Good afternoon, ladies and gentlemen. My name is Ebenezer Onyeagwu, the Group Managing Director and CEO of Zenith Bank. I would like to introduce my colleagues who are on this call with me today. First on the list is Dr. Adaora Umeoji, our incoming CEO and Group MD. We have Henry Oroh, Executive Director. Adobi Nwapa, Executive Director. Akin Ogunranti, Executive Director. Adamu Lawani, General Manager. Louis Odom, General Manager. Felix Egbon, the Chief Risk Officer of the bank. Mobisha Asangbede, Chief Inspector of the bank. Rolake Akinkugbe-Filani, our Group Head of Investor Relations and Corporate Development. We have Mukhtar Adam, our Group CFO. Then we also have our other colleagues here, Joshua Uwedinisu, the Deputy Chief Risk Officer of the bank. We have Alex Toby, Deputy CFO of the bank. Oluka Akinbinu, the AGM and Head of Strategy.
We have Nsikan Umoren in our Financial Control and Strategic Planning Department. Eugene Ewubor, also from our Financial Planning and Strategy. Michael Adesoye in our Financial Control and Strategic Planning. Folashade Keleko in our Investor Relations Department. And we have Emmanuel Gumina from our Financial Control Department. Ladies and gentlemen, it is our pleasure to present to you the detailed analysis of our performance in 2023.
But before we go in, it is important for us to have a refresh in terms of the overall economic landscape where we operated, right from the global aspect, because in 2023, the global economy does show signs of recovery from the pandemic-induced downturn, but we witness varying degrees of volatility across different regions in the world. Many countries continue to grapple with inflationary pressure, supply chain disruption, impacting consumer prices and business operations generally.
Government across different regions have continued to implement different forms of fiscal stimulus and other measures to support and spur economic growth, while central banks across the globe had to adjust monetary policy to address the issues around the high inflationary trend. And one thing that is also key is that technology and digitalization continue to be the key drivers of economic activities with sectors like e-commerce, remote work, and digital services experiencing significant growth. However, we also witness heavy headwinds coming from geopolitical tension, environmental challenges that continue to elevate the risk in the global operating environment. Overall, one will say that 2023 was one of a cautious optimism in terms of how the global economy stood. And going into 2024, the headwinds that were experienced in 2023 still appear to be there.
And of recent is the latest Iranian attack on Israel, and the expectation of everyone is that the tensions will not escalate any further. Otherwise, it will worsen the already challenged supply chain and other macroeconomic disruption globally. In terms of our local environment, we recall that first half of last year, we witnessed very strong challenge arising from the Naira redesign and its adverse impact and consequences on business.
And that also continued for a while until the emergence of the new president, President Bola Ahmed Tinubu, who hit the ground running and came up with very bold and audacious reforms. Here among these reforms were the unification of the exchange rate, as well as the removal of subsidy on petroleum products importation. These reforms appear quite audacious, like I said, but however, we are beginning to see that the reforms are gaining grounds.
As difficult as they were, one of the things that came, the development we saw with the unification of the exchange rate was a high volatility in exchange rate to the extent that exchange rate in the course of this year rising to as much as NGN 1,800 per dollar. Interestingly, as the reforms continue to hold grounds, we are seeing a moderation and improvement in the exchange rate that, at the moment, exchange rate is hovering around the region of NGN 1,200, demonstrating the resilience of the economy and also the very important reforms and the overall program of the government to see that economic growth is pursued throughout the country. We have also seen the commencement of production of the Dangote Refinery, as well as the completion of the rehabilitation of the Port Harcourt Refinery.
These two developments are supposed to bring about improvement in the availability of refined petroleum products in the country, and hopefully, this should also curtail the demand for foreign exchange being earmarked towards importation of petroleum products. We have also seen improvement in terms of production capacity of the indigenous oil and gas producers, who for the past four years have not had any production at all. Most of them have also been able to come up with alternative evacuation route, and we are beginning to see improvement coming from the production. By extension, some of the loans granted to this set of obligees, we expect to see improvement in performance going forward. The Central Bank has had to grapple with quite a lot of challenges. One of them is the unabating inflationary trend.
This has led the Monetary Policy Committee to hike interest rate, the MPR, to the level of 24.75%. We have also seen the Central Bank lift the ban on the 41 banned items, making them eligible to access foreign exchange in the market. The unification of the exchange rate is also boosting confidence in the market, and we are seeing incremental FPI and FDI flows coming into the country. When compared on a relative period on period, what we have witnessed so far in the year far outstrips what had come in the course of last year. We have also seen Central Bank, in attempt to rein in inflation, increase the CRR to the level of 45%. Albeit, we have also seen the yield on government risk-free instrument going as high as the level of 21%.
We believe that all these are helping to drive confidence in the market and also help to rein in inflation as we race towards really pursuing the audacious plan of government to have a $1 trillion economy. The latest of what we are also seeing is the current increase in the authorized minimum share capital banks, and the banks of authorization with international authorization expected to maintain minimum equity paid up of NGN 500 billion. At the moment, Zenith Bank remains the bank that has the least amount that requires to be raised to achieve the minimum. The intention is that we will continue to retain our international authorization. Therefore, we are putting plans in place to ensure that we raise the required minimum of NGN 230 billion and in a very organic manner that continue to ensure growth and continued prosperity of our institution.
On the back of all this, I am happy to report that Zenith Bank reported very stellar performance. Recorded triple digit growth in top lines despite all the challenges in the economy. This has come on the back of proactive and very outstanding treasury and robust treasury management, diligent and disciplined approach to creation of risk assets, and as well as the fact that we continue to keep our eyes on the KPIs, and all of them recorded very significant and outstanding performance. Against this performance, we are declaring a total payout dividend of NGN 4 per share, the highest in the banking industry and the highest ever paid by any bank so far in the history of this country. We believe that having done well, it is important for us to reward shareholders.
It is also important for us to underscore that the dividend we are paying is coming out of our organic profits and out of the very significant improvement we had in our top line. We have made sure that we create reasonable buffer and improving our countercyclical buffer. So our equity remains very strong. Our total equity as at this stands at NGN 2.32 trillion, which still remains the highest capitalized banking institution in Nigeria, and also one of the topmost capitalized banks in Africa. I will leave the CFO to throw more highlights in terms of the performance before we go into the Q&A. Thank you very much.
Thank you very much, MD CEO. Good afternoon. As the MD has explained, we had very good financial year 2023, with the key performance measures growing significantly. Our gross earnings moved from less than NGN 1 trillion to NGN 2.1 trillion within the financial year, a 125% increase. This came as a result of increment in interest income, non-interest income. Almost all our revenue lines showed growth within the period. Interest income grew by about 112%, from NGN 540 billion to NGN 1.1 trillion. This is largely due to the increase in the rate environment, which we all know. We also have expansion in our risk assets without reducing the quality of our risk assets. We had significant liquidity that helped us to invest in treasury bills and other securities. Within the period, we also saw increase in interest expense because of the rate environment.
The increase in interest expense was, however, moderated by we reining in on operating expense. Cost of funds increased within the period from 1.9% in the previous year to 3% in the current period, which is because of the general rate environment that we are in. On all this, our net interest income was very strong, positively by 101%, increasing from NGN 367 billion to NGN 736 billion. We finished the period with a net interest margin of 7.3%. Impairment charge was very significant for us, up to NGN 410 billion because of our approach to making the best impairment charge or provision on our loans as possible. As we all know, the exchange rate movement within the period increased the risk assets, especially the donor-denominated loans.
We also matched it with a corresponding increase in impairment charge so as to protect our balance sheet and ensure that we have adequate buffer to deal with potential loan challenges if they ever arise. We have cost of risk increasing from 3.2% to 7.2%. As I said earlier, non-interest income also increased. The trading book did extremely well because our trading book in various instruments, both derivatives, we have bond trading, treasury bills trading, all recorded significant growth. We also had revaluation gain as a result of the depreciation of the Naira within the financial year 2023, which also added to our non-interest income. Operating expense increased by 31% within the period. As I explained earlier, the revenue line grew by over 100%, but expense was significantly moderated within the period. That saw our cost-to-income ratio reducing from 54% to 36%.
It is important to note that the regulatory costs within our operating expense alone contributed to 30% of our overall costs. All these cumulated to profit before tax of NGN 796 billion. That is 180% growth from prior period. Our balance sheet also experienced significant growth. Gross loans growing by about 71%. If you isolate the exchange rate impact on our loans, we had about 26% growth in the loan book. The customer deposit also grew by about 69% within the period. If you isolate the revaluation impact on our deposit, the deposit also grew by 30%. We have our total asset growing to NGN 20.4 trillion within the financial year. We have liquidity reserve of about NGN 7.9 trillion at the close of the financial year.
Our shareholders' funds stood at NGN 2.3 trillion at the close of the financial year. This clearly shows that as a bank, we have a very strong and liquid balance sheet to be able to explore growth opportunities and able to also explore expansion to be able to generate more revenue, make more profit, and be able to reward our stakeholders. Thank you very much. I hand over back to the MC.
Okay, thank you very much, Sefo. We are now open for questions and answer.
Thank you very much. Ladies and gentlemen, if you wish to ask a question, please press star and then one on your telephone keypad displayed on the screen. If you wish to withdraw your question, you may do so by pressing star and then two to cancel. Again, if you wish to ask a question, please press star and then one. We will pause a moment while we wait for questions to register. Our first question is from Timothy Wambu of Absa. Please go ahead.
Thank you very much. I trust that you can hear me. Good afternoon, Ebenezer, Mukhtar, and the team. Thank you very much for the presentation and for taking time to answer our questions. My first question is on the net open position compliance. Could you kindly just indicate to us whether you are now compliant and what it took for you to be compliant? From your interpretation, are you long USDs even on your balance sheet? That is the first question. The second question is that, according to your AGM notice, you indicate that you look to introduce, almost if you want to double your shares in issue. That will indicate that you are looking to raise way in excess of what you require to meet the minimum recapitalization requirements when you double your shares in issue.
Kindly just explain how you intend to go about it, and do you intend to carry out a rights issue and the modalities of that rights issue? The third question and last one is on the loan-to-funds ratio. I can see you guiding loan growth and deposit growth of 20%. But somehow your loan-to-deposit ratio is increasing from 46% to about 60%. Maybe while you are at it, can you just indicate whether the Central Bank is still clamping down on banks for not complying with the loan minimum requirement? Thank you.
Okay. Thank you very much, Timothy. So start with our net open position. We comply within the required time frame. Recall that it was 10%, and in line with our compliance with extant regulation, it was not a problem for us to comply. In fact, the day the policy came out, the next day, we complied immediately. I think I can say that we are one of the first banks who have complied. The reports have been reviewed, and we are quite in line with that regulation. The capital raise. Yes, you are right. When you see it will appear that we are going to raise, we are doubling.
But if you go on to read the notice further, there is a condition that says, after the capital raise, any other unissued capital that the board consider, it is just an empowerment to give the board the opportunity to raise as much capital. Bear in mind that the requirement for us to comply with the regulation is to raise NGN 230. But typically, for Zenith, we like to keep things above the regulatory minimum so that we have some buffers. So the whole idea is put it there, let us see to what extent we will raise above the required minimum. After that, in keeping with the CAC regulation, any portion of the unissued share capital that remains will be canceled. So that takes care of that. The issue of the loan growth, the loan-to-deposit ratio.
Well, to the best of our knowledge, CBN has relaxed that policy arising from the increase in the CRR to 45% and maintaining a more refined and straightforward methodology. Because if you begin to compute it and do the arithmetic with a CRR of 45% and a liquidity ratio of 30%, it therefore means that for you as a bank, your loan growth should not be more than 25%. Otherwise, you are eating into shareholders' fund. So that has been done, and we have not seen any penalty coming from Central Bank of Nigeria with respect to that. So, in terms of loan growth, I think I will leave the CFO to throw more light with respect to the guidance.
Okay. Thank you. We guided loan growth of, I think 20%. So the guidance we have given in this presentation are all based on organic growth. We are guiding that we will grow organically. We want to isolate the impact of any revaluation, because we have seen the Naira firming up recently. So if the Naira continues to strengthen, we will be able to still grow our loan book by that 20%. Same for deposits. If Naira begins to weaken, we will still grow organically 20% without the revaluation impact. Which is why I explained that within the period, our deposit grew by 69%, but the actual growth was around 26%. So that is what guided, that is what informed this guidance.
Well, there is also the question around the modalities for the capital raise. Since it is essentially equity raise and 81 capital is not going to come, essentially, we will be looking at doing a combination of maybe a rights, public offer, as the case may be. So if there is need for us to think of where private placement, it depends. But the whole essence is that our approach is to achieve this target organically and achieve it pretty much soon. Next question.
Thank you very much. Ladies and gentlemen, again, if you do wish to ask a question, please press star and then one. We also please ask that you keep to two questions. Our next question is from Ngozi Odum of CardinalStone. Please go ahead.
Yes. Good afternoon, everyone. Thank you for the call and for taking questions. I wanted to get a brief view on your expectations for dividend payments going forward. Noting that, you know, the CBN had, you know, excluded retained earnings. Do you foresee dividend payments or dividend payout ratio, you know, matching your historical payout ratio, which was around circa 40% going forward? On your capital raise, do you foresee the timeline within the next six to nine months? I am assuming that you are hoping to raise your NGN 230 billion. Are you hoping to conclude that this year? Lastly, just briefly on your expectations for or your views per se, on the AMCON. Given that the institution of AMCON and then lifespan has exceeded far above its intended or original dates.
I wanted to know on the expectations for the unwinding of this structure. Thank you.
Okay. Thank you very much, Ngozi. Your first question is on expectation for dividend payout. For as long as we continue to do well, we will continue to reward shareholders. That is basic. As can be seen from the performance of 2023, we are making a payout that has never been seen before in the industry. The payout ratio will be determined by how well we do, and I am pretty sure we will continue to do excellently well, which means we will continue to reward shareholders excellently. The capital raise, the time frame. First is bear in mind that banks have been given two years. We are working our plan to ensure that we complete it as quickly as possible.
We may not be able to give you a specific timeline, but just know that if there's going to be one institution that will be achieving it and achieving it very soon, I think it's going to be Zenith before others will come following. Because we have the pedigree, we have the name, we have the brand. I mean, you see how well the stock has performed. So we have everything that will drive investors' confidence. So we are very certain that existing shareholders will be subscribing to both the rights and if need be, any public offer that will be there. Expectation on AMCON, very interesting question. Well, first is, bear in mind that AMCON had really come to end of life. What we have is an ascension of almost like putting it back again on life support.
What's also important is that, for an institution like Zenith, what we have contributed or paid to AMCON, more than double the eligible banking asset we handed over to AMCON. So if we are going to be looking at the debit and credit, you will see that we are in credit. So institutions like us appear to be shortened by the continued implementation of AMCON. If you are looking for our expectation, we expect that AMCON be brought to an end immediately. So maybe other institutions where AMCON haven't fully recovered from them, maybe a different kind of scheme can be worked out for them to have a continuous payment or deduction for their AMCON fee. Our own position is, we think it should be rested, because if you look at our regulatory costs, i.e. AMCON and NDIC, other overheads, they account for 30%, one third.
That is quite heavy. So imagine if we are releasing that one third into our profit, that will tell you the level of performance that the bank has and the resourcefulness of this bank to really extract value for shareholders.
Thank you very much. The next question is from Nick Padgett of Frontaura Capital. Please go ahead.
Hi, thanks for the call. This is actually Tim Raschuk from Frontaura Capital. Just a couple of questions. On the unwinding of the FX position, does that entail any extraordinary gains or losses? Could you just talk about what your expectation is given the Naira moves for revaluation gains or losses in Q1? Maybe just around the capital raise. I know it's you following a rule the Central Bank has made. On a capital adequacy or other capital metric spaces, Zenith Bank and many of the other larger banks are well capitalized. The Central Bank forcing banks to raise a lot of capital when all the share prices are trading at a big discount to book, it's not the most logical thing to do. Maybe if you could just talk about that and what you think the Central Bank's thinking is around that.
My last question is just on guidance and whether the guidance is in the capital raise or not. The PBT and PAT numbers, do those assume something for capital raising? Thank you.
Thank you very much, Patrick. First on the FX position, the expectation, I guess you want us to give an indication of where we expect rates to close. First and foremost, as Nigerians, we want the Naira to firm up because of the obvious implication of a higher exchange rate on the general price levels. You will look at it, this is one of the elements feeding into the inflationary trend we see. So it makes a lot of sense for us to witness an appreciation and a stronger Naira. Recall that the Central Bank of Nigeria said it about twice that the Naira is undervalued. So I believe what we have witnessed before is more of speculative attack, and it seems like the market is coming to the realization that yes, Naira should be allowed to find its true value.
A Naira finding its true value drives confidence. A Naira finding its true value will enhance purchasing power of the average consumer. Life will be a lot more better. So to that extent, we'll subscribe to a strengthening of the Naira. The issue of overcapitalized bank arising from the new CBN regulation. I guess you don't want us to even comment on that because we are in a regulated business. Whatever the rules are, we obey. We don't own the license, it's issued. So for as long as that's what the regulation is, our first level is comply. So we need to comply with it. After that, we start putting the other puzzles together. One thing is certain, we think it will position us to be able to do a lot more. I mean, we'll have a lot more capital to deploy.
We'll be able to address the various growth areas we see in the economy. We have a deeper pocket to do bigger deals as it were. I think, again, when you align that against the targets of President to achieve a $1 trillion economy, you realize that you needed to have stronger and bigger banks to be able to achieve that. To that extent, we think, is a requirement that we have to follow and adhere as we did too. Guidance on the capital raise. Mukhtar, did you get that question? What's the question?
I think there was a question whether we expect exceptional gain or loss from the FX. That's what I wanted to answer.
Okay, go ahead.
I think you've handled the capital one. He asked if we expect exceptional gain or loss. We do not because we have also structured our balance sheets to the sense that we did not expect that significant revaluation gain will continue forever. If you look at our notes on other income, that is on page 163, you will see that our trading gain, the gain on the trading book, increased significantly. Other trading book increased significantly. Trading on treasury bills also increased. But if you go to page 164, you will see that our revaluation gain also grew, but not as much as the growth on the trading book. Even if we are fully compliant with the FX position, the net open position is not going to significantly affect our trading book.
The revaluation gain that we're going to see would reduce significantly, but overall, the impact on our profit will be manageable. That's how I want to answer. You are not also going to see one big gain or one big loss as a result of this policy. Our guidance on PAT and PBT have taken cognizance of the capital requirement. Yes, we have taken cognizance of the capital requirement in guiding our PAT and PBT. However, as we did last year, in the second half of the year, we revised our guidance. We have given this guidance based on what we know and what we anticipate. As we move into the capital raising, and as we observe the macros, how they evolve, if there is a need for us to revise our guidance, we will revise and advise the markets. Thank you.
Okay. Next question.
Thank you. The next question is from Stephen Chima of CardinalStone . Please go ahead.
Hi. Good afternoon. My question really is on net interest margins for the bank. We saw net interest margins at 7.3%, same as last year. Considering the current interest rate environment, how do you see that being reflected on asset yield for the bank and overall, how would that translate to net interest margins for the year? Secondly, with the CBN's directive on FCY long position, how does the bank see its earnings faring this year? Perhaps some sort of guidance on PBT and PAT in that regard. Also, I observed about an 18% decline in net income and net income from fees and commission, and fees and commission expenses almost tripled. Could you speak a little bit about major drivers that drove that movement in fees and commission expenses? Yeah. Thank you.
Okay. Let me get the CFO to respond to the questions.
Okay. Thank you very much, Stephen. The first question is on net interest margin, NIM. 7.8% compared to last year's 7.8%. Yes, you are very right. The rate environment has improved. You also have to recognize that if you look at the balance sheet of Nigerian banks, most of our liabilities are short tenured. When the rate environment starts picking up, the liability reprice faster than the assets. That is what we have seen. Towards the end of 2023, we saw the yield on the asset moving very fast. That happened towards the end of 2023. In 2024, we have seen NIMs improving beyond that level. We guided NIMs of 10% in 2024. Be rest assured that the rate environment is good, and we are going to use that to drive the NIMs in 2024.
Then you asked about the directive on FCY position, how it impacts our PBT, PAT. The FCY position that the CBN has given guidance, we have complied with it. When you have dollar assets or dollar liability, there are different ways you can deploy them as a bank to make revenue. You can deploy them on the banking book by creating loans, by investing in other investable instruments, or you can deploy them on the trading book by entering into various transactions, either derivatives or forward and so on and so forth. The restrictions does not limit us to how we can utilize the funds. We have the balance sheet, we have the liquidity, so we are able to explore other avenues to deploy them. We have factored in that in our PBT and PAT guidance.
As I said, as we observe the environment, we may, if need be, revise the guidance. This is based on what we know now and what we expect. Net income on fees and commission. You said the expense has grown significantly. You are right. A lot of the fees and commissions, they are driven by digital platforms. The digital platforms are driven by software, hardware solutions, and support that are sourced for in foreign currency. When you see significant devaluation, you experience a very sharp increase in the costs before the revenue will begin to ramp up. We have seen the growth in the cost. In 2024, the revenue has started ramping up faster than the cost. You expect to see the expense there reducing in terms of how it is growing and the revenue overtaking the expense. Thank you.
Thank you, CFO. Can we have next question?
Of course. The next question is from Olumide Sole of Vetiva Capital Limited. Please go ahead.
Good afternoon, everyone. I just have a very simple question, and to say it is just one. My question is basically looking at the CBN guideline of net open position at all. I am just wondering, with FX devaluation gains, can the bank sustain its performance? Can we see for 2024, 2025, and years ahead, will the bank be able to record the kind of impressive performance we have seen? When the bank was able to record the massive FX devaluation gain, which we saw in 2023. That was my first question. My second question is, I know that the bank is looking at creating its group this year. Turning to a group. What services are, aside banking, what services is the bank looking at to expand soon? Thank you.
Okay. Thank you, Olumide. Let me get the CFO to speak to the net open position and impact on our earnings going forward.
Okay. Thank you very much. Yes, you are very right. Again, if you look at our financial statement, I will refer you to page 164. You will see that our foreign currency revaluation gain there is NGN 228 billion for the full year 2023. Our total profit is NGN 795. If you take away the NGN 228 billion, that leaves you with NGN 566 billion. Last year, 2022 financial year, our profit was NGN 284 billion.
So you have the profit almost doubling if you back out revaluation gain. So assuming we did not do revaluation gain, we have a profit of NGN 566 billion, which is 99% growth from 2022. Even if we have made our projection, which it was the basis of our projection as we said, the guidance that we have given is based on organic growth. We are still able to show growth in our profit, less revaluation.
You have to be rest assured on that. Back to you, MD.
Okay. I think that addresses. There is a second question. We have addressed the first. Next question.
Thank you. The next question is from Josh Arowolo of Stanbic Pensions. Please go ahead.
All right. Thank you very much. Good afternoon, and thank you for taking my question, and congratulations on the stunning results. I have three questions. The first one is just to reconfirm the bank's FX long position now, given that it was, based on my understanding, was around $1 billion as of full year 2022. If we can just get the absolute number now, that would be great. The second question is on the bank swap book, just to understand the size of that swap book currently. If you can just guide us on when the next set of big maturities on the swap portfolio will happen, just to also help with our modeling, that would be great as well. The last question is on asset quality.
I understand that most of the impairments that was made during the year, about NGN 400 billion, is largely precautionary. Is there any sort of legacy loan that was impaired during the period as well, just to get a better understanding of those impairments? Thank you.
Okay. Thank you very much. I'll get the CFO to answer the FX long position, the swap book, and the maturity profile. On the asset quality, let me say here that there's no deterioration in the quality of our asset. What we've done is just to be prudent and conservative and making sure that we increase our impairment given the revaluation gain. What you are also seeing under the impairment line includes the additional provision we made for countercyclical buffer. Right now, with Naira strengthening, we are going to see that, yes, instead of us hitting P&L, we go to the countercyclical buffer to even it out. That's essentially what we've done. It's not a reflection of a deterioration in the quality of the loan book. The loan book still remains very strong and healthy.
Going forward, we'll continue to achieve that because in our tradition, we are careful and diligent choosing and picking the kind of deals we do. If you look at our trajectory over the years, we've maintained the least loan loss provision in the industry. We've been there for more than 30 years of our 34 years of existence. CFO, you want to deal with the FX long position?
Okay. Yes.
For group.
Yes, thank you very much. If you look at our FX balance sheet that we have disclosed on page 119 for the group and page 121 for the bank, you would realize that at the bank level, you even have a short USD on the balance sheet. It is only when you bring in the other derivative instruments that you have a long USD. We have also done hedge accounting within the period. If you look at the notes that we have on other income, you are going to see how we have treated the hedge accounting from the trading book into the banking book. We do not have an issue with the long USD position. If you want to know what is giving us that evaluation gain, you are looking at a long USD position in the range of $1.2 billion. That is that.
The swap book, it is in the range of, again, if you look at that same page 119, we have mentioned the various swaps that we have that is amounting to about $1.4 billion, and then they are of various maturity. The maturities are structured at different level. We have maturities almost every three months. That helps us to reprice and to determine whether we want to continue or not. The MD has spoken about asset quality.
Next question.
Thank you. The next question is from Ronak Gahdia, who is a private investor. Please go ahead.
Thank you. Thank you, Zenith team. Firstly, congratulations for the results and thanks for taking the time to take our questions. Mine are maybe just a couple of follow-ups Josh just asked. In terms of the net open position, could you just guide us what the net open position for the bank is currently following the introduction of the CBN regulation requiring banks to close down their long positions? Likewise, on the swap portfolio, it was at about $1.4 billion. Given the changes that we are seeing at the CBN, has the bank continued to maintain that swap portfolio, or is it seeking to close down that position through the rest of the year? If it is looking to wind down the position, what potential impact could we see coming through on the P&L side as that instrument unwinds?
Finally, my last question is on your margins. You have already spoken quite a bit about it, but I saw a big, at least by my calculation, there is a big uptick in your net interest margin in the fourth quarter. That, in my calculation, was being driven by a.
Sorry, Ronak. We seem to have lost you there.
Can you hear me now?
Yes, we can hear you now. Thank you.
Sorry, where did you lose me?
As the uptick in the net interest margin in the fourth quarter.
Maybe you could just talk through the big uptick in net interest margin in the fourth quarter. I saw it was being driven by a substantial increase in lending rates. Even taking into consideration the uptick in interest rates, the increase in lending rate during the quarter was quite strong and surprising. If you could just talk through in terms of what was driving that. Thank you.
Okay. Thank you very much. On the net open position, we are squared in line with CBN regulation. We are not supposed to keep a positive net open position. It is the other way around, where you can go short. As far as that regulation is concerned, we are squared. The swap book at $1.4 billion. If you flash back to last year, you will realize that the swap book was actually about $1.85 billion. So know that we are going concerned, and we have very outstanding and most best-in-class talented treasury team. It is all about where we have the margin, where can we harvest the most value for shareholders. That is essentially what we do. We do bargain hunting. We are not in any way fixated on certain products. The treasury team continue to be creative, and we have seen it downsizing to $1.4 billion.
It depends on what else we find in the market. The risk and reward concept will continue to drive us as we deploy our liquidity asset to achieve the required gains. That deals with the question of whether we wind down. It is all about what we see in the market and the dispositions we have about certain developments we see in the market. Margin increase uptick. Yes. From last year, we started seeing rates trending up, and of course, we are in the margin business. When we see costs going up, it is only important that you now need to reprice to ensure that you do not compress your margin. The acceleration in rates started from about that Q4, so we had to reprice, and that repricing helped us to improve the uptick you are noticing in the interest margin.
We will continue to play the market and ensure that no matter the direction that rate goes, whether it goes up or it goes down, that we do not have compression of our margins. Last question?
Thank you very much, sir. Ladies and gentlemen, in the interest of time, I will hand back to Mr. Onyeagwu for some closing remarks.
Thank you very much. I would like to invite our incoming CEO, Dr. Adaora Umeoji, who will give the highlights in terms of the outlook going forward. Let me also thank you, the analysts, for the insights you keep providing for us when we have sessions like this. They help to reshape our understanding of the dynamics in the market and the implementation of our strategy. I realize that this is going to be my last call, and Adaora will be taking over, so it will be good for us to hear from her in terms of how she will be driving the strategy going forward. One thing that is important is to say that Adaora is going to be the fifth generation of leadership in the bank. Not just the fifth generation, but the first lady CEO of the bank.
She comes with a lot of pedigree, she comes with a lot of creativity, a lot of energy. So we have no doubt that she will be able to continue to elevate the core values, discipline, and the principles of business in Zenith. Adaora, over to you.
Thank you very much, Global CEO, for that brilliant introduction. Today, I am going to be taking the strategy for driving our vision for 2024 financial year. In addition to the communicated strategies already, the Zenith vision remains to build the Zenith brand into a reputable international financial institution recognized for innovation, superior customer service, and performance, while creating premium value for all stakeholders. Zenith Bank has remained focused on being a trailblazer in the banking industry, both in Nigeria, Africa, and beyond, consistently topping the charts in terms of profitability in the Nigerian banking industry. There are some key strategic updates that we would like to share with you this afternoon as we close out investor's call. I would like to start with Zenith Holdco transition.
We expect that within a month of our extraordinary general meeting, which is going to be held on April 26, 2024, we will conclude our transition to a holding company structure. Under our holding company structure, we will have a new fintech vertical and payment services platform called Zenpay Limited, which we are already having the Central Bank approval for, and we intend to launch this before the end of 2024. Zenpay will leverage on the opportunities within the payment space in Nigeria, across West Africa and beyond, as we expand our retail and digital franchise. We have Project Tiger. Project Tiger, the name is formed as a result of tiger, meaning strength and power. So we named our comprehensive IT infrastructure Project Tiger to be able to show the strength and seamless service and powerful back-end systems.
Project Tiger was initiated with a mission to upgrade and expand the bank's existing infrastructure, to transform and overhaul the systems and communicate the rising demand to be able to service our customers better. This transition is expected to enhance our capacity across the various business segments, from commercial, SME, retail, and public and corporate aspect of our business. Modules such as treasury and trade were deployed in 2023, while the remaining modules of the Project Tiger, such as core banking and loans, will go live in 2024. The new system capability will enhance excellent customer service delivery across all channels, customer touch points, while driving efficiency and ensuring cost saving. We are going to look at expansion and establishment of a France subsidiary.
With footprints in over seven countries, Zenith has always been focused on globalization as a key to exploiting opportunities in global markets and expanding our branch franchise. As part of the group's expansion plan, the bank is awaiting final approval from the French banking regulatory authorities to open a subsidiary in Paris. The French subsidiary, which will be under the Zenith Bank (UK) Limited entity, will help facilitate trade transactions for the group customers and their trade partners across the Eurozone. We also cannot afford to ignore the growing intra-regional business, commercial, and trade opportunities on the African continent. We are looking forward to launching our strategic initiative in collaboration with the African Continental Free Trade Area, known as SMARTAfCFTA, by the end of Q2 2024. We are also looking forward to pursuing our aspiration to expand our franchise in other African countries where we do not have representation.
These new geographic opportunities will help us to tap into growing customer demand for financial services in regions where we do not have representation. We are going to go into capital raise very soon. The Central Bank of Nigeria released a regulatory circular on March 28, 2024, where they specified new minimum capital requirements for commercial banks, merchant banks, and non-interest banks in Nigeria. To this end, the bank will be going to the capital market by way of rights issue, public offer or private placement, or a combination of these to raise at least an additional NGN 230 billion to meet the regulatory minimum capital requirement of NGN 500 billion set by the CBN for banks with an international authorization license. We will seek other shareholders' approval for this at the upcoming AGM of the bank.
With our strong brand name, we are very optimistic of raising this fund because in the subsequent ones we've done before, we were able to raise and we got fully subscribed. Zenith Bank remains the most capitalized bank in Nigeria at NGN 2.3 trillion in shareholders' fund as at December 2023, and we are in the top 10 of African banks by shareholders' fund. Another strategy is going to be to grow our loan and deposits. With the appreciation of Naira presently, there are a lot of promising opportunities for banks as it ensures a rebound of the economy, which we believe will increase the purchasing power of every Nigerian and foster a renewed desire for our banking product and services. This, together with our SME business and digital drive, will enhance our market share and grow our deposits.
We also see opportunity on the horizon by loan growth across key sectors such as telecoms, agribusiness, fast-moving consumer goods, manufacturing and other areas. These opportunities can be used to deploy the additional capital we plan to raise. We have a strategy of raising the SME, retail, and digital footprints. Our SME growth agenda, retail drive, and conscious expansion of our digital footprint across all KPIs like agency banking, mobile banking, POS terminal, and card services, are key aspects we plan on utilizing to boost our growth and sustainability going forward. We have an export business to be able to deepen on our export drive. Zenith Bank controls half of the export market, and we intend to consolidate more on that. We have remained committed to the growth of non-oil exports in Nigeria, which can be seen through the bank's Zero to Hero export scheme.
Which is a capacity building initiated for the non-oil sectors, where we have seminars held by the bank to grow our customer export business. Finally, we have the customer service. Exceptional customer service remains Zenith's area of core competence, and we intend to improve on this trend by leveraging on our world-class technology while improving on the capabilities and well-being of our staff. This will ensure that the bank continually scales into a formidable and sustainable brand that will deliver premium value to our shareholders and stakeholders. Thank you very much. I will let the CFO talk on the guidance for financial year 2024.
Thank you very much, MD. We have included the guidance for the financial year 2024 in the presentations. During the course of the question and answers, we have also made reference to some of the key parameters in the guidance. We have also mentioned that as events unfold, as we see what happens in the year, if it becomes necessary, we may revise and advise investors and analysts. Thank you very much. Okay.
Okay. Thank you very much, everyone. You have heard from our incoming CEO. You see that the recipe is the same. The face of the CEO will be changing from a man to a very pretty lady. As a result, we are also going to be seeing a lot of fresh air being injected into the system. In keeping with our heritage and our DNA of discipline and very professional approach to business, we will continue to extract victories out of the visions laid into the system. The system is there. We have a robust platform. We have such an organized and disciplined system that it self-regulates. We are having somebody who has institutional memory in terms of how to carry on. Be rest assured that we will continue to post very outstanding performance. No matter the direction the interest rate goes, Zenith Bank will remain very profitable.
We are not tired of leading. We will continue to lead no matter the condition that the market presents. Thank you very much, and I wish you the very best as you continue to support Zenith Bank. Thank you.