Hello, everyone, and welcome to the Qatar Islamic Bank conference call. Please note that this call is being recorded. I'd now like to hand over to our moderator for today. Shahan, you may now begin. Thank you very much. Hello, everyone. Good afternoon. I want to welcome you to QIB's third quarter, twenty twenty-four and nine months financial results conference call. So on this call from management, we have the bank's CFO, Gaurang Hemani. And as usual, we will follow the call as in previous, with first management reviewing the company's results, followed by a Q&A session. I will turn the call over now to Gaurang. Please go ahead. Thank you, Shahan. Good day, ladies and gentlemen. Welcome to Third Quarter 2024 Results Call of Qatar Islamic Bank. We'll quickly take you through the highlights of the results for the nine months ended September 30, 2024. QIB reported a net profit attributable to shareholders of QAR 3.265 billion for the nine months ended September 30, representing a growth of 6.9% against the same period previous year. Net profit attributable to the shareholders for the Third Quarter 2024 was QAR 1.2 billion, representing a growth of 9.1% against the corresponding quarter last year, and 8.1% against second quarter of 2024. The total assets of the bank now stand at QAR 197.5 billion, up 2.7%, or QAR 5.3 billion against second quarter 2024, and 4.4%, or QAR 8.4 billion versus December 2023. The core activities of the bank, represented by financing and investing activities, continued to grow in third quarter 2024. Financing assets, primarily driven by increases in private sector credit, now stand at QAR 127.7 billion, representing a growth of QAR 0.8 billion against second quarter 2024, and 4.4%, or QAR 5.3 billion against December 2023 levels. Investment securities have now reached QAR 50.3 billion, having grown 2% in second quarter 2024, and 4.8% on year-to-date basis versus December 2023. Customer deposits now stand at QAR 126.4 billion, up 4.6% against December 2023, as banks continue to work towards optimizing its source of funding and cost of funds. The financing to deposit ratio of the bank is at 101% against Qatar domestic banking average of almost 130%. On the profitability front, the total income of the bank before the cost of deposits have reached QAR 8.6 billion by the end of third quarter 2024, against 7.8 billion for the corresponding period last year. At the same time, the cost of deposits of the bank have reached QAR 3.7 billion against QAR 3 billion in third quarter 2023. The net operating income of the bank after cost of funding for the nine months ended thirtieth September 2024 was QAR 4.9 billion against QAR 4.8 billion same period last year, representing a growth of 3.4% compared to previous year. Expenses of the bank now stand at QAR 854 million for the nine months ended, representing an increase of 3.5% against previous year. Efficient cost management enabled the bank to maintain its cost-to-income ratio at 17.3% for the nine months ended 13, September 2024, which is at the same level as previous year. The ratio continues to be the lowest in the Qatari banking sector and one of the lowest in the region. The continued strength in the operating performance enabled the bank to continue to build precautionary total impairment charge of QAR 807 million, including expected credit losses on financing of around QAR 758 million in the nine months ended 13, September 2024, thereby improving the coverage ratios across all the three stages of the financing portfolio. The impaired financing ratio, or the stage 3 financing ratio, was stable at 1.7%, with a healthy coverage of 95%, up against 87.5% at the end of 2023, and at the same level that was there in second quarter 2024. While during the same point of time, the stage 2 financing ratio has dropped to 13.2% against 18.5% at the end of last year. These results demonstrate the bank's ability to generate strong, stable, and sustainable profitability for its shareholders, with a return on average equity of 16.3% and return on total average assets of 2.3%. On the capital adequacy front, the bank's capital adequacy is very healthy, at 21.3% under Basel III guidelines, giving us sufficient cover for the future balance sheet growth. Having taken through the key highlights of the financials, we'll now go to the Q&A session. We are now opening the floor for question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. Our first question comes from Rob Skipper from Ashmore. Your line is now open. Hi. Hi there. Thanks, thanks very much for the call this morning. Yeah, could I just ask on the asset quality? So as you just highlighted towards the end there, the Stage 2 ratio dropping from 18.2% in June to 13.4% in September. Could you just give us a bit more color on that? Like, what was the underlying credit that improved? Was it one client? Was it many clients? What kind of sector exposure is it? Yeah, anything you could tell us on that would be great. Thank you. It's what you have seen is a continuation of what we had been telling in the previous calls, that we are fairly confident about the asset quality, especially on the ones that are sitting on stage two. And there are more scope of moving them back to stage one, and that's what has happened. It's across different sectors and across multiple clients, so it's, there's no specific concentration that we are talking about out here. Many of them had been in stage two for a long point of time, and now we just, we move them based on their performances or the which have been tracked over a period of time, to back to stage one, given their improvement in their credit quality. Yeah. Okay, great. And so you expect that to continue, like, in the fourth quarter and into next year, like, continued migration from stage two to stage one? We'll continue to monitor, and we will continue to take the necessary action when it comes to moving them to stage two to stage one, or as the case may be. So at this point of time, we can say we are fairly comfortable with the stage two portfolio sitting at 13.4%. We are fairly happy with it. There are always rooms for improvement, but at this point of time, we can say we are fairly happy with the percentage sitting here. Yeah. Okay. No, no, obviously, yeah, for now, for sure. But over the next few quarters, would you expect that ratio to drop further? Yeah, as I said, we will continue to monitor and take action depending upon how the asset quality moves. Yeah. Okay. And in terms of the coverage, how is the coverage of the Stage two book now? The stage two coverage ratio now sits at about 6.5%, against 5.1% at the end of the year, so it's improved by about 1.5%. And stage three coverage ratio, compared to December 2023, has moved from 87.5% to 95%, and the stage one coverage ratio continues to be very strong, significantly better than the sector, at 3.8%. Yeah. Okay, great. And just in terms of, like, guidance on cost of risk, like, how do you think of full year cost of risk now that we've seen this improvement in underlying asset quality? We've always been saying that the cost of risk is not driven by the need of it. It's more driven by if we continue to have strong operating performance, we continue to build balance sheet strength, keep adjusting the levels of coverage and provisioning. But overall, it's a function of how well we are doing in our operating performance and how the asset quality moves. At this point of time, we are fairly happy. As a bank, only thing we can say is, if you look at the trend, we tend to build provisions, more provisions at the beginning of the year rather than at the end of the year. That's the only guidance I have at this point of time. Yeah. Yeah. Okay. Got it. Great! Thanks. Thanks very much. Thank you. Thank you. Your next question comes from Vikram Viswanathan, from NBK. Your line is now open. Hello, can you hear me? Yeah, Vikram, I can hear you. Thank you, Gaurang. Two questions from me: Does your articles of association already incorporate a clause for buying back shares, or do you have to convene an EGM to include the buyback clause in your articles? That's my first question. The second question, on the Q3 margins, there was an improvement sequentially when compared to Q2, and I just wanted to ask you if there was any one-off in the margins or it was... Was it- Yeah. a proper improvement in margins? Yeah. Mm-hmm. Okay, so I'll take the first one. As far as I recall, I understand, there are a few more activities that need to be done before we can go ahead with any buyback, if at all we want to do, so no, at this point of time, we are legally not ready to be able to do any buyback, but- Okay. Secondly, on the fact of the improvement in the NIM quarter on quarter, we kept saying that we would encourage people not to put too much emphasis on quarter on quarter. In general, we tend to more look at it on a year-to-date basis, where we believe that we are overall still in line with our guidance and in line with the previous year numbers. However, in general, we believe that because of the... The reason why I say is because there are timing of, the, especially when you are going through a rate cut or a rate hike cycle, the timing of the, impact on the cost of funds and the financing book are not always fully aligned, so you could see small movements between the quarter. But overall, the guidance we give is that we are fairly comfortable with our NIMs. We don't expect any significant deterioration in the rate cut cycle. It could be marginal drop, but we are not expecting any significant impact on it. Okay. Hope that answers your question? Yeah. No, it does. But my question is: if rates start going down, let's say, policy rates go down by two hundred basis points, there will be some impact on your margins, right? Because when the rates were going up, you experienced a good increase in margins. So on the way down, you should be impacting it. We didn't have any significant increase in the margin. If you look at over the last two, three years, the overall increase in the margin was, I think, seven or eight basis points or something like that, then that too was in a much, much, much more aggressive rate hike. I don't think so. We are going to see the same level of rate cuts from what we see. I think the narrative in U.S. keeps changing very frequently. You started with soft landing, then you come to hard landing, now you come to no landing. So it is very difficult to gauge, and I think everybody's is it's as good a guess in terms of the quantum of the hike and the speed of the hike, speed of the cut. But yeah, in general, we are fairly comfortable with our levels. We believe that whatever there will be the reductions in the financing revenue, we will get a significant benefit also coming from the cost of funds. Okay. Just a follow-up on the first question. You said you're not still legally ready to do buyback. Mm. What are the steps that you need to undertake to make We have not looked into it at this point of time, because we will look into it once we have some kind of a guidance or a mandate in terms of what direction the board wants to take, so don't want to go into elaboration of it. All I can say is, yes, there's some work needs to be done, but again, it's all going to be driven by how the board wants to look at it. Okay. Thank you. Thank you, Gaurang. Yeah. Okay, next question comes from Salome Skhirtladze from Bloomberg Intelligence, your line is now open. Hello. Thank you for the presentation. I have a few questions. The question number one, again, on your NIM sensitivity. If you could give us some numbers, how your NIM could change with, say, a hundred basis point rate cut for the next year? Another question on the capital level, CET1 ratio, which is, I think, the highest level since 2020. How does the board look at the deployment of this capital? And the third one on the loan portfolio growth. Some banks say they are expecting growth coming from the LNG project. Some banks could have some more leverage to crowd out, let's say, so the loan growth potential from this project. Where do you see the opportunities for your bank going forward? Which segments, and whether you see some signs of intense competition for the market shares? Thank you. Thank you. So on the NIM sensitivity, I think I already elaborated in the previous question to Vikram, that we are fairly confident that we should be able to maintain our NIMs, maybe we might have marginal. There is no clear indication I can give you in terms of where, what is the exact NIM sensitivity. But in general, based on our assessment, we believe that even if there will be an impact, it will be very, very minimal. Second, on the capital ratio, yes, we continue to remain, the capital adequacy ratio continues to remain strong. However, you need to keep into consideration that, from this year onwards, under the QCB guidelines, the interim profits are included in the capital adequacy ratio. So if you look at it from the work perspective, is that you will have one quarter of profit that will be added by the end of the year, while you will have dividend distributions, etc. So we are not expecting any further significant improvement on the capital ratios by the end of the year. The board is fairly happy. They believe that it's as long as we are able to generate decent growth, they want to continue to maintain the balance between how much of the capital they want to retain for the future growth, as well as they will continue to look into it, how it can be, how the shareholders can be rewarded. In general, we believe that high capital adequacy ratio helps us in maintaining a very strong ratings. Our ratings are, as we know from the Moody's perspective, at least one or two notch higher than other private sector banks in the country. And that in turn has benefits from the fact that if I can go in terms of the latest Sukuk issuance that we did, we did a five-year Sukuk issuance at 4.485%, the lowest coupon achieved by any bank, any GCC financial institution in 2024. These are all reflective of the good asset quality metrics, the capital health of the bank, the liquidity of the bank. So all these things are taken into consideration and never looked into isolation when it comes to capital ratios alone. On the third question, on the loan growth, we believe that yes, we are predominantly a private sector bank. We believe that the private sector growth should come from the percolating effect of the North Field expansion that will be there on the services, the industries, sector, predominantly. However, we believe a large part of the growth will be resulting from the fact that, when the growth momentum again picks up, when because of the North Field expansion related impact. Competition has always been there, so I would not say that it is going to significantly change the competition landscape. We take a pride in being the number one private sector bank in the country, whether it be in terms of the balance sheet, loan book size, the net profit, etc. So we are well aware of what challenges we will have from competition, but sometimes it's always a good opportunity to say that you are able to do much more selective growth when you are sitting in a relatively, let's say, comfortable position than some of the peers. So yeah, we are fairly comfortable that there will be adequate growth opportunities. That is also we already showed you that we have been able to grow almost 4.4% this year, which is almost in line with the target that we had given mention at the beginning of the year, that we had said that we expect the loan book to be within 5%-6% growth range. So and that's what we believe, that it is in the medium term, that's what the banking sector will do and what QIB should be able to achieve. Thank you so much. Thank you. Your next question comes from Alvin Alsina from Lesha Bank. Your line is now open. Hi. I had a question on provisioning. So basically, it declined year on year. So is it more due to there was some recovery angle and the gross was, like, similar to past year? Or is it purely because you have booked less provisions? So that's one. Second thing is, like, usually, how should we see the provisions in the medium term? Like, let's say, I'm not talking about the next quarter or the year, but more in the medium term. Like, do you have a target that, okay, I'll keep the ro- cost of risk as to XX levels in the medium term? Thank you. No. So I'll answer both the questions together because they are kind of this very, very interlinked. So as I said, our cost of risk is a function of how the asset quality moves and how much do we believe that we can allocate more towards strengthening the balance sheet. If you look at it, our asset quality in terms of stage three has remained fairly stable. Our stage two ratio has improved significantly. Thereby, we believe that it was a time whereby we could afford to reduce the cost of risk because it was not, not really more need-driven. It is more about the fact that we were able. Our ability to build those provisions continued to remain. In the long run, it is as I said, it's the same thing, right? We'll continue to monitor how the asset quality keeps moving. As of now, we are fairly comfortable where it is. However, it's an evolving situation, right? So we'll continue to look at it. We are fortunate that we have fairly decent coverage ratios that we maintain, compared to very many peers of ours, especially in the Stage one bit of it, so that we do have decent amount of buffers to be able to absorb any major impact. So, I don't have any specific guidance, if you are looking in terms of a number. I will maintain and reiterate what we keep saying, is to say it is a function of how the asset quality evolves and how the operating performance of the bank will move. As of now, we are fairly comfortable with the levels that we are being maintaining, because we have very decent coverages on our asset quality. Understood. Thanks a lot, and if just one more I can, on the fee income, I see that, for most of the banks that have reported, the fee income has declined a bit in this quarter. So any particular reason for that, or it's just like a general industry trend? No, for us, for us, our core fees was-- have been fairly stable. I think what you saw, the drop this quarter, was predominantly last year in the same quarter, we had some very decent advisory fee came in, in, in our, investment banking subsidiary, QInvest. That has been slightly lower this quarter. But overall, our core operating, core fees levels have been fairly decent. I-- we, again, it's, fee is another area where we keep telling people that quarter on quarter you will see variations, and to better evaluate, you need to look at on a year-to-date basis, rather than looking at on quarter to quarter. Because there are always, by nature, fees have elements that are not always recurring. They are not accrual incomes, right? So, you could have variations happening quarter to quarter, which does not always signify a trend, whether positive or negative. Got it. Understood. Thank you very much. Your next question comes from Nikhil Prith from CGSS. Your line is now- Yeah. Thank you, sir. Well, actually, this is regarding your balance sheet items. You know, I just saw that your unrestricted investment accounts have gone up along with the deposits. Yes, your loans have increased, but also due from banks have also increased along with it. So wanted to know, is there some relation? I mean, could we see that, you know, as due from banks come down, as your unrestricted investment account, you know, could also see a corresponding decrease? Unrestricted investment accounts or the deposits, what you see is we have been reducing since last year and especially this year. We continue to reduce the non-resident deposits, and we are more acquiring the international funding through longer-term bilateral or other facilities that are there with the bank. So due from banks is more of a function that where we are targeting, and as well as the Sukuk issuances are the one where we target to have a better ALM profile by having a longer-term funding, because the deposits tend to be more shorter term. So that's what the ALM strategy that the bank has been adopting. Overall, our financing to deposit ratio is at 101%, much better than the industry average. If you look at only purely Qatar banking sector, I'm saying Qatar domestic banking market, right? The average is about 130%, and we sit at 101%. The reason I'm comparing this is because we have very limited international subsidiaries that have an impact on the overall consolidated numbers. So effectively, we are far, far better in terms of the deposit to financing to deposit profile compared to our peers in the country. Okay. Okay, and one more, I mean, in terms of your, tax implications, I mean, 15% slab, any update on that, I mean, for next year? No, unfortunately, we have not heard anything from GTA so far. So GTA is the General Tax Authority. We've not heard anything so far. So we ourselves have been trying to push and trying to get them to give us little bit more clarity. We hope we are able to share with you something more by the end of the year. Okay. Thank you, sir. The question comes from Zohair Pervez, from Al Rayan Investment. Your line is- Hi, good afternoon. This is Zohair from Al Rayan. Just a question regarding the recent news of the write-off of some loans made during the COVID-19 pandemic. Is there any impact to QIB? No, I don't think so. It impacts any of the commercial banks. Most of these loans that you're talking about are there with QDB, so these are all loans in the Qatar Development Bank portfolio, predominantly. Okay. Clear. Thank you. Thank you so much. We don't have any pending questions as of the moment. I'd now like to hand back over to Shahan for further remarks. Okay, great. Well, if there are no more questions, we can wrap up this call. I'd like to thank Gaurang for giving us an update on the bank, and we will pick this up again next quarter. Thank you. Thank you very much, everybody. Thank you for joining. Looking forward to you on the year-end results call. Thank you. Bye-bye. Thank you so much for attending today's call. You may now disconnect. Have a wonderful day.