Ladies and gentlemen, welcome to the Dubai Islamic Bank first half, 2023 financial results earnings call. Please note all those who are listening to us via the webcast link to kindly refresh their browser link in case of experiencing any intermittent audio issues. As a reminder, please ask your questions by submitting them via email to webcast@dib.ae. I will now hand you over to host, Janany Vamadeva from Arqaam Capital. Miss, please go ahead. Thank you, Lauren. Good morning, everyone. Thank you for joining us today. This is Janany Vamadeva. On behalf of Arqaam Capital, I'm pleased to welcome you to Dubai Islamic Bank's Q2 2023 earnings conference call. I have with me here today from DIB management, Dr. Adnan Chilwan, the Group Chief Executive Officer, John Macedo, the Chief Financial Officer, and Kashif Moosa, the Head of Investor Relations and Strategic Communication. Without any further delay, I'll now turn the call over to the Head of Investor Relations, Kashif Moosa. Kashif, over to you. thanks, Janany, and welcome everyone to DIB's first half results webcast, 2023. The session is led by our Group Chief Executive Officer, Dr. Adnan Chilwan, accompanied by John Macedo, Chief Financial Officer, and myself. Request everyone to keep the questions coming through the email provided, which is webcast@dib.ae, and they will be addressed at the end of the presentation. With that, let's start. We move on to slide four. In the slide, you can see that the U.S Fed continued its rate hike trend during the first half of the year, raising rates by an aggregate of about 75 basis points. The aim obviously being to lower inflation. Even with the pause last month, the Fed chair sort of cautioned that while there has been some progress in bringing down inflation, it still remains elevated, and warned of potential upside risk to the rates given the tight labor market. The World Bank continues to have moderate forecast for global GDP growth for this year. Again, amidst the elevated inflation levels, and also a cut because of the cut in oil production by OPEC+, for the remaining half of this year. Closer to home and among the GCC region, the World Bank expects the UAE to lead with the highest GDP growth, with 2024 estimates at 3.4%, driven by a rebound and acceleration in public and private non-oil GDP. Overall, UAE banking sector continues to remain healthy, with the initial first half 2023 reporting season now being kicked off and showing some strong and improving balance sheets and profitability. Moving on to slide five. The economy of the UAE continues to exhibit strong current and future indicators steered by, you know, visionary strategies such as pre- reserving national identity, environment and sustainability, bilateral trade deals, expanding them, and development of the educational system. Further indicators of the UAE economy have shown strong positive growth as well. For example, FDI levels are up 10% year-on-year. Banking sector credit is up 3.5%, as of Q1 2023, and deposits also up 15% as of Q1 2023. The tourism numbers also are up, welcoming about 8.5 million visitors in the first half of 2023, compared to 8.3 million visitors in the first half of 2019, higher than pre-pandemic levels. The PMI levels also continue to show increasing levels of economic activity, driven by rising employment and of course, the growing population of Dubai. On the financial market front, the DFM performance was also positive, recording 14% year-to-date jump, as listed corporates continued to report sound financial and earnings. With that, I will now hand over to Dr. Adnan Chilwan, Group Chief Executive, to take you through the full year financial results. Dr. Adnan, please. Thank you, Kashif. Good afternoon, everyone. As always, I will do a page turn of the presentation, and then leave enough time to take your questions. My first slide is slide seven, titled Key Highlights for the first half of 2023. An overall robust set of results across the bank, this is around both profitability and balance sheet. Over the period, the bank's financial position has expanded, that expansion is underpinned by its solid franchise value, which is capitalizing on the growth of the economy. The UAE economy, as you can see, has expanded about 7% in 2022, and in the first half, I think, it's close to around 4%. That growth is amongst the highest in the world. In line with the operating environment, our core assets, mainly financing and Sukuk investments, were up by 5.3% on a year-to-date basis, exceeding our full year guidance. This is underpinned by gross new underwriting and Sukuks during the year, which equated to nearly AED 45 billion, which is up significantly by 36% year-on-year. This, however, was offset by regular repayments to the tune of AED 25 billion. When early settlements of around AED 7 billion are added, it has resulted in a net positive movement of close to around AED 12.7 billion or circa AED 13 billion. The bank has delivered a net income of AED 3.1 billion, which is up by 15% year-on-year. This is a true testament to the bank's efficient P&L management, as well as robust financial position and its franchise strength. The Cost to Income ratio, as you can see, has further improved by around 50 basis points year-on-year, and we are currently at 26.4 amongst the lowest in the market. Overall, another set of results in one of the fastest-growing countries in the world. I think in the first 6 months, it's only fair to say that DIB has performed significantly well. Slide eight. A slightly different-looking slide than usual. Financial performance, and we are looking at balance sheet here. Digging deeper into the performance, we have delivered balance sheet growth of around 4% year-to-date, and the balance sheet footing stands at around AED 300 billion. Asset growth during the period is a function of the financing portfolio, which has grown by 2% year-to-date, and the Sukuk investments, which have grown by 18% year-to-date. Put together, I think I've already mentioned that we've grown by close to around 5.3% year-to-date when it comes to financing and Sukuks together. On the funding side, deposits have increased by 6% on a year-to-date basis, and that is on the back of a 5% increase in corporate deposits and an 8% increase in retail deposits. Even on a quarter-on-quarter basis, the deposits were also strong at around 6% up. Our efficiency ratios in terms of return on assets and return on tangible equity has outperformed our year-end guidance, so we remain comfortably positioned vis-à-vis our commitment to our shareholders and other stakeholders. I'm going to look at slide nine and 10 together, and that is in, looking at the income statement. Similar to the balance sheet, the PNL picture is also very strong. Persistent efforts to focus on improving our financial performance has kept the bank adequately profitable. In terms of NIMS or net profit margins, we've registered 3.2%, exceeding our full year guidance, and this is up by around 40 basis points compared to first half of 2022. However, on a quarter-on-quarter basis, and this is something that we also mentioned, in our last webcast. On a quarter-on-quarter basis, our net profit margins have softened by 10 basis points. This is predominantly because our customers within our liabilities have rotated their funds from CASA accounts to investment accounts, or rather fixed deposits, term deposits, whatever you may want to call them. We remain comfortable with our full-year guidance as far as NIMS are concerned. This is clearly if you want to be self-critical, this is clearly a trend that we want to address going forward. I.e., we would expect our net interest margins to also improve quarter-on-quarter, given that the interest rate environment is high. In our case, I think we've seen some mild softening for the reasons that I have mentioned. Clearly, as we go along the presentation, you'll also see what I've mentioned is validated with the fact that our current and savings accounts stand at around 39%, which has come down from the 43% that we used to be at the beginning of the year. That has added to our cost of funding, and this is a trend that we are cognizant of, and this is something that we want to take within our stride. It's important that we reflect on being a little self-critical, and this is something that we want to do going forward. OpEx has moved up 9% year-on-year, as we are ensuring optimal spend while looking to grow and strengthen the group over the next few years. This is something that we mentioned in the last quarter of 2022 into 2023, saying that we should be expecting increase in OPEX, and that is because we are strengthening our control functions, investing in the future in terms of technology as well as in terms of our risk management systems. Needless to say, I also did mention that as long as we can deliver, you know, our guided Cost to Income ratio, we should have done well for ourselves, and that is exactly what we have done, even in the first half of 2023, where our Cost to Income ratio is at 26.4%, and that is down by around 50 basis points year-over-year. Within our guidance that we have given to the market. On a quarter-on-quarter basis, of course, the picture is also good when it comes to Cost to Income ratio, and that has gone down by around 110 basis points to 25.8, but that's only for quarter 2, 2023. If you actually look at it on an overall basis, of course, we are well within our guidance of 26.4, as I've mentioned. All of the above has led to a solid 15% year-on-year net profit growth in the first half of 2023. On slide 11, when we look at deployment of our funds, our assets have expanded by 4% to end with a balance sheet of around AED 300 billion, majority of which is coming from our disbursements in our financing and Sukuk investment. Our new gross financing amounted to AED 31 billion, and that's on the loan side, while our Sukuks doubled to around AED 14 billion year-on-year. Overall, if you add up the two, we've had gross underwriting across all our businesses to the tune of around AED 45 billion. Real estate within the loan book stands at around 19%, which is also in line with our guidance. On slide 12, a detailed look at our consumer business. This portfolio is up by 4% year-to-date, and it stands at around AED 54 billion, constituting 27% of our total financing within the bank. This portfolio has grown in the last six months, and this is led by higher deployment within our auto finance business, as well as our home finance business year-to-date, including our personal finance business. That has continued to do well for us, and it's only, you know, within our strategy to improve these three contributors going forward as well. Across all the products within consumer bank, we've booked gross new business of AED 10 billion during the first half of 2023, and this is up when compared to the first half of 2022, when we had done gross underwriting of around AED 8.6 billion. Clearly there is traction within our consumer business. Despite the routine repayments within the first six months of AED 8.3 billion within consumer, the consumer portfolio has exhibited positive growth for the year of around AED 2 billion. This incremental growth is a product of all the retail business segments that we've been focusing on over the last 18 months or so. Within retail or within consumer, our revenues are up by 26%, and yields have expanded by 87 basis points to reach 6.6%, underpinning very strong profitability. On a year-to-date basis, on the liability side within the consumer bank, our CASA deposits have continued to remain sticky, seemingly agnostic to the current rate environment, and the total consumer deposits have increased by 8% year-to-date. Overall, very profitable business for us, and it will continue to be a key focus area for us going forward. On slide 13, a look at our corporate business. This portfolio has increased by nearly 1.5% year-to-date, stands at around AED 136 billion, and it remains very, very diversified, as you can see from the pie in the middle of the slide. A very colorful colorful pie, I must say. On a year-to-date, growth in financing primarily came from our sectors like utilities, financial institutions, automobile, a bit of aviation, as well as some lending to the government sector. Gross corporate new financing has reached to around AED 21 billion during the year. This again is an indicator of growing business volumes, particularly in the private sector. However, this has been offset by routine repayments that is close to around AED 13 billion. Again, once again, we've seen repayments, early repayments or early settlements to the tune of AED 6 billion in the first six months. It's a trend that we have seen continue within our corporate business. That is what has docked our growth in our corporate business. Historically, in the last 18 months or so, that is what had dented our growth within our overall portfolio. Having said that, we've experienced that in the first half of 2023 also, but what we've done wonderfully well is that our gross underwriting has been significantly higher across all our businesses, and we have offset that dent by doing more financing within each of our businesses. I think on an overall basis, that has resulted in the overall loan book of the bank growing by around close to around AED 12 billion, which I've mentioned in the past, as well as in the corporate itself, it has grown by close to around AED 1.5 billion. Our revenue trends continue to be on an upward trajectory within our corporate bank, given the very floating nature of our book, which has captured most of the Fed rate hike, reaching to around AED 2.3 billion in revenues during the year, and that is up by, you can see, 39% year-on-year. Our corporate CASA balances stood at AED 32 billion. This is where we've seen the current account balances rotated into investment deposits. We've not seen that on the retail side, and I did mention that that has been seemingly agnostic to the interest rate environment. Our retail deposits have been very sticky. Our CASA deposits have been very sticky. On the corporate side, we've seen some movement from the current and savings account into investment deposits. It is worth noting that on a quarter-on-quarter basis, our CASA from corporates have improved by nearly AED 2 billion. When we look at the six months in totality, this is where we've seen movement within our portfolio, and that's how our CASA overall balances or overall percentage has come down and stands at 39% for the bank. On slide 14, our treasury business continues to grow. Primarily the fixed income book has expanded, and it stands at around AED 61 billion, 18% up year-to-date from AED 52 billion at the end of 2022. Almost three quarters of our Sukuk portfolio is sovereign in nature, and about 90% of the remaining quarter or the 90% of that remaining book is investment-grade or above. Within treasury, our yields have expanded by 65 basis points year-on-year, and they stand at around 4.6%. This is due to the fact that incremental Sukuk investments are coming into the portfolio with higher coupons. Though the revenues were impacted due to higher Cost of Risk and the fixed nature of our Sukuk investment book. Overall, there is a 65 basis points expansion in our yields on the Sukuk portfolio itself. Slide 15 looks at asset quality. Our Non-Performing Financing ratio decreased by 11 basis points, stands at 6.35% on a year-to-date basis. That is actually because of the growing financing denominator. Within the first half of 2023, our absolute amounts of non-performing loans stand at around AED 12.9 billion due to the recoveries both on core DIB book as well as NMC and Noor POCI, demonstrating continued improving business sentiment. Cash provision coverage ratio continues to be on an upward trajectory. It has risen by 300 basis points year-to-date, reaching around 81% in line with DIB's risk strategy. Within Q2 2023 itself, impairment charges declined on a year-on-year basis by 13% and by 7% on a quarter-on-quarter basis. If you look at that on a half-year basis, our Cost of Risk is down by 10 basis points, and we've reached at 74 basis points, down from 84 basis points in December 2022. Slide 16 looks at asset quality in slightly greater detail. The pie shows DIB's core non-performing financing, and that has witnessed slight uptick of around 1.2%. In terms of percentages, 1.2% year-to-date, but it has been flat quarter-on-quarter, and that has been normal business activity. NMC and Noor POCI, which constitutes 15% of our total non-performing financing, have both declined by around AED 2 billion. Slide 17 looks at asset quality in stages. I just want to focus on Stage 2 and be self-critical here. We've seen our Stage 2 financing increase by around 17% year-to-date, stands at around AED 18.2 billion, and on Stage 2 our coverage has dropped by 80 basis points. It stands at 6.7%. The reason for that is just one account within our corporate book, which has faced, you know, impacted by the higher interest rate and whose repayment capability has been impacted by the increase in interest rates recently. To us, this is not a credit issue because we are working to assist the customers during this period. As a part of risk policy, an automatic downgrade happens when an increase is witnessed in Stage 2. Important to note that for this particular customer, the business is very profitable and our exposure is also fully secured. From a prudent perspective, we have made sure that this comes in Stage 2, and we will work with the customer in regularizing, you know, the repayments according to a new schedule that we would have to craft. As mentioned earlier, Stage 3 loans have improved by around 0.7%, while coverage remains robust at around almost 63%, and that continues to improve quarter-on-quarter. Slide 18, it looks at our funding sources and liquidity. Liquidity of the bank continues to remain strong. You can see that LCR ratio stands at 159%. This is up by around 9% year-to-date, allowing the bank to meet short-term obligations. I've mentioned about CASA at length in details. CASA stands at around AED 81 billion. It accounts to around 39% of our overall deposits. On a quarter-on-quarter basis, important to note that our CASA has improved by around AED 1.5 billion. I also mentioned that when we were looking at our corporate business. We continue to see a migration of Wakala deposits, a migration to Wakala deposits rather. This is something that we saw in the first quarter, and we also saw this in the second quarter. That's the reason why our CASA percentages have come down from around 44% at the beginning of the year to around 39%. We want to change that trend, and we want to make sure that going forward, we would try and enhance our CASA ratios. Also, it is important to acknowledge that when the interest rates start to go down, we anticipate that our CASA book will start to rise as well. This is something that we've seen in the past. On slide 19, look at capitalization. The levels remain very robust. CET1 stands at around 13.4%, and that is up by around 50 basis points, you can see in the graph. Our CAR stands at around 17.9%, and that is up by around 30 basis points on the graph. Both well above the minimum regulatory requirement of 10% and 13.5%, respectively. Total equity now stands at around AED 43 billion. The next slide looks at our digitalization and strategy. Our digital strategy has continued to support our growth. On this slide, we present a few digital metrics pertaining to our consumer business. The continuous growth in this statistic seen here demonstrates the strength of our digital channels, which have been instrumental in fostering and enhancing customer engagement across various channels. This is clearly evident as we have witnessed the new-to-bank acquisition from digital channels is higher when compared to our branch network. Slide 18 is a slide on our sustainability and ESG strategies. We've already unveiled our ESG strategy within the first webcast during the year. That strategy articulated the vision, the two pillars, as well as the eight strategic priorities that we've set for ourselves. This slide is only a subset of that. It shows you what we've done in the first six months, and it covers four strategic priority areas. Before I go into those areas, it's important to demonstrate or important to highlight that our ESG portfolio remains a key part of our growth strategy. Year to date, the portfolio has seen a growth of around 12%, and that is primarily coming from our corporate business, as well as our green vehicle financing that we've introduced within our consumer business. On a portfolio basis, this portfolio has now crossed around $2.2 billion. If you also look at ESG Sukuk investments, the total green investments within the bank, which means financing and Sukuk, stand at around $3.6 billion. This is something that we will continue to grow as we go forward. A look at the four key strategic priorities that we worked on, you know, during the first six months. We focused on employee well-being. This is one key strategic priority for us out of the eight. As, you know, as an initiative, we are pleased to announce the opening of Al Amanah, which is a parent-child care zone, which supports our staff, you know, with a work-life balance and parenting within the workspace itself. Another strategic priority for us is championing business ethics and customer privacy. To this effect, we have strengthened our IT infrastructure and ecosystem. We've partnered with IBM Consulting, we've accelerated our data transformation journey. Another strategic priority area for us is to propel sustainable financing, you know, that we've done within our own issuances. We started the year with a successful, sustainable Sukuk of around, you know, $750 million, then we also came back to the market with another issue and did tap the market with another $1 billion. In total, we've done around $1.7 billion, we also have committed that any capital market activity that we do for ourselves on the liability side will always be sustainable in nature. The fourth priority area that we worked on during this quarter is the financial inclusion. To promote financial inclusion, we were recently recognized by Emirates Development Bank and the Ministry of Economy for our crucial role in facilitating access to financing for SMEs within the UAE. Our sustainable SME portfolio also has now crossed more than AED 2 billion. We'll continue to focus on our ESG pillars as well as ESG strategic priority areas, because as you know, our vision is to own the space, and this is something that remains like a standing item within our strategy, and this will also form a standing part of our webcast. We will continue to appraise you of the development and the initiatives we are taking within our ESG space. This is only going to grow from here in terms of what we are going to do in each of these strategic priority areas, as well as in terms of our own, you know, financing and Sukuk growth. We are trying to make sure that that portfolio continues to increase as we go forward. Slide 22, looked at our new digital proposition that we've launched, and again, this is a part of our drive strategy. It's digital transformation, if you remember. We have actually launched in the second quarter, our digital proposition called Alt, and it is predominantly driven by a continuous quest for digital excellence, it's in line with the transformation strategy that I have just mentioned. What is Alt? Alt is a full-fledged digital umbrella brand, which houses all of the bank's digital offerings, under one roof, providing customers with a seamless and hassle-free banking experience. What that means is that it's a platform that brings together more than 135 digital services that we have within the bank, and that is done through the digital channels, the DIB's mobile app, online banking, ATMs, as well as WhatsApp. Everything that existed on these platforms have now been housed on a single platform, and that's what is called as Alt. This is a one-stop shop for all our banking needs. It enables customers to open a bank account within minutes, get onboarded without being a customer of the bank. You know, any new individual within the country can be onboarded here. Can apply for a personal finance on an auto finance or a credit card, go and do their remittances either locally or internationally, make payments and much, much more. All in all, 135 services have been collated and consolidated under one platform. Slide 24 is the last slide before I pause to take questions, and it's nothing but a summary of everything that I've mentioned, and I won't go into this. Some key highlights here is that the bank has had a wonderful first half of 2023. I alluded to on my first webcast that we see very strong pipeline in terms of underwriting. Ever since that first webcast, all the interactions that I had with analysts as well as investors on deal and non-deal roadshows, I mentioned that we have a very strong pipeline in Q2, and that is just demonstrated here in terms of results, where you can see gross underwriting has been AED 45 billion, and the net growth after the normal repayments, as well as extraordinary settlements, has increased by around 5.3%. That actually shows you that everything that I mentioned on the first call as well as in our interactions has actually come true. Our commitment has seen our balance sheet grow by around 4%. The bank's profitability continues to be very solid, very robust, very resilient, and that is also resulted in very strong efficiency ratios, both ROE and ROA, and we have surpassed the guidance. Our margins continue to improve year-to-date. I've already been self-critical, I'll save you that trouble of net interest margins quarter-on-quarter. Overall, when you look at the table on the right side of that graph, you'll see that we have surpassed almost everything that we ventured on at the beginning of the year. We want to continue to maintain the guidance that we have because there's still some work to do across some of the other metrics. The one guidance that we want to revise upwards is the growth guidance. We are moving that from 5% for the full year to 7.5% for the full year. That means that, you know, another 2.5% increase from what we started at the beginning of the year. Q2 has been a very good quarter for us in terms of growth. If you recall in Q1, our growth, overall growth was around 1%. That means that we've really done well in Q2. That is something that I alluded to on my last call. I take a pause here. I'm going to open the floor for questions, and I'll try to take as many as I can. We've got only 25 minutes to do that. Please, use the portal. You know, send us your questions, we'll try to skim through them, take a pause here and come back to you, and answer as many as we can. In the event that we are unable to answer your question, given the limited time we have, please, do reach us, you know, on our investor relations portal, and we will try and answer as many as we can after the call as well. Thank you, Doctor. Ladies and gentlemen, please send your questions through. We will start answering them in that order. Thank you. Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, then please send them via webcast@dib.ae. Thank you for holding until we have our first question. The first question is from Janani, at Arqaam Capital, talking about the NIM outlook for the second half, and, what does it mean for the cost of funds going forward and the deposit flows? The second question is about the increase in Stage 2 again, and some details. Thank you, Janany. As always, a very good question. You know, I start by saying that while I was making the presentation, I've been self-critical, right? We do realize that on a quarter-on-quarter basis, our net interest margins have gone down slightly though, but they've gone down. On a year-to-date basis, we are at 3.2%, which is up. When we gave our guidance at the beginning of the year of around 3%, that was taking into account all. If you recollect, when I mentioned, we had given a guidance of around 3%, even though the interest rates were expected to go high, and continue to increase, we were cognizant of the fact that there would be a challenge to maintain these, you know, balances in current and savings account. We were anticipating that there would be rotation into fixed deposits. We were anticipating that those fixed deposits will be at a higher rate when rolled over same time, you know, 12 months back. When you put all that together and extrapolate, that's the reason why we gave year-end guidance of around 3%. We were not trying to be conservative, we were trying to be realistic. That is actually being now seen in the first six months, quarter on quarter, where the net interest margin guidance, or the net interest margin is coming under pressure. Even though our full year guidance, we are sticking to 3.2%, which is, sorry, sticking to around 3%, which is up from where we were, you know, last year. We had anticipated this, and I think, again, depending on what interest rate hikes would be witnessed in the next six months, we would have to try and revisit this net interest margin guidance closer to those quarters. As of now, we are holding on to this guidance. All that I want to say is that this is something that we did mention, even on our first call, when, if I remember correctly, you did mention that we are being conservative on our net interest margin guidance, given that, you know, interest rates are going to go up. At that time, I did mention that we don't want to get ahead of ourselves. We anticipate that there would be rotation from CASA into fixed deposits and the cost of fund would come under pressure. This is exactly what has happened. Your second question on sectors that drove Stage 2 loans, and how do you see it having an impact on NPL formation or Cost of Risk? No, we do not see it having an impact on any NPL formation. You know, because we've seen some stress, and that is only coming because of higher interest rates and the capability of the client to service. It's only one customer that I've mentioned. We are not using sleep over this. It is something out of prudence. You know, we've classified as Stage 2, but we are going to work with the customer and going to restructure this facility. We are adequately collateralized, in fact, 100% secured. We do not anticipate, you know, this to move into NPLs at all. This is not a new customer. This has been with us for the last 12 years. We've had an excellent relationship with the customer, very strong customer, you know, and a very well-known customer within the private sector. Nothing to worry about as far as that is concerned. In fact, the Cost of Risk, you know, we would hold our guidance for an annualized 80 basis points. We've seen 74 basis points, you know, year to date. You know, given that, you know, we've got to look at this on a 12-month basis, we continue to look at it at 80 or hold at it, hold it at 80 basis points. Ladies and gentlemen, I would like to remind you, if you have any further questions, please send them via webcast at dib.ae. All right, we've got a number of questions from Edmund from Bloomberg. I'll just quickly run through them and then Dr. Adnan will answer. First one is on the retail book and, you know, is there a proportion that still needs to be repriced if the interest rates remain higher? The second is on the home financing, how do you expect the book mortgages to go forward into the second half of the year? The third is on the cost of funding. and the liquidity and deposit gathering, and what do you think should be the trend now going forward? The last is on, will we continue to see early settlements and repayments in the second half? Thank you, Edmund. I'll try to take your question in the same order that you've raised. Large proportion of DIB's retail book is yet to reprice. If you look at DIB's retail book, 50% of that is on a fixed-rate basis, and 50% of that is on a variable-rate basis. The repricing that you are alluding to is for the variable rate loans. I would say that variable rate loans on the consumer side is home finance, and those continue to reprice as we go forward. You know, they reprice on duration of three months, six months. As new interest rate hikes will come, you know, that entire variable rate portfolio on the home finance side will continue to go through its own traction of repricing as we go forward. Just to correct that, you know, 50% of that consumer book is repriceable or variable in nature. Your second question is on home financing growth decelerated in Q2. Again, I would not ask you to just focus on one quarter, look at it on a year-to-date basis. Because sometimes, you know, it's a function of, you know, the time of the year, you know, summer, sometimes things slow down, you know, across a particular business or a particular sector. We expect that the mortgage demand in the second half will be high, given that there are new projects that are being launched, as we speak, and also the influx of population that continues to come within the country and settling down. We've seen that already in our pipeline in Q3. We expect that, you know, the second half of our home finance business or our mortgage business will continue to grow. Do we see a more constrained cost of funding in the second half? I hope not, because, you know, like I said, we want to reverse that quarter on quarter net interest margin trend, and that is only being impacted by our cost of funding, is because we've seen some CASA get rotated into fixed deposits. This is something that we are cognizant of. It's something that we want to address. Of course, our improved LDR ratio at 90% means that we've gathered the deposits that we want, so there is less pressure on us to mobilize any new liabilities. We will keep one eye on our LCR ratios, our NSFR ratios, and our LDR ratios, and we'll try to maintain a good balance. We want to bring our cost of funding down as much as we can, the easiest solution to that is better current and savings account. Which has always been the strategy of the bank, both on the consumer side with payroll and on the corporate side with cash management and operating accounts. I see no reason why that should change in the latter half or the second half of 2023. Do we see any repayments or settlements easing further? They slightly eased in the second quarter on a year-to-date basis, it's the same when you look at it in the first half of 2022 versus the first half of 2023. Close to around AED 7 billion, AED 7.1 billion of early settlements have been done. Had those not been done, the growth would be, you know, even higher than the 5.4% that we've seen. Having said that, you know, we don't anticipate extraordinary early settlement, but even if that happens, our engine, our gross underwriting pipeline is very strong for Q3, which will help us offset that if there is extraordinary early settlement. If there are no extraordinary early settlements and we manage to achieve the pipeline, the strong pipeline that we anticipate in Q3, then I think it will be a excellent, you know, Q3 in terms of growth. Your last sub-question is: How do you see DIB positioning for a strong construction pipeline in the UAE over the next five- years? I've been mention this over the last 12 months. We are not very keen in enhancing our construction portfolio. You know, if you're talking about contracting financing, this is a business that we are moving out of because we've got adequate business opportunities within our public sector, within our private sector, within our Sukuk book, within our retail book. And this is a sector that we have kind of looked at very cautiously and understandably so. You know, hindsight is a luxury. I think that strategy of the bank has really paid rich dividends, and we will continue to follow that strategy even over the next five- years. Ladies and gentlemen, I would like to remind you, if you have any further questions, please send them via webcast@dib.ae. Thank you for holding until we have our next question. All right. A few questions from Shabbir, from EFG Hermes. Question number five, one, Shabbir, is on foster fund, and the second one is on NIM. These two have been answered. We'll just go along to save time to your third and fourth. The third question is on the rates. If they start declining, how is DIB positioned for that? Would NIM benefit come in as a result of the lower rates? The fourth question is on the fee income, which was stronger this quarter. Is this the same? Thank you, Shabbir, for your question. Your question on if rates start declining, and we know at some point in time they will, how are we positioned for? I think we are positioned for well in declining interest rate environment, because we've seen in the past, and we've demonstrated that over the years, that when the rates are low, customers prefer to keep money in their current and savings account. You see, Shabbir, what has happened is I've already mentioned, so, slightly on. This will address your question, your first question, which I've already mentioned, but I'll just kind of summarize it here. Our liability book has grown. When I mention liabilities, I mean, you know, our total liabilities, current and savings account across our corporate business, our current and savings accounts across our retail business have been very sticky. Our wakalah or our fixed deposits across our businesses has increased. So our liabilities overall has increased. That's a good sign, and it's a good sign because that has allowed us to kind of fund our growth. The only downside, which I've been self-critical about, is that our net interest margins have come down, and that is because our composition of our current and savings account has changed, and they have been rotated into our fixed deposits. We've not lost money to competition. In fact, the customers have decided to move from current and savings account into fixed deposits. Also, let me say that on the fixed deposits, we've not been the highest interest rate payers in the market. It's just that the structure of our balance sheet on the liability side has changed, and that has resulted. It's not like we've aggressively sourced new deposits or we have paid higher than market rates. Our cost of funding has changed because the composition of our liability side has changed. Some of those deposits that we used to hold, you know, same time last year, when they rolled over, they rolled over at significantly high rates. That shows you the stickiness of our liabilities has actually, you know, increased our cost of funding. If our liabilities were not sticky in nature, they would have gone out of the bank and we would not have, you know, paid a higher cost of funding. They are sticky in nature and the fact that they have rotated from current and savings account into fixed deposits, and one year since then, when compared period to period, I think all of those things put together, our cost of funding has increased. In a declining interest rate environment, you know, as in the past, you know, I would say that we would tend to benefit and, you know, our net interest margins would benefit as well. Fee income. Your question on fee income, we had a strong quarter, absolutely. Is this sustainable? Yes, because that fee income is a result of just better underwriting. It's a function of our volumes. We anticipate Q3 volumes to be high. That would also allow us to maintain our fee income, you know, at those levels. As a reminder, if you have any further questions, please send them via webcast@dib.ae. Thank you for holding until we have our next question. Ladies and gents, we have only about five minutes left. There are so many questions that have come through. We will have to take them up after. In any case, we said take a few questions from Rahul from Citi. The question number two and three, Rahul, we've already answered in the, I think the last. This was from Doctor. The first one is what we're going to take. The first one is on the guidance of 7.5% of financing and Sukuk growth, and what would be the split in confidence? Rahul, thank you for your questions. Like Kashif mentioned, we've got five minutes. We'll skim through all of the questions, and most of them are repeated in nature. We are trying to take as many unique questions as we can, which is your first question is different. You're talking about our new guidance of 7.5% across our growth, and what kind of split between financing and Sukuk. Why we are confident of this new guidance is because we are looking at a strong pipeline, right? Our Q3 pipeline continues to be strong. And you'll appreciate that when we talk about pipeline, we anticipate the kind of business we will be able to underwrite within each of our businesses, right? Within our retail book, within our corporate book, and within our Sukuk book. I just don't want to single out, you know, any particular business here. In terms of the strong pipeline, now, the assumption that we also have is that we will not have any extraordinary early settlements. If we don't have extraordinary early settlements, which we have seen to the tune of around $7 billion in the first half. If you strip out the extraordinary early settlements that we had in the first six months, you can see that our loans within our retail and consumer, retail and corporate, and our Sukuk book grew equally in the first half of 2023. If you actually strip out the early settlements that we have seen. On the corporate side, only look at gross underwriting on our consumer and our corporate, and then compare it to the gross underwriting on our Sukuk. Both of these are equal in nature. When we are looking at our 7.5% annual guidance, which has gone upwards, we do not want to split them between financing and Sukuk because we feel that both will add equally in the latter half of 2023. Needless to say, if there are early settlements, that would not happen on the Sukuk side, that would happen on the predominantly corporate side, and that's how the corporate side gets dented or dwarfed. The Sukuk growth looks substantial. It's not like we are only focusing on our Sukuk book. We are focusing on our consumer book, we are focusing on our corporate book, and we are focusing on our Sukuk book. In terms of gross underwriting, it's a 50/50 split between our loan business and our Sukuk business in the first half of 2022 or 2023. That's exactly what we want to do in 2023. A few questions from Varuna. I think four of them, but Varuna, we've just gone through them. I think they've all been answered. In case there's any further clarification, you can contact us later post the call. Yeah. Kashif, we have skimmed through the questions now. Varuna, like Kashif mentioned, we have gone through your questions as well. You know, between the questions that were asked from Arqaam, from Bloomberg, from EFG, from Citi, I think we have answered most of these questions that we can see in your email, as well as, you know, some of the questions that others are asking us or want to ask us have already been answered. I am going to like always use the last five minutes, if you don't mind, to summarize everything that I've mentioned, because it's important that we leave you with some key highlights. You know, those key highlights are that the bank has had a fantastic first half. I say that is because when you look at profitability, that has grown by 15% year-on-year. When you look at our growth, we have outshown ourselves, and we have met our year-end guidance of around 5% in terms of growth across our businesses. This is despite our, you know, year-to-date high normal repayments as well as extraordinary repayments. That is because we focused on our core businesses. We've had gross underwriting of around AED 45 billion, and that has been, you know, offset by repayments of around AED 13 billion, or repayments of around AED 33 billion, and extraordinary repayments of around AED 7 billion. When you net this off, it reaches to a total of a growth of close to around AED 10 billion-AED 11 billion, and that means around 5% growth year to date. That's point number one. Point number two is that based on this, we are revising our guidance upwards as far as growth is concerned, and we are putting a 7.5% guidance for the full year. When you look at our net interest margins, we are cognizant of the fact that quarter-on-quarter, the net interest margins have gone down. Let's not take away from the fact that we had highlighted the overall net interest margins for the bank to be at around 3%. We had anticipated this, articulated it meticulously within the first call of the year, and I think it's just panning out the way we had anticipated. We would definitely try and enhance our current and savings account and bring our overall cost of funding down. That's, you know, that's work for us. Overall, based on our very strong results, you know, our net interest margins, as well as our Cost to Income ratio. Overall, based on our strong, profitable results, our ROEs and ROAs have already met the year-end guidance. The last message would be that first half of 2023 has been good for us, and we are going into the second half of the year with a very strong pipeline and positive trajectory across all our metrics. Hopefully, we will be able to keep up this good work in Q3 as well as in Q4. We will definitely do a webcast once our Q3 results are out, but even before that, we would probably meet some of you on some non-deal roadshows that are planned during Q3, even before the results are out. Hope to see you then. You know, hopefully we will be able to have face-to-face meetings, but if not, definitely we will meet each other on the webcast in Q3 and try and give you another set of positive results, strong results in Q3 as well. Thank you, Doctor. That brings us to the end of the call. I will, and the investor relations team will get in touch with you. Some of the questions that have come up while the doctor was also speaking. Rest assured that we will get back to you soon. See you again in the next webcast. Thanks a lot. Goodbye. This concludes today's conference call. Thank you for your participation.