Lesaka Technologies (LSAK) Q4 FY2026 Earnings Call: EBITDA Growth, FY2027 Guidance and Bank Zero

Lesaka Technologies (NASDAQ: LSAK) reported higher FY2026 revenue, adjusted EBITDA and adjusted EPS, supported by strong Consumer and Enterprise growth. Merchant remained the main pressure point as lower take rates offset higher transaction volumes.

Key Takeaways

• FY2026 net revenue increased 20% to ZAR 6.33 billion, while group adjusted EBITDA rose 41% to ZAR 1.27 billion.
• Adjusted EPS increased 210% to ZAR 6.51. Lesaka also generated approximately ZAR 40 million of GAAP net income, its first positive full-year result since 2022.
• Q4 FY2026 adjusted EBITDA reached a quarterly record of ZAR 367 million, up 22%, with margin expanding to 22.6% from 20.1%.
• Consumer and Enterprise delivered strong Q4 growth, but Merchant net revenue declined 10% and segment adjusted EBITDA fell 33% amid take-rate pressure and integration costs.
• Net debt to group adjusted EBITDA declined to 1.9x from 2.9x a year earlier. Management targets leverage below 1x by June 2027, assuming the Bank Zero acquisition closes and lending books are transferred as planned.
• FY2027 guidance calls for net revenue of ZAR 7.0 billion to ZAR 7.7 billion, group adjusted EBITDA of ZAR 1.45 billion to ZAR 1.60 billion and adjusted EPS of ZAR 7.50 to ZAR 8.50.

Core Financial Data

Business and Operating Performance

Consumer

FY2026 Consumer net revenue increased 38% to ZAR 2.4 billion. Transactional-account revenue rose 24% to ZAR 855 million, lending grew 49% and insurance increased 42%, primarily through customer acquisition and cross-selling.

In Q4, Consumer net revenue rose 31% to ZAR 669 million, while adjusted EBITDA increased 56% to ZAR 253 million. Active consumers grew 11% to 2.1 million, and monthly ARPU increased 15% to ZAR 98.

Product penetration continued to deepen: 51% of active consumers held at least two products. Q4 lending originations increased 20% to ZAR 937 million, and the outstanding consumer loan portfolio grew 40% to ZAR 1.4 billion. Insurance gross written premiums rose 36% to ZAR 155 million, with in-force policies up 34% to 753,000.

The insurance collection ratio declined to 94% from 96%. Management expects it to moderate toward 90% over time as the customer base broadens.

Enterprise

Enterprise FY2026 net revenue reached ZAR 913 million, with core net revenue increasing 45%. Q4 net revenue rose 34% to ZAR 255 million, while adjusted EBITDA increased 155% to ZAR 54 million.

Q4 ADP total payment volume increased 18% to ZAR 12.2 billion. Utility TPV rose 16% to ZAR 502 million, while the active meter base expanded 11% to 382,000. Management said Enterprise should be Lesaka’s fastest-growing segment in FY2027, albeit from a lower base, with scope for further margin improvement.

Merchant

Merchant was Lesaka’s weakest division. FY2026 net revenue increased 3% to ZAR 3.1 billion, while core net revenue rose 6% to ZAR 2.8 billion. The average active merchant base grew 12% to 132,000, but weighted average ARPU declined 5%.

Q4 Merchant net revenue fell 10% to ZAR 729 million, and adjusted EBITDA declined 33% to ZAR 122 million. Active merchants increased 3%, with community merchants up 6% to 107,000 and corporate merchants down 7% to 25,000.

Transaction volumes remained positive. For FY2026, acquiring TPV increased 27% to ZAR 44 billion, ADP TPV rose 31% to ZAR 55 billion and cash TPV grew 4% to ZAR 119 billion. However, lower take rates offset this growth. The ADP take rate declined 25%, reflecting reduced airtime commissions and faster growth in lower-margin supplier payments. Competitive and mix pressures also affected cash and acquiring take rates.

Merchant lending improved late in the year. Q4 originations rose 20% to ZAR 249 million, while the closing loan book increased 15% to ZAR 463 million.

Management Guidance

Management said Q1 FY2027 will reflect seasonality and one-off restructuring costs in Merchant. Some costs could extend into early Q2, but the company does not expect them to continue beyond that point.

FY2027 guidance includes Bank Zero and assumes completion by December 2026. Management expects little impact on FY2027 net revenue or adjusted EBITDA because Bank Zero is forecast to be near break-even, with most synergies expected in FY2028.

Lesaka expects its annual group cost run rate to reset to approximately ZAR 350 million in FY2027 as it invests in data, information systems, people, risk and compliance. Operational capital expenditure is expected to be about ZAR 450 million, plus approximately ZAR 100 million of nonrecurring leasehold improvements.

For FY2029, management set ambitions—not formal guidance—of approximately ZAR 11 billion in net revenue, an adjusted EBITDA margin above 25% and adjusted EPS above ZAR 18. Operational targets include 3 million active consumers, 200,000 active merchants and Enterprise TPV of ZAR 80 billion.

Bank Zero and Balance-Sheet Strategy

The Bank Zero acquisition remains subject to Prudential Authority and exchange-control approvals. Management expects the transaction to close before the end of calendar 2026.

Bank Zero’s deposits increased from just under ZAR 400 million when the agreement was signed in June 2025 to more than ZAR 700 million by April 2026. Management expects deposits to exceed ZAR 1 billion by December 2026 and ZAR 4 billion by June 2029, driven by alliance banking, Lesaka consumer deposits and organic retail growth.

Lesaka plans to transfer its Consumer lending book to Bank Zero first, followed by Merchant, with both targeted for completion by the end of Q4 FY2027. If completed as planned, management estimates gross debt could decline from ZAR 3.8 billion to approximately ZAR 2.3 billion and leverage could fall below 1x by June 2027.

Risks and Watch Items

• Merchant take-rate compression continues to offset transaction-volume growth, particularly in ADP, cash and acquiring.
• Merchant restructuring costs may extend into early Q2 FY2027, although management does not expect them to persist beyond that period.
• The Bank Zero transaction remains conditional on outstanding regulatory approvals, and the timing of lending-book migration is execution-dependent.
• FY2027 investment will raise group costs and capital expenditure before management expects additional operating leverage.
• Consumer loan-book growth will be funded from free cash flow until Bank Zero’s funding model is implemented.
• Bank Zero’s final capital requirements remain subject to regulatory guidance.

Analyst Q&A Highlights

Management acknowledged that Merchant’s FY2026 performance was weaker than expected, citing integration demands, ADP margin pressure and timing. It expects merchant-count acceleration to become visible in Q2 FY2027 after implementation of the revised strategy began in September.

For Merchant, management identified active merchant numbers, ARPU, transaction volumes, take rates and the number of products used per customer as the main indicators investors should monitor. Customer acquisition remains primarily direct, supplemented by third-party agents and strategic partnerships.

Management said Consumer margins should trend above the approximately 35% level previously communicated as customer numbers, lending and insurance scale, although quarterly margins will remain seasonal.

The company also said it is evaluating two or three potentially transformative acquisitions, alongside smaller bolt-on transactions focused on the Southern African Development Community region. Management stressed that acquisitions would need to be accretive.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Welcome to Lesaka Technologies results webcast for the fourth quarter and full year of fiscal 2026. [Operator Instructions] Our press release and investor presentation are available on our Investor Relations website at ir.Lesakatech.com.

During this call, we will be making forward-looking statements, and I ask you to look at the cautionary language contained in our press release, presentation and Form 10-K available on our website.

As a domestic filer in the United States, we report results in U.S. dollars under U.S. GAAP. However, it is important to note that our operational currency is South African rand and as such, we analyze our performance in South African rand, which is non-GAAP. This assist investors in understanding the underlying trends in our business.

I will now turn the webcast over to Ali.

Ali Zaynalabidin Mazanderani

Good morning, good afternoon, and thank you for joining us for Lesaka's results for the fourth quarter and full year of fiscal 2026. FY '26 was another excellent year for Lesaka, delivering on all our guidance measures, which we will come to shortly. But before reviewing the year, I want to briefly reflect on Lesaka's evolution.

Lesaka was launched in May 2022 following the merger with the Connect Group. We had set out on a journey through organic and inorganic growth to build the leading independent fintech platform in Southern Africa. As I sit here today, I'm extremely proud to reflect on what we have built, the platform, the people and the performance, challenges set and challenges met, fostering a culture of accomplishment and belief, a team whose depth, breadth, diversity, resilience and ability are fitting representatives of the extraordinary country in which they live.

Yet, until a few months ago, that team was spread across a disparate office network, operating under multiple brands, the name Lesaka was barely heard or known by our most important stakeholders, our customers. While the financial milestones we will turn to later are significant achievements, one of the biggest reasons for celebration this year is in the coming together of one Lesaka. The coming together in our wonderful new Johannesburg office in July 2026, which will be followed in the coming couple of months with our new offices in Cape Town and Durban creates the environment to foster the cross-pollination between teams that will be 1 of our core competitive advantages. We are Lesaka. We are a [indiscernible]. It is very difficult to be so when not together.

This change from where we work has been accompanied by the change in the brand unveiled in Q2 FY '26, and a month ago, the public launch of that brand. Today, I'm delighted to say that our customers now say our name, and I'm delighted that they are embracing our brand as enthusiastically as our circa 4,000 employees. It is difficult to convey the palpable energy and enthusiasm that has come with the brand launch. The Street parades, the music, the crystallization of an identity, this is a new commitment we make, a commitment to show up where our customers are, whether they be mothers or pensioners, spare shop owners or companies, whether they be in the city centers of the high [indiscernible] or the rural villages of the interior, the mountains of the Drakensberg or by the beaches and valleys of the Cape, where you are, we are, a pledge to be present with empathy, with commitment, to serve with dignity, with humility and with authenticity. Those are the silent subtle terms now ringing loudly across our country with a voice that is gathering momentum every week defining Lesaka where you are. And so to where we are as of June 2026.

For the year, net revenue grew 20% to ZAR 6.33 billion. Group adjusted EBITDA grew 41% to ZAR 1.27 billion, and adjusted earnings per share grew 210% to ZAR 6.51. It's a performance that reflects delivery on our promises.

On the right of the guidance measures we gave for FY '26, across net revenue, group adjusted EBITDA, adjusted EPS and positive GAAP net income, I'm pleased to say we delivered across all 4 measures, including turning GAAP net income positive for the full year for the first time since 2022. In addition, our net debt to group adjusted EBITDA fell to 1.9x, below the 2x we have set as our goal.

Underneath the group numbers, our 3 divisions had different years, reflecting their different stages of evolution. And I want to spend a few minutes on the revenue drivers of each. Merchant had a challenging year, as various businesses were brought together. It grew net revenue by 3% to ZAR 3.1 billion and core net revenue, which strips out hardware sales and residual products by 6% to ZAR 2.8 billion. Significantly, no single 1 of the 5 products that constitute the core of the business dominates contribution. Over the course of FY 2026, acquiring grew by 21% and to ZAR 77 million, and software grew by 34% to ZAR 391 million, while ADP, cash and lending each declined by single-digit percentages.

At the primary level of revenue drivers, we grew our average active merchant base by 12% to 132,000 while our weighted average ARPU declined by 5%.

Across our 3 largest products, we saw volume growth. Acquiring TPV grew 27% to ZAR 44 billion. ADP TPV grew 31% to ZAR 55 billion and cash TPV grew 4% to ZAR 119 billion. Merchants are transacting more with us. But on individual products, there has been a decline in take rate. ADP take rate declined 25%, mainly due to the reset and commissions for Airtime set by the mobile networks over the year. We also experienced a mix effect were our fastest-growing volumes are in lower-margin supply payments. A combination of mix effects and competitive pressure also led to the cash and acquiring take rate decline. In lending, where we feel we have a great opportunity, we under-indexed on our expectations during the year with a 3% decline in core net revenue.

The demand from our merchants is there, and they are overwhelmingly underserved, but we are still evolving the offering, which will allow us to scale the product with the appropriate capability, risk appetite and controls.

Consumer has had an outstanding year. Net revenue grew by 38% to ZAR 2.4 billion, with all 3 products growing well. Transactional accounts grew by 24% to ZAR 855 million on strong customer acquisition. Lending grew 49% and insurance grew 42%, both driven by cross-selling into our account base.

Our blended transactional fees rose by just 3%, so growth came primarily from customer acquisition, not pricing. In a largely flat market with many competitors, we grew our customer base by 19% more than any competitor. This demonstrates the best-in-class proposition, build to serve customers with technology and humanity where they are.

Enterprise had a strong year as well, growing net revenue to ZAR 913 million, with core net revenue growing 45%. Pleasingly, the growth was across both volumes and take rates for both the 2 main products, ADP and utilities.

A year ago, we told you FY '25 was a year of build for enterprise and that it will become a meaningful contributor in FY '26, it has done exactly that. We now have 3 meaningful divisions in which to build our future, combining into a unique South African fintech platform. Dan will now take you through the broader financial performance, focusing on the quarter.

Daniel Smith

Thank you, Ali. Good morning and good afternoon to everyone joining us today. Ali has described the platform we have built and the performance drivers of each division. I will explain what that progress means financially before taking you through the fourth quarter results.

FY '26 was a year of financial inflection for Lesaka. We delivered group adjusted EBITDA within our latest guidance, exceeded the top end of our adjusted earnings per share range and achieved positive full year GAAP profitability of approximately ZAR 40 million. We are clearly seeing the improvement in our financial performance translate into stronger cash generation, with net cash from operating activities at ZAR 864 million for the year.

After capital expenditure of ZAR 421 million, this leaves ZAR 443 million of positive cash generation. This is a significant improvement over the prior year and reflects the growing cash generating capacity of our business.

Our balance sheet has also strengthened. As a reminder, our medium-term leverage target has been 2x or lower. We closed the year at 1.9x compared with 2.9x a year ago and reduced gross debt by approximately ZAR 200 million. We have achieved this ahead of the Bank Vera acquisition.

Pleasingly, we have seen a significant reduction in our nonoperational and one-off charges. As shown on the slide, nonoperational charges reduced from approximately ZAR 1.7 billion to ZAR 35 million. During the course of FY '26, we made good progress in exiting our remaining noncore investments and businesses, the overall financial impact of which was quite limited compared to the previous year. In addition, one-off charges reduced from ZAR 322 million to ZAR 91 million. Taken together, these milestones reflect improved cash generation and quality of earnings as we continue to scale our platform. A significant amount of the noise and complexity has been eliminated in our numbers going forward.

Turning to the fourth quarter's performance. Net revenue increased 8% to ZAR 1.62 billion, with group adjusted EBITDA increasing 22% to ZAR 367 million, demonstrating increased operating leverage. Our adjusted earnings, which we regard as a key measure of our underlying performance, increased to ZAR 199 million.

On a per share basis, adjusted earnings increased from ZAR 0.90 to ZAR 2.40.

Our leverage ratio closed at 1.9x.

Our Consumer division delivered another strong quarter with net revenue increasing 31% to ZAR 669 million. This reflects growth in our active customer base and the continued success of our cross-sell initiatives. Enterprise net revenue increased 34% to ZAR 255 million, reflecting the contribution from recharger and growth across ADP and utilities. We are pleased to see the division making a growing contribution as its platform scale.

Merchant net revenue declined 10% to ZAR 729 million. As Ali outlined, the division faces pressure on revenue compression despite growth in transaction volumes. It is a key area of focus for us. Lincoln will take you through the operational drivers.

At a group level, adjusted EBITDA of ZAR 367 million was an all-time quarterly high for Lesaka, representing growth of 22%. Our margin increased to nearly 23% compared with 20% a year ago.

Consumer segment adjusted EBITDA increased 56% to ZAR 253 million, while Enterprise delivered ZAR 54 million, an increase of [ 155% ]. These are positive contributions and reflect the growing scale of both divisions.

Merchant segment adjusted EBITDA declined 33% to ZAR 122 million. This reflects the soft operational performance and the ongoing integration and rationalization of the division.

Group costs were ZAR 63 million for the quarter and ZAR 238 million for the year. The quarterly figure is broadly in line with the run rate discussed at our third quarter results.

Looking ahead, as we're prepared to bring Bank Zero into our platform and further scale operations, we expect a reset in our annual group cost run rate to approximately ZAR 350 million in FY '27. This increase represents an investment in group enabling functions, including data and information systems, people and risk and compliance capabilities.

We remain focused on ensuring that it supports growth and improves efficiencies across the business and expect the spend to stabilize at this level in the medium term with positive operating leverage emerging.

Turning to cash flow and our balance sheet. Cash generated from business operations was ZAR 384 million for the quarter compared with ZAR 379 million a year ago. As a reminder, these measures before working capital movements, loan book funding, bulk NPV purchases, tax and interest. After these movements, net cash generated from operating activities was ZAR 179 million compared to cash utilization of ZAR 113 million a year ago.

For the full year, net operating cash flow was ZAR 864 million. Working capital releases contributed to this result. We also continue to reinvest cash in growing our lending books with the funding requirements vary through the year, particularly on the December festive season.

Our earnings growth and cash generation have supported the reduction in our net debt to group adjusted EBITDA ratio to 1.9x. This reflects both higher EBITDA and a reduction in gross debt from approximately ZAR 4 billion to ZAR 3.8 billion.

We have also experienced the benefit of reduced leverage with a decrease in effective borrowing rates from our lenders.

As mentioned earlier, we have achieved our leverage target before the acquisition of Bank Zero. Subject to completion and the planned migration of lending book funding, we anticipate further benefits to our funding costs and external debt requirements.

Steve will unpack the timing and assumptions in more detail. Capital expenditure was ZAR 171 million in the fourth quarter, above our recent run rate, taking our full year spend to ZAR 421 million. This is above the ZAR 400 million annual guidance previously communicated and partially due to timing of operational investments and fit-out costs relating to our one Lesaka office consolidation program.

In the fourth quarter, approximately 42% or ZAR 72 million relates to point-of-sale devices and cash vaults, supporting the growth of our merchant base. A further 30% related to nonoperational CapEx for the fit-out of our new offices.

Looking ahead to FY '27, we expect total operational CapEx to be around ZAR 450 million, as we invest in the growth of our business, particularly Merchant. We also expect nonrecurring leasehold improvement CapEx of approximately ZAR 100 million as we consolidate our offices in Cape Town and Durban. We remain focused on capital discipline and the returns on investments.

In recent quarters, the benefits of the platform we are holding have become increasingly evident. Our group adjusted EBITDA margin increased to 22.6% this quarter compared with 20.1% a year ago, reflecting improved operational leverage at a group level. On the last 12 months basis, CapEx as a percentage of group adjusted EBITDA reduced from 42% to 33%.

Given the investment plan for FY '27, the near-term ratio will be elevated by trend down to below 30% in the medium term.

Combined with an improved quality of earnings, these trends highlight the strengthening financial fundamentals of Lesaka. We remain focused on improving merchant performance and generating improved returns as we continue to evolve and scale our platform.

Thank you. I will now hand over to Lincoln to take you through our divisional performance.

Lincoln Mali

Thank you, Dan. Good morning and good afternoon. Four years ago, we set out to build a single platform that could serve a merchant of any size from [indiscernible] shop through a national franchise. Financial year 2026 has been a year of building that machine rather than running it.

Turning to our quarterly results. Our active merchants grew 3% to 132,000. Within that, community merchants grew 6% to 107,000 and corporate merchants declined 7% to 25,000. On our community channel, we are seeing positive traction in market product banking. As we digitize cash, merchants are enabled to transact digitally through our complementary ADP and acquiring products.

The corporate channel has been more challenging. Attrition in the base is a combination of expected patterns and market dynamics. Firstly, we exited the ATM business in the second half of financial year 2026, and we've been sunsetting legacy noncore acquiring products, representing the decline we expected. And what matters is the evolving mix of merchants we can build a full relationship with as we are demonstrating within community.

Within corporate, we are deliberately focusing on integrated acquiring with software rather than stand-alone. Blended metric ARPU declined 8% to ZAR [ 1,700 ], largely a mixed effect of gaining more community than corporate measures. Corporate stand-alone ARPU was flat at just under ZAR 6,000, confirming the merchants will reduce with noncore. Community stand-alone ARPU came down 8% from ZAR 824 to ZAR 755 due to declining take rates in ADP.

Community merchants represent more than 80% of our active base and are growing the fastest. A stable corporate ARPU, coupled with the software community ARPU produces a downward branded figure, and that will remain true for as long as community growth faster than corporate.

On product penetration, merchants using 3 or more products came down from around 10% to around 7%. That is [indiscernible] as communities where the base is growing and the new merchants often come on in a single product. We're also taken community lending criteria during the year.

Acquiring TPV grew 6% to ZAR 10.6 billion in the quarter, with active acquiring merchants up from 70,300 to 73,700. That growth came from community. In corporate, our large merchants have generally stayed with us.

[indiscernible] grew 5% to ZAR 29.8 billion across 4,900 vaults. Corporate cash continues its structural decline, down around 2%, while community cash grew by roughly ZAR 3 billion. That aligns with the expectations. Formal economic case acceptance is declining, while accounting on raw cash is not.

Cash taken into our vaults flow into ADP. ADP TPV grew 34% to ZAR 14.6 billion. Prepaid solutions grew 6% to ZAR 5.7 billion in return to growth. And supplier-enabled payments grew 62% from ZAR 5.5 billion to ZAR 8.9 billion. Supplier payment tied merchants into our ecosystem by taking cash handling risk out of their business and creating cross-sell opportunities. We have more than doubled that network in 2 years, and [indiscernible] adding on suppliers.

We are pursuing various monetization strategies given the increasing TPB, particularly within ADP.

Merchant lending originations improved sequentially throughout the year, with the fourth quarter up 20% to ZAR 249 million and the book closing 15% higher at ZAR 463 million. This has been supported by disciplined lending back into merchants we already know and whose transaction data we can see.

Software sites were flat for the year. The development that matters is Unity. Our cloud-native hospitality platform that enables acquiring at scale and essential to our long-term merchant strategy. 16% of our software base has now migrated to Unity, up from 10% a year ago. And our nearer-term opportunity lies within the sites we already manage.

On the left is our base, split by how many products each merchant uses. Merchants using a single product grew from 69,000 to 71,000, 2 products grew from 46,000 to 52,000, 3 or more products fell from 12,000 to 9,000 for the reason I gave. On the right is what wear is worth. In corporate, a second product leaves ARPU by nearly 60%. In community, it serves doubles it.

The economics of layering is not [indiscernible]. It is visible in our base today. More than 5,000 [indiscernible] merchants took a second product from us this year. As we focus on integrating the business within merchant, our expectation is to drive that market product growth.

I will now move to Consumer. Financial year 2026 has been another record year for Consumer across every metric we track. Active consumers grew 11% to 2.1 million. Our share of the ground beneficiary market rose from 13.6% to 14.9% and from 10.8% 2 years ago. I want to put that in context because in this [indiscernible], the numbers understate what our teams achieved.

In the 6 months to June, the grand beneficiary market contracted as SASSA reviewed the [indiscernible] and removed recipients who no longer qualify. We grew our base in the shrinking market, and we added more customers in absolute terms than anyone else in this segment. That is the clearest evidence of the strength of our proposition and distribution.

On economics, Consumer ARPU grew 15% to ZAR 98 per month from ZAR 85 last year and ZAR 762 years ago, a compounding effect of cross-sell. Our product penetration continued to improve. 51% of active consumers now hold 2 or more products. The first time we've been above half of our base, and [indiscernible] hold all 3, up from 16% last year and 14% 2 years ago.

We are showing the composition of consumer ARPU for the first time and intend to show it annually. Our transactional account products has remained relatively stable over the last 2 years in ARPU contribution while lending and insurance creating the ramp. We have been routinely talent on where the competition will erode our core transactional relationship. The evidence is that it has not. It has held while our base grew by more than 0.5 million, and that stability is the foundation of Lesaka.

Effectively, all our ARPU expansion has come from lending and increasingly insurance layered on to a transactional relationships [indiscernible]. On the right is the core reason that strategy works, our debt competition. We have grown our brand footprint with an emphasis of world communities where our customers live and our competitors [indiscernible]. Our model is a deleverage hybrid. We acquire customers face-to-face through people who live in the communities that they serve and transact with them digitally. The 2 are in the time.

Our lending business had another very strong year. Fourth quarter originations were ZAR 937 million, up 20% year-on-year with the outstanding portfolio growing 40% to ZAR 1.4 billion. The product mix shows how the book is evolving. Our 9-month product introduced in financial year 2025 now accounts for 63% of our portfolio. Our shorter 6-month product represents 35% of the portfolio with the balance attributed to [indiscernible] and 3 months.

The quality of the book remains strong. We only learn to consumers who are active Lesaka customers with most originations going to repeat [indiscernible]. We are growing by driving relationships with consumers we understand well, not by taking an unfamiliar risk. We have recently introduced a ZAR 5,000 range loan on the same 9 month term priced for the slightly higher risk of a larger advance, a direct response to customer demand.

Insurance continues to scale well. Gross written premiums grew 36% to ZAR 155 million for the quarter, and the in-force policies grew 34% to 753,000. Our collection ratio moved from 96% to 94%. As flagged in recent quarters, we expect this to moderate towards 90% over time as the book broadened beyond customers who onboard and account opening. This year's movement also reflects the SASSA registered [indiscernible]. Policyholders whose grants are terminated, often do not pay the next premium. At 94%, this remains an exceptionally high collection rate for this end of the market.

Financial year 2026 has been a phenomenal year for consumer.

I will now move to Enterprise. ADP TPV grew 18% to ZAR 12.2 billion for the quarter, with bill payment up 12% to ZAR 9.3 billion. We now settled on behalf of consumers and businesses with more than 650 [indiscernible], including municipalities, telcos and retailers. For bill payments, we earn a fixed [indiscernible]. For prepaid, we earn a commission on [indiscernible]. We have not raised prices. What has changed is the mix as prepaid growth partner and a larger share of revenues earned at [indiscernible].

Our [indiscernible] relationship spend banking, retail, fintech and telco, whose end consumers access ADP through the enterprise to 1 seamless integration.

Utility TPV grew 16% to ZAR 502 million for the quarter, and our active Lesaka base grew 11% to 382,000 meters. This is a different model from ADP, lower volume, higher margins, largely annuity based. We sell [indiscernible] once through retailers such as [indiscernible], and they earn on every retire for longer that [indiscernible] is used. TPV growth reflects both organic volume and the pass-through of electricity price increases. As Ali said, this was a year where the Enterprise division began to make a significant financial and operating impact on the group.

That concludes the operational review. I will now hand over to Steve.

Steven Heilbron

Thank you, Lincoln. I'd like to spend the next few minutes providing an update on our acquisition of Bank Zero, which we announced late June 2025. To date, we have said very little while the regulatory process has been running. This is a key strategic milestone for us. And today, we will provide some clarity as to why and what this acquisition does for the Lesaka Group. Lesaka is a fintech, and we intend to remain true to this domain. We acquired Bank Zero because the banking license is a key enabler to our fintech strategy and our core activities.

There are things we want to do for our merchants and consumers that we can do much better with a licensed bank in the group. It should also be said that this was a natural fit in that we have an alignment on vision and ambition and have a tremendous amount of respect what your team, Michael and the team have built. There is a strong international president for fintechs going down this path. Acquiring a bank takes time, substantial capital and requires a high regulatory watermark. That difficulty is exactly what makes it valuable. And after completion, we will be on the right side of that equation.

As the owner of a licensed bank, we have a seat at the industry table. We become a member of all key payment streams and have our own clearing capability. This gives us representation in our own right, less reliance on sponsors and more freedom to execute our strategy.

This slide sets out the current status of the transaction. We announced the transaction in June 2025 when Bank Zero held a deposit base of approximately ZAR 400 million. We received unconditional approval from the Competition Tribunal in November 2025. And in April 2026, Bank Zero onboarded its first alliance banking partner, Paymentology. The 2 conditions that remain outstanding before this transaction becomes unconditional, our approval from the prudential authority and exchange control. We anticipate, given the good progress and feedback received to date that the transaction will close before the end of the calendar year.

An observation to be made on timing, we signed in June 2025, and as you will appreciate, a change in control of the South African bank routinely takes up to 18 months or longer.

This slide points to the progress made by Bank Zero during the interim period. At the time, the SPA was signed in June 2025, Bank Zero was in a loss-making position of just over ZAR 3 million per month with just under ZAR 400 million of deposits and around 40,000 customers. It was an extremely well engineered neobank, but lacked scale. Since then, it has built its alliance banking unit, deposits have passed ZAR 700 million by April and we expect a deposit base in excess of ZAR 1 billion by December 2026.

We told the market at the time of announcing the deal that we expected the bank to be at or near breakeven by completion. On our current forecast, Bank Zero is budgeted to achieve breakeven on a stand-alone basis by December 2026, before any contribution from Lesaka.

This slide sets up the compelling rationale of acquiring Bank Zero and highlights 4 primary benefits for Lesaka. The first is product. We will be able to offer a more complete set of banking services to the consumers and merchants that we already serve and move into select product arenas, expanding our customer offering, an example of which is foreign exchange and cross-border payments.

Bank Zero is a key enabler. It enhances our product offering, makes us more complete and earns a larger share of our customer wallet.

The second is the deposit-taking license itself. Our consumer float does not sit on our balance sheet today. Bank Zero will enable this and allow us to earn interest on deposits and fund our lending activities.

The third is infrastructure and what Bank Zero does in reducing our cost to serve. We depend on third parties for parts of our proposition today. The dependency of that kind carries a cost and their strategic exposure. Owning a modern and well-engineered banking platform reduces both our strategic and economic leakage. The economic leakage is what we pay others to do that which we can do ourselves. Strategic leakage results from being in a position we think that matter most to our customers are run by competitors and also [indiscernible].

The fourth is funding, and it is the one with the most significant financial benefit attached to it. Our lending books today are funded with bank debt. Once these books sit inside the bank, they can be funded with customer deposits. This materially reduces our cost of funding and group leverage. We will show you the effect of this shortly.

The banking license also widens what we are able to do in each of our 3 divisions. In Consumer, we are positioned today around the roughly 12 million South Africans who receive a social grant. Owning a bank gives us the ability to serve a materially broader market including the further 14 million or so South Africans who earn a taxable income from which we will choose the segments where we believe we can compete.

In Merchant, the bank allows us to add business banking, business savings and remittances alongside the payments, software and lending that we already provide. It enables us to give a merchant more reason to consolidate their financial activities on our platform, which is at the heart of our merchant strategy.

And in Enterprise, the bank opened a vertical that was previously closed to us, alliance banking, which provides account hosting, card programs and compliance support to fintechs, marketplaces and retailers. This is a business we could not have entered without a banking license, and it is where Bank Zero has grown substantially over the past year.

It is important to address the expected deposit base evolution. There are 3 sources. The first is the initiation of alliance banking. Following the onboarding of Paymentology as the first alliance banking partner in April, we have seen a material increase in deposits. The second is our consumer accounts. We anticipate these deposits migrating in Q1 FY '28. The third is organic growth of Bank Zero's deposits into the South African retail market. Combined, and subject to completion, we expect a deposit base in excess of ZAR 1 billion by December 2026, growing to above ZAR 4 billion by June 2029, representing a compound growth rate of roughly 60%.

At 30 June 2026, our gross debt stood at ZAR 3.8 billion, and our net debt to group adjusted EBITDA was 1.9x. Close to half of that debt is not funding the operating business, it is funding our lending books. Once Bank Zero is part of Lesaka, we will migrate these books into the bank and fund them with customer deposits. We are targeting the transfer of the Consumer book first, followed by the Merchant book, with both being transferred to the bank by the end of the fourth quarter financial year ended 2027.

On the assumption that this is achieved, gross debt falls to approximately ZAR 2.3 billion, and we estimate our leverage ratio to be less than 1x by the year ended June 2027. This does 2 critical things. One, it significantly reduces the interest cost to the group; and two, it provides us with greater flexibility with respect to capital allocation. We can reduce bank debt, buy back shares or pursue acquisitions that enhance our growth prospects. We will make these choices on the merits at the time.

Assuming our choice were to be debt reduction, given our forecasted free cash flow generation, we would anticipate close to 0 gross debt by our financial year ended June 2028. Dan spoke earlier about reaching our medium-term leverage target of 2x during this year. This slide shows the balance sheet story travels well. I will hand back to Ali, who will take you through our guidance and medium-term ambitions.

Thank you.

Ali Zaynalabidin Mazanderani

Thank you, Steve. Turning to guidance. For the first quarter of FY '27, we are guiding to net revenue of ZAR 1.58 billion to ZAR 1.66 billion. Group adjusted EBITDA of ZAR 200 million to ZAR 240 million, and adjusted EPS of ZAR 0.40 to ZAR 0.60.

Q1 reflects both seasonality and expected one-off and restructuring costs in the Merchant business. For the full year FY '27, we are guiding to net revenue of ZAR 7 billion to ZAR 7.7 billion, group adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion and adjusted EPS of ZAR 7.50 to ZAR 8.50.

This is inclusive of Bank Zero, which, as Steve said, we expect to complete by December of this year. We do not expect this to have a meaningful impact on net revenue and group adjusted EBITDA in FY '27 as the company is close to breakeven, and most of the synergy benefits are expected to accrue during FY '28.

Partly as a consequence of this, we expect our net revenue, group adjusted EBITDA and adjusted EPS to accelerate their growth in FY '28 relative to FY '27. This is represented in our medium-term ambition, where we are looking 3 years ahead. These are management's operational and financial ambitions to FY '29 inclusive of Bank Zero, but excluding any future unannounced acquisitions.

We regard them as a floor, the level we are setting ourselves to deliver better than. They're ambitions rather than guidance. They can, of course, change the business and the environment evolve, but they represent the direction and the shape we are building towards and we believe is achievable.

Operationally, by June 2029, in Consumer, we intend to reach 3 million active consumers with a meaningful contribution from non-grant recipients. In Merchant, 200,000 active merchants, with growth driven by the community segment, both in South Africa and neighboring countries. And in Enterprise, a total TPV of ZAR 80 billion.

We expect the ARPU in Consumer to marginally increase and Merchant to decline slightly due to the mix effect of community growing faster than corporate and having a lower ARPU, but for the ARPU of each segment to be maintained through product cross-sell.

In Enterprise, we are expecting a modest increase in take rate, again, largely reflective of product mix.

The consequence of achieving this would be net revenue growth of more than 20% CAGR to circa ZAR 11 billion for the year ending June 2029.

As we continue to experience operational leverage, we expect to have a group adjusted EBITDA CAGR of more than 30%, resulting in a group adjusted EBITDA margin of more than 25%. This should translate into an adjusted EPS CAGR of more than 40%, resulting in adjusted EPS of greater than ZAR 18. At current exchange rates, this implies more than $1 in adjusted EPS for the year ending June 2029.

We are grateful from where we have come and excited about where we are going. Thank you for your time, and we will now take questions.

Unknown Executive

Thank you. Operator, can you open the questions to the first person on the line?

Operator

The first question we have from Ross Krige of Investec.

Question-and-Answer Session

Ross Krige

I have quite a few questions. I'm going to break it up so I can get other people a chance. Just first the question was on [indiscernible]. So the first 2 parts would be, firstly, on the Q4 performance. So relative to your expectations in May, it looks like a bit worse than you expected. So just wondering what deteriorated beyond that expectation?

And then in Q1, the restructuring that you referred to Merchant for Q1, just wondering what specifically will this entail? And how confident are you that this won't continue beyond Q1.

Ali Zaynalabidin Mazanderani

Okay. Thanks, Ross. So the line was a bit weak, but just to repeat what I understood you were talking about the Q4 performance of Merchant and how that linked to our expectations? And the second one was around the restructuring in Q1 of next year and how confident we are that is a once off. So I'd say that -- a few things. I mean the first thing around the Q4 performance, and it's not just the Q4 performance, I think it's across FY '26.

As we said in the presentation, it is weaker than we had expected. The process of putting the businesses together requires quite a lot of energy and effort and focus, but I think we're making good headway against that. And I think that the issues are more issues of timing relative to anything else. There was some softness as a consequence of the margins, especially in the ADP business, which we also alluded to in the presentation.

The Q1 evolution is not really though an evolution that's underpinned by a change in the core net revenue. It is a cost issue. Whether that cost issue will have consequences into the beginning part of Q2 or not, I can't be sure. But what I would say is that we certainly don't expect it to go beyond that. And our guidance for the year reflects that as well.

Ross Krige

That's really helpful. If I can just follow-up with - just a follow up on that, and that's helpful. Just in terms of the -- I guess, the 1 with the Lesaka rebranding and some of the sort of timing issues that you referred to. I mean if I look at the operational ambitions to FY '29 again in merchant, clearly, a very strong acceleration in run rates of active merchant growth relative to circa 3% in Q4 year-on-year. Just wondering, so at what point would you expect that acceleration is ready to take hold?

Ali Zaynalabidin Mazanderani

I think that acceleration candidly is already beginning. I think that when you are looking at the Q2 numbers of next year, you will see that acceleration within our merchant count. So obviously, Q1 is July, August and September, and it's really over the course of September that we've started to implement that strategy.

Operator

We have a question from James Labatt from Standard Bank Securities. We have a couple of questions. The first, congratulations on a great quarter and year. Appreciating that you can't give too much detail around Bank Zero, are you able to give an indication of how you intend to grow Bank Zero's deposit base, excluding the EasyPay deposits?

Ali Zaynalabidin Mazanderani

Steven?

Steven Heilbron

Sure. As we pointed out in the presentation, we -- there are 3 sources of deposits within Bank. The first is the alliance banking -- the Alliance banking source. The second is our own consumer deposits. And the third is an organic retail treasury strategy, which we will embrace within the bank. As we pointed out, we expect that deposit base to be in excess of ZAR 1 billion by December '26. When we first signed the SPA, we had ZAR 400 million or just under ZAR 400 million of deposits and significant progress has been made in that regard.

We -- in April of this year, we were already at ZAR 700 and you can see that we're forecasting to June 29, ZAR 4 billion. And as I said, 3 pools, the alliance banking, which is scaling substantially, the organic strategy within Bank Zero and we will be moving our consumer business, the sponsorship will be moving from the African bank to Bank Zero over time, and all of those customer deposits will sit on our own balance sheet.

So I think we'll actually surprise on the upside in relation to the deposit base. And we've seen very good evolution to date.

Operator

Great. One more follow-on from James as well from Standard Bank, probably related to you, Steve. Given that the group currently has numerous fintech verticals in the table, is there the intention to continue with M&A? And if so, which areas do you think you currently are lacking, and therefore, seek to acquire in the space?

Steven Heilbron

So thanks, James. Yes, there is an intention to carry on. I think we have our eye on 2 or 3 specific transactions, which could be quite transformative for us. I'm not at liberty to disclose what those would be. But I think I would want to point out that we are committed to doing acquisitions that are accretive. And I guess we would argue that we are substantially undervalued at this point. If you look at the presentation, so dilution is not something that we're prepared to do on a nonaccretive basis. But if you look at the presentation that we put forward, you will see that by June, December -- sorry, by June '27, our leverage ratio comes down under 1. and so we will have, again, an ability to use debt substantially. And given that we expect our share price to rerate, we think we'll be in a position to focus on some of these transformative opportunities.

Separately to that, as we speak today, we are doing smaller bolt-on transactions with a key focus on the SADC region in some of the jurisdictions outside of South Africa, where we are adding -- we are deepening our customer sets and augmenting our products, and those transactions will be announced in due course.

Unknown Executive

Thank you, Steve. Operator, could we open the line to the next person in queue.

Operator

We have a question from Theodore O'Neill of Litchfield Hills Research.

Theodore O'Neill

Question for Lincoln, discussing the merchant business. I just want to clarify exiting the ATM business had some marginal negative impact on the merchant business. Is that what you were saying?

Lincoln Mali

This is a business that we've highlighted before that it was not part of the core strategy going forward. So we made the decision to exit that business. And so there was a small impact in our number that relates to that. And those costs are not costs that will occur in the future. So we've been able to exit that business responsibly.

Theodore O'Neill

Yes. And do you expect there will be some rebound after the acquisition is completed of the bank?

Lincoln Mali

I think Ali has alluded to the transformation and changes that need to take place in the merchant business and that we want to see that growth coming through in the second half of the financial year. It's not really linked to the Bank Zero acquisition, but there are benefits when the Bank Zero acquisition comes through. So there are prospects that are good on a stand-alone basis of the merchant business because of the actions that we're going to take. But then there's an added layer that comes from what Steve has outlined about the benefits of Bank Zero for all the different divisions of the group.

Theodore O'Neill

Okay. And my last question, following up on the bank acquisition is, is it too early to say how you expect to promote the new business to your existing customers and the rest of the -- new customers? And will it result in any kind of meaningfully higher OpEx in 2027?

Steven Heilbron

So I think the -- we spoke about in the presentation the fact that we will have a strong foray into the alliance banking space, which we think is -- from a societal perspective, is pivotal to financial inclusion, which is part of our core strategy. Separately to that, the bank is a key enabler. It's going to enable us to do a lot more for our merchants in the form of business banking, business savings, ForEx, and we will broaden that product arena to satisfy the needs of our merchants. And the important thing is that this allows our merchants to consolidate their financial activities onto our platform and gives us a much bigger share of wallet.

Likewise, from a consumer perspective, this -- owning a banking business broadens the opportunity within the consumer space. And we spoke about the fact that we will step outside of the grant niche, and we will choose areas where we can compete in both technology and product. And then in our Enterprise business, which is really under which the alliance banking business fits, this gives us an opportunity to substantially develop that business.

I think the market was looking for a new entrant, and we are very happy with the progress that has been made to date.

So on a broader -- at a broader level, I think what the bank does is it allows us to do from an economic perspective, it creates a lot of value. And from a strategic perspective, it enables our offering to broaden across all the segments that we play in.

Operator

The next question we have is from Reno Kumar of Oppenheimer & Co.

Unknown Analyst

This is Guru on for [indiscernible]. Just more broadly, given incumbent banks larger size and scale like with Capitec entering into the merchant market and with some localized fintechs starting to gain some momentum. Just curious as to how these dynamics play out for Lesaka? And what are some potential implications we should be thinking about in the [indiscernible]?

Ali Zaynalabidin Mazanderani

Thanks very much for the question. I mean I believe that we have 3 fundamental, I suppose, strategic benefits to the incumbents. And those are sort of centered around being technology, the capacity to build technology in the modern environment for a specific purpose rather than the legacy that a number of incumbents are constrained by. And I think that, that advantage, if anything, is more pointed today with the evolution of AI than it was 5 years ago. So we definitely see that technological opportunity. And I think that, that's partly reflected in our cost to serve. It's also reflected, obviously, in the fact that Bank Zero's relative cost to service is very low.

So we need to be the most efficient provider. The second structural opportunity we have is the disruption of distribution, and that's embedded in that where you are a tagline. An enormous proportion of our business is in frontline, in sales and support that go to our customers, that go to their villages, that go to their shops and serve them where they are rather than relying on them coming to a bank branch or a retail outlet that may cost the material amount and then to get to. And that is technology-enabled, but human distribution strategy. And we think that it is what separates us and creates a material competitive moat vis-a-vis others.

And you can see the consequences of that cleanly in the consumer business's performance. The third one I would say is that we can iterate our business on the basis of what the future should look like because we are not held captive by an existing profit pool based on legacy structures. It's very challenging when you have a big profit pool and you are not free to evolve solutions necessarily based on what's the best for the society or best for the customer because of the danger of cannibalization.

We are largely free from those challenges. So when we build solutions, we always build them with the efficiency at the forefront. We can candidly disrupt a banking market that we don't currently generate enormous profit from. I think that, that sort of -- that feature out of 3 things is common for all fintech insurgents, not just in South Africa, but really across the world. And it is why, over the long run, they tend to win against the traditional incumbents.

Unknown Executive

Thank you, operator. We'll take a couple of questions from the webcast. Two questions in a row from Jamie Friedman at Sesquena International Group. Thanks for the call. Within Merchant, what would you say are the KPIs investors should watch to measure the trajectory within this segment? And tidying along, can you talk more about the distribution within Merchant? Is it direct? Or do you utilize indirect channels in the region?

Ali Zaynalabidin Mazanderani

So good questions. Thank you. So I think the key things to watch are the 2 primary drivers that we are communicating on a quarterly basis of the number of merchants and the ARPU per merchant. Those are the drivers of what we are calling our core net revenue, and ultimately, I think they are obviously very relevant for the underlying health of the business. And on a second degree level, obviously, we're providing now annually the product drivers where the main components are the TPV and the take rate associated with our biggest products, which are acquiring ADP and cash.

The third thing, I think, which is obviously linked to the ARPU and the product rate is the number of products that our customers are engaging with. So our capacity to cross-sell within that segment. I think that's what I would primarily focus on as drivers for the sustainable health of the business.

In terms of the distribution model, it is today primarily direct. We do have a material sales and service operation. However, it's not exclusively so. We would engage with third-party agents and create strategic alignment as well, but the dominant acquisition channel is direct.

Unknown Executive

Thank you. We have a question again from James Labatt at Standard Bank Securities. How do you think about your debt picture? Of course, there are contractual obligations, but do you have the ability to retire these early from cash generation?

Ali Zaynalabidin Mazanderani

Lincoln, Dan?

Lincoln Mali

Yes, Thanks, James. We do have significant flexibility with our lenders. They have been long-standing supporters of our business and continue to be within that overall construct, they are an important enabler in us moving our lending books out of our existing business into Bank Zero.

Unknown Executive

Thank you. Operator, could we open the line for any questions that are still in queue?

Operator

We have a follow-up question from Ross Krige of Investec.

Ross Krige

So just moving to the other segments of the very strong performances in Consumer and Enterprise, just firstly on Consumer. I guess the intention is just to understand the sort of medium- to longer-term margin outlook, I can see on the -- on your ambitions that it looks like revenue CAGR is aimed to be at around 20% beyond '26 in Consumer. So I'm just wondering what sort of OpEx growth, and therefore, operating leverage might we see in that segment?

And then on Enterprise, yes, very strong sequential and year-on-year performance. And I guess we're substantially above the sort of level -- EBITDA level you talked to a few quarters ago. So just wondering, again, around sustainability of that. It sounds like from your commentary that momentum is still very positive. And it sounds like, if anything, there's opportunity for higher margins. Is that a fair conclusion?

Ali Zaynalabidin Mazanderani

So I'll take the Enterprise and then I'll let Lincoln and if, Dan, you want to add anything on the consumer side. So yes, Ross, I think people materially underestimating the growth potential of what we're building in the enterprise business. So I do expect that of our 3 segments that will be the fastest-growing segment over the course of this year, albeit for a lower base. And I do believe that, that growth rate is sustainable for a reasonable period of time at least. And there will be the opportunity for our margin increase associated with that. I think it's telling but across both of the core products, we were able to increase volumes while we were also able to increase take rates, which is, I think, representative of the product market fit there and representative, I guess, of the dynamic which we achieved in the consumer business.

For me, 2 years ago, the consumer business's evolution is clear. I think this is the year where the enterprise business is evolution is clear. And I'm hoping that the same is true for merchant over over the subsequent year.

On consumer and the margin evolution, I don't know if...

Daniel Smith

So we're -- for the last quarter, our consumer margin was ended up with being 58%. I'm a little bit elevated compared to previous quarters. We've consistently guided the market on average 35% there or thereabouts. We do see a significant operational leverage within the consumer business, particularly as we scale it with more customers and grow our lending and our insurance businesses. So I would expect in time, our consumer margin to trend upwards from the 35%. Do just note it won't be sequential quarter-on-quarter given obviously some of the seasonality in that business particularly our lending business, but we do see opportunity for margin growth in the medium term in our consumer business.

Ross Krige

If I may, I have 2 other questions if I can go ahead. Just on working capital. And just wondering, any guidance at all you can give on, I guess, general working capital and then the loan flows over time for FY '27 and whether there's anything to call out that should occur? How we should think about that evolving over the course of the year?

And then on Bank Zero, I understand you might not be in a position to talk about this yet, but I was wondering if you have any -- if you are able to comment on capital requirements at Bank at this point?

Ali Zaynalabidin Mazanderani

So I think Dan on the loan capital and maybe Steve on the Bank Zero.

Daniel Smith

Yes, Ross, is this way to think about overall cash generation is our EBITDA is largely cash and so it translates on a quarterly basis very much into cash. Our broader working capital and loan book growth is cyclical, and there's some real seasonality in there, particularly around quarter 2 and quarter 3. So I'd guide you towards looking at it on an annual basis rather than a specific quarterly basis because of that cyclicality.

Working capital guidance [indiscernible] can give is between 1% and 2% of net revenue on an annual basis. And growth in loan books, we do have an ambition set in our consumer side in the short term to continue to growing that book. It's really performing well. Our growth in -- over the last year and in the short term on our merchant lending book has been fairly constrained. That's been intentional. So over the course of the next 12 months, we would expect some significant growth coming through in our consumer lending book. Until we do Bank Zero, that will be funded through free cash flow. And obviously, then that only changes significantly our funding model once the Bank Zero transaction and funding model has been implemented.

Steven Heilbron

So Ross, as you mentioned, and I'm sure you can understand it's difficult for us to talk at this point. We are waiting still for the licensing panel and for the guidance from the regulator in relation to our capital adequacy ratios. What I will say that in all of our models, we've been probably excessively conservative. So in our forecast, we probably provided more capital than we believe is ultimately justified. And clearly, as we travel with the bank over time, we would be looking to justify a CAR ratio that over time diminishes right.

Ali Zaynalabidin Mazanderani

Thanks, Steve and Dan.

Unknown Executive

Thank you, everyone. That now concludes our webcast.