Hello and welcome to the Qatar Islamic Bank Conference Call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you would like to ask a question by that time, please press star one on your telephone keypad. Thank you. Now, I would like to hand the call over to Shahan. You may begin. Thank you. Hello everyone. I want to welcome you to QIB's Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call. So on this call from management, we have the bank's CFO, Gaurang Hemani, and Vinay Balakrishnan, Head of Business Reporting and Budgeting, and also head of investor relations. So as usual, we will conduct this call with first management reviewing the company's results, followed by a Q&A session. I will now turn the call over to Vinay. Please go ahead. Thank you, Shahan. Happy New Year and good day, everybody. Thank you for joining the QIB 2024 annual results call. Qatar Islamic Bank yesterday announced financial results for the fiscal year ended 31st December 2024. Net profit attributable to the shareholder amounted to QAR 4.605 billion for the fiscal year 2024, compared to QAR 4.305 billion for 2023, marking an increase of 7% over the last year. The basic earnings per share for the year 2024 is QAR 1.86, compared to QAR 1.73 for the previous year. QIB Board of Directors proposed an additional cash dividend distribution to shareholders of QAR 0.55 per share, that is 55% of the nominal share value. After considering the interim cash dividend of QAR 0.25 per share, the total cash dividend for the year is QAR 0.8 per share, which is of the total nominal share value, which represents an increase of 10.3% compared to 0.725 QAR per share for the previous year. The proposed dividends are subject to approval by the Qatar Central Bank and QIB's General Assembly. The total assets of the bank now exceed QAR 200 billion, representing a growth of 6.1% compared to the previous year, 2023. The growth drivers of financing and investment activities. The financing activities have now reached QAR 125.3 billion, having grown 2.4% compared to last year, while investment in securities have now reached QAR 53 billion, that is up 10.4% against December 2023. Customer deposits at the same point of time now stand at QAR 125 billion as of 31st December 2024, with the financing to deposit ratio at 94.5%, which remains well below the industry average and below the QCB maximum requirement, reflecting the bank's strong liquidity position. On the profitability front, the net funded income represented by income from financing investing activities, after deducting the cost of funding paid to deposit and sukuk holders, registered a growth of 3.8% to reach QAR 5.73 billion in 2024 against QAR 5.52 billion for 2023. The net financing margin for the year represented by financing yields less cost of deposits remains stable at 3.6% compared to 2023. Similarly, the overall net margin of the bank, after considering all profit-bearing assets and liabilities, was also stable at 3.1% against previous year. Net fee and commission income at QAR 867.4 million continued to reflect the bank's healthy core operating and banking services activities. The bank continues to strive to improve efficiency through digitization and automation, supported by strong cost management discipline, helping it to contain its annual operating expenses at QAR 1.14 billion, representing a marginal increase of 3% against the previous year. As a result, the bank was able to maintain its cost to income ratio around 17%, which remains the lowest in the Qatari banking sector. On the asset quality front, QIB was able to manage the ratio of non-performing financial assets to total performing assets around 1.86% as of 31st December 2024, one of the lowest in the industry, reflecting the quality of the bank's financing asset portfolio and its effective risk management framework. QIB continued to record precautionary impairment charges on financing assets for QAR 865 million for the year 2024, and the coverage ratio on non-performing financing assets at 95% as of 31st December 2024. QIB strives towards building stronger balance sheets and was able to bring down the Stage 2 financing ratio from 18.5% at the end of 2023 to 13.4% in 2024. The Stage 2 financing ECL coverage ratio improved from 5% in 2023 to 8.4% in 2024. Stage 1 financing ECL coverage of the bank stands at 3.5%, which is well above the industry average. QIB continues to remain successful in maintaining strong capital positions and at the same point in time, improve dividends and generate strong return on equity to its shareholders. The total shareholder equity has now reached QAR 27.2 billion, an increase of 7% compared to 31st December 2023, thereby improving the total capital equity ratio as per Basel III guidelines from 20.4% to 20.9% in 2024, which is well above the regulatory minimum requirements prescribed by Qatar Central Bank and the Basel Committee. That's it from my side. I will hand it over for the Q&A sessions. Shahan. We can go to Q&A now, please. All right. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening by a loudspeaker in your device, please pick up your handset and ensure that your phone is not on mute when asking your question, and your first question comes from the line of Jon Peace with UBS. Your line is now open. Good morning. Can you hear me okay? Yeah, we can hear you loud and clear. Great. Thank you very much for the presentation. So my first question is, do you have any items of forecast that you're prepared to share with us for the year ahead? Things like loan growth, margin, cost of risk, etc. And I guess I'd be particularly interested in your tax rate expectations for the year ahead. And my second question is, would you please be able to give us the sort of all-in NIM over average interest earning assets and some thoughts about how you think that might develop over the next year? Thank you. Thank you very much, Jon. The first question to say that in terms of our forecast, we expect the private sector credit to grow in the range of about 5%-6% for next year in Qatar, and we expect to grow in line with overall market. In terms of the NIMs, our financing NIMs this year were at about 3.6%, and the overall NIMs were at about 3.1%, as Vinay mentioned in his speech. We expect that we should be able to maintain the same going forward, expecting any major deterioration or a significant improvement, given the fact that there's still a lot of, let's say, change in opinions in terms of if and how the rate cuts in Fed would take up and how QCB is going to follow them. In terms of cost of risk, we continue to maintain our guidance that we have been giving in the past, that based on our asset quality, we really believe we are well provided. However, if we continue to generate strong operating performance, we'll continue to build balance sheet strength, improving the coverage across all the stages of the portfolio, Stage 3, Stage 2, Stage 1, as the case may be. In terms of the tax rate, all I can tell you at this point of time is that Qatar, the jurisdiction of the parent company, has committed to adopt and implement the BEPS Pillar Two GloBE rules, which have multiple mechanisms that aim to ensure large multinational enterprises are subject to a minimum tax. On 23rd of December, the Shura Council in Qatar approved the amendments to select provisions of income tax law, and the General Tax Authority has indicated that they are going to introduce domestic minimum top-up tax starting 1st of January 2025. However, under the GloBE rules, there are a number of provisions that are at national discretion that may change in terms of who falls within the scope of the taxation and who can be exempt, especially if there are some transition rules related to new international expansions, etc. So for us, it will be very difficult to tell you in terms of what is going to be the implication at this point of time till the final executive regulations of the amended tax law are published. So if QIB will be subject to tax, then effectively the covered tax that will have to be paid is 15%. However, there are further discussions ongoing, and which we'll only find out when we get the executive rules, is the fact that the listed entities in Qatar pay 2.5% already as a contribution, whether that will be covered or not. There are various initiatives that are being looked into to say how different large entities would be supported by the government. Some other regional countries have already announced that, and we expect Qatar to follow. So the net impact of the tax rate is very difficult for us to comment because as of now, the tax law is not available for us to review and give you the clear picture at this point of time. What was the second question you had? Sorry, I missed it. I think you'd covered it there in terms of the. Yeah, on the overall NIM. Overall NIM, yeah. Yeah, I've already got it. Overall NIM, yes. Yeah. Thanks very much. Thank you. Your next question comes from the line of Alona Sahid Latsa with Bloomberg. Your line is now open. Hello. Can you hear my voice? Yes, very loud and clear. Thank you for the presentation. Could you give us a bit more color on the deposit and loan growth breakdown for the next year by sectors, preferably to see whether you expect any major inflows from the government sector that was the key driver for the deposits, and on the loan front, which areas and which sectors do you think will be key growth drivers for the coming years? Thanks. Thank you, Shahan. As you know, we are predominantly a private sector bank, and the majority of our exposures is towards the private sector, both in terms of personal banking as well as corporate banking. On the personal banking side, we continue to expect a decent growth that we have been witnessing in the past, and going forward, in terms of the corporate banking, I think a large part of the growth will come from the sectors that are closely associated with North Field Expansion, services sector, and industry, etc. It is going to follow the path of the Qatar National Vision 2030 that has been put forward by the government and the various initiatives that are being taken. In terms of deposits, I think we will continue to see a growth coming from both on the public sector side as well as the private sector side. We saw a decent growth in the public sector deposits this year, and we expect that given the fact that as the hydrocarbon revenues of the country improve, the government will continue to bring in more liquidity into the system, so we believe that our share of government deposits as of now is about 33% compared to 30% last year. We expect that to continue to grow, and what we'll continue to do is we continue to focus, whereby we reduce our reliance on non-resident deposits and focus on domestic corporate and retail deposits. Thank you. And if I may squeeze one more on the rising loan-to-deposit ratio. So in terms of the growth rate, do you think the higher interest rate could be a challenge given the outflow of the non-resident deposits from the system? The outflow from the non-resident deposit from the system is a deliberate attempt by us to reduce the high-cost deposits. So it's not the fact that the change in interest rates are going to have any impact on those. What the bank is going towards is, instead of relying on shorter-term non-resident deposits, we are focusing more on, when it comes to non-resident funding, on the longer-term funding, whether it be through bilateral syndication or Debt Capital Markets issuances. So those continue to remain the focus. How the interest rates evolve, I think the market has seen both low interest rates and high interest rates growing, rising interest rates periods in the last one year, and the growth continues to remain. I think the private sector continues to grow. Public sector credit is not a function of how the rates are, but in terms of the fact that government is going to have surpluses with them. They will continue to ensure that they either repay short-term borrowings that they do from the banking system, including ours. So we saw a repayment, significant repayment at the end of Q4 of this year. We saw a repayment by government to bring in the liquidity back into the country by repaying the short-term borrowings. However, what we did very prudently was we took almost all the liquidity and, in fact, more. We went and invested into medium-term State of Qatar Sukuk. So sometimes when you look into the, like I've been telling in the past as well, when you look into the exposure to public sector, it's not purely the loan book that needs to be looked into, but we should look into both loan and the investment books. So while the top-line loan growth number may seem muted or maybe even a reduction like the way you've seen in Q4, but in reality, it is just more of a transformation of the instrument from financing to investments, which works in our favor in reality because it improves our HQLA, reduces the pressure on loan-to-deposit ratios, helps in improving our LCR and NSFR, etc. So in effect, sometimes when you look at the public sector exposure, it needs to be looked on a combined basis, both from the financing book and the loan book. I expanded more than what you asked because I'm sure I'm going to get some question by somebody else, and I'm just trying to preempt those answers. Fair. Thank you so much. Your next question comes from the line of Chiradeep Ghosh with SICO. Your line is now open. Oh, hi. First, thanks for the opportunity and a good set of results. Actually, very quick question. First is I observed that the real estate exposures seem to have marginally gone up in this quarter. So is the real estate concerns out, or there are not many avenues for you to lend since you moved to real estate? That's my first one. Second is how agnostic are you to rate cut, more rate cuts or fewer rate cuts? Just want to get a sense. How are you placed in the sense would you prefer a more rate cut scenario or a fewer rate cut scenario? And third one is, again, the asset quality is commendable compared to other private sector banks. I'm sure it's a lot to do with the risk management department. Or is there any regulation which is only applicable to Islamic banks, which is indirectly forcing you to be more conservative? That's my question. Going on the first question on the sense that the increase in exposure in the real estate sector, as I said, I don't think so the sector itself is overall a challenge. It's about what kind of assets you are able to acquire that's always there because I think it's not fair to put a broad brush across the entire sector. What we do is we are fairly selective in what kind of real estate exposures we add to our portfolio, more driven by who is the underlying sponsor, what's the kind of project, etc. So we do believe that there are opportunities out there, and we'll continue to look at it. We have never been agnostic to real estate, or neither we said we significantly prefer. It's all about what kind of opportunities that are available and whether they fit within our risk-return profile that we assign to that kind of each sectors. In terms of your net profit margins, as I said, I think we have seen, and as we have been telling in the past as well, that effectively the way the balance sheets of a large part of the Qatari banking system, especially I can tell for QIB, is that we are kind of neutral in the sense that even if the rates go up, I think we are able to charge to customers a higher rate, but a large part of it also goes away through costs of funds and vice versa if the rate drops. So that's the reason I said while there is a bit of, let's say, the views keep changing in terms of the number of cuts and the timings of cuts. I don't think so that we are really that sensitive in terms of if a couple of basis, a couple of rate cuts come this year or in the second half of the year or whenever it is. So we are fairly comfortable where it comes. In terms of asset quality, I don't know what to say because there's no difference whether you're an Islamic bank or not an Islamic bank. At the end of the day, the asset quality is an asset quality. A customer is performing, and a customer is not performing. The guidelines and the rules by the central bank apply to all the banking sector equally, right? So what we have been doing is that, yes, as we have said, we are a risk-averse entity. We many times compromise balance sheet growth in order to make sure that we get the right quality of asset growth. At the end of the day, it's not the top line that really matters. It's all about how are you adding shareholder value while generating the bottom line after taking into consideration the cost of risk. So we continue to remain conservative. I think we believe there's a significant shareholder value that you can add by trying to be a more consistent and a more, let's say, a bank that is able to have strength to be able to handle any challenges or shocks that could come in. So I think we continue to remain risk-averse. We continue to take precautionary provisions, but that's more driven by our own risk management and financial management policies rather than anything to do with being an Islamic bank or not an Islamic bank. So there is no additional collateral requirement for Islamic banks. It's all the same, right, for all banks? There are no requirements in terms of it's all about how you are able to structure your loan book, right? So it's all about individual, let's say, negotiations and individual relationship with different clients. What really is a difference is when you take a real estate collateral in an Islamic bank, I would say the value of the collateral has got nothing to do, but the advantage that we have is more often than not, the collaterals are transferred in the name of the bank. While in many of the conventional banks, they are more, let's say, hypothecated in the name of the bank, and the beneficial interest is transferred. Here, we get both the beneficial interest as well as the legal ownership. Very clear. Thank you very much. Your next question comes from the line of Abhinav Sinha with Lesha Bank. Your line is now open. Yeah. Hi. My question was on the cost of risk. So if I look at the fourth quarter number, it was significantly down to 34 basis points. So just wanted to check, is this a gross number, or is it a net of some recovery? And if that's the case, then what would it have been without the recovery part? Thank you. The cost of risk that you look at, it is always the net cost of risk is after the recoveries. And you do never look at it in isolation. So we did have significant recoveries in Q4. And what we did as we took advantage of that, and instead of reversing those to P&L, etc., we on a conservative basis went and downgraded some customers and took coverage all the way up to 95%, even on those ones. As I said, if we have our cost of risk is more driven by how our overall operating performance is. We believe that we are adequately provided when you look at Stage 1, Stage 2, Stage 3 coverage. So it's not about looking in a piecemeal basis. It's always the overall picture that one needs to look at. Got it. Thank you. Your next question comes from the line of Nikhil Pothani with CBFS. Your line is now open. Hi. Good afternoon, everyone. I just have a couple of questions. Actually, one is pertaining to your loans. I mean, overall, for the last two to three sessions which we had conference calls, we have been always talking about the NFE project coming into picture in terms of private sector, these services industries. And to a certain extent, we don't know really how much that actually has come up as far as 2024 numbers are concerned to private sector. So of course, you can just give us an understanding about that and going forward in 2025. Second, actually, the question in terms of provisions, we understand, but what we see is your NPL also has increased. Now, I can understand there is a yearly exercise that you do, but do we see the trend, I mean, in the sense that, again, coming back to normal in the first three quarters and the fourth quarter again going up? And lastly, on your foreign exchange gains, sir, I mean, this has been higher than normal rate in the fourth quarter. I mean, against 10-13 million, your run rate, we are talking about 60. So what has actually changed there? I mean, have your exposure to foreign assets or something else increased, and that's what you have gained? Thank you. Okay. Answering the question, the first one on the North Field Expansion, we've been telling that we were expecting in the second half of 2024, but the larger effect to come from 2025. Not much came up in 2024. I think it did come, but it has been slower than what we were expecting. And that's why we are even marginally behind our guidance that we had given on the loan, on the financing growth. We expect that 2025 to be a better year in terms of what will be the effect of the North Field Expansion into the private sector. In terms of Stage 3, yes, it is an annual exercise that happens in Q4, Q3, Q4. That's just the culmination of what keeps going on during the full year, right? So during the year, we keep downgrading and we keep upgrading. So if you see, we did some downgrades in Q1. We did some downgrades in Q4. A lot of it is driven by the fact that where we see the portfolio evolving and how do you think, how do we think is the best way to handle? As I mentioned in the previous to Abhinav's question, to say that we did have significant recoveries coming in Q4 of this year. We tried to be more cautious and saying instead of taking it to P&L, we tried to, we downgraded some customers from Stage 2 to Stage 3 and utilized the recoveries to cover those. So while it may appear to be a Q4, but if you look at, if you take a look at our numbers, you will see that we downgraded customers in Q1, where we also did a lot of upgrades from Stage 2 to Stage 1. We downgraded from Stage 2 to Stage 3, so it's an ongoing process where the bank continues to assess the portfolio. Some of it does come at the end of Q4 because some of them are guided by QCB. However, we didn't have anything much this year. Most all the downgrades largely have been more voluntary by the bank. In terms of foreign exchange, I don't think so that it's always good to put a number and expect that the same number will go quarter by quarter. It's a combination of what kind of sales revenue we are able to generate in terms of the customer flows that come in. It's a function of what currencies in which the foreign exchange is there. If there are non-dollar remittances, etc., larger ones, your margins tend to be higher. Sometimes the treasury takes a view on certain currencies and takes trading positions, and then you get it. So we always keep saying that certain numbers do not make sense to form an annual opinion by just looking at one quarter, etc. In general, for fees and commissions, for foreign exchange, etc., there are seasonalities involved, and that's the reason why to get a more comprehensive view, one should look at full-year numbers rather than quarter-by-quarter numbers. Okay. Coming back to the loan part of it, I mean, you mentioned 2025, you're optimistic on NFE. Can we say, I mean, in the first half itself, we could be seeing something to look forward to? It could be possible. I wish I could give you the time frame to it, but unfortunately, no. As I said, we are expecting a lot of it to come in 2025. Timings are a function of when the contracts get awarded to those contractors, subcontractors, when they come to the banking system to get the funding, etc. So sometimes you could have the contract signed, but the drawdowns could happen at different stages. So I would be a bit reluctant to give you a commitment in terms of the timing, but we believe that a lot of it is going to come in 2025. You are factored in 5%-6% growth, right, for 2025? Yes. Yes. Okay. Thank you. Thank you, sir. Your next question comes from the line of Waruna Kumarage. It's SICO. Your line is now open. Hello. Hi. Good afternoon. Thank you for the call. I have two questions. The first one, pardon me if I explained this point earlier, but could you explain why the reason for the improvement in the net interest margin in the fourth quarter? That's my first question. And secondly, in terms of recoveries, can you explain, I mean, which segments were these recoveries related to, that recoveries that you recorded during this year? Those are my two questions. Okay. The Q4, I think, as I mentioned to you, that the liquidity in the system had significantly improved, which allowed us to be far more, let's say, prudent in terms of the cost of funding that we were able to generate by bringing it down. Given the fact that we had strong liquidity, we did not need to participate in expensive deposit chasing that some banks had to do. So I think it's more driven by how we were able to optimize our cost of funds. And the fact that just because a rate cut happens, sometimes asset repricing can be delayed while deposit repricing could be quicker. So again, I go back to say, because there could be timing differences, one quarter NIM is not the right indicator. Our guidance for next year is you need to look at the full year NIMs and work on them rather than looking on a quarter by quarter basis. Recoveries came from multiple areas. The majority of them were from some corporate as well as from the retail side of it. There were some contractor-related recoveries, contractor financing-related recoveries. There were some other services sector that we had. As I said, we are always a bit more cautious when we downgrade and we take 95% coverage, and that means that if there are recovery, if there are repayments, etc., we are able to recover the entire money back, so unlike, I think we are one of the two or three banks in the country who maintain high coverage ratios on the Stage 3. That helps us to ensure that if you have recoveries, you are able to have reversals in your cost of risk, which you can utilize again to provide for new downgrades, etc. Okay. Thank you, and just one more question. In terms of cost of risk, when you elaborated on the guidance, I mean, directionally, can we expect an improvement, or I mean, how do you see going forward in 2025? As I said, in reality, we are fairly well provided. Our Stage 3 coverage ratio sits at 95%. Stage 2 coverage ratio is 8.3%. Stage 1 is definitely an outlier, positive outlier compared to market. So directionally, I think we are well provided. And unless and until there is a significant asset quality deterioration, which we are not expecting at this point of time, the cost of risk should normalize to lower levels compared to what we have been doing over the last five years, three, four years average, if you can take it. I will not want to compare on a year-by-year. Sometimes it is cost of risk more of a medium-term view you take on the asset quality rather than purely on a quarter-by-quarter or year-by-year view. Okay. Thank you very much. Your next question comes from the line of Vimal Surendran with AllianceBernstein. Your line is now open. Hello. Am I audible? Yes, please. Yeah. I have a couple of questions. One was about the support package for the real estate sector. Last quarter, we had heard from some of the banks that the government is contemplating some form of support package to the real estate sector, and some of the banks would be the beneficiary of it. I was just wondering if there has been any progress on that front and what would be the form of that support package. I have a couple of other questions as well. Honestly, I don't think so. We as a bank made any comment about this. So I would not be able to comment on what other banks would have commented. So from our perspective, I don't think so there was any such explicit support package that was and we surged. If at all, we were not a part of it because our asset quality did not really demand that we need some kind of support from government or anybody. So I would not be able to comment on my peer banks' comment. Sure. That's really clear. On the other side, on your funding plan side, you have a couple of bonds maturing in 2025. So you would need any plans to issue Euro bonds in the near term, probably down the year. And you also do not see any capital instruments, Additional Tier 1 or Tier 2 bonds in your capital structure. Do you have any plans to issue those kind of structure? Going on the first bit, DCM on the debt issuance, debt sukuk issuances. It's not purely about what maturities are coming up. It's purely driven by what we believe is the right time to go to the market. If you see that we went into the market in September of 2024, whereby we were able to raise funding for five years at 100 basis points spread over 3.485, all in at 4.485, which was the lowest by any GCC bank in 2024, lower than the secondary market spreads of QIB or any other bank in the country. So effectively, I think what we believe is not purely that because we have a maturity, we need to go to the market. The timing we try to find which is the best time to go to the market and to raise it. In hindsight, if you look at it, we raised funding at a rate, all in rate, lower than what U.S. Treasury can be issued for the similar tenor. So it's all about we definitely, however, as a policy, what we want to do is we will go to the market at least once a year. We want to build a yield curve so that it helps in subsequent issuance pricing. So you can expect us to come to the market in 2025. However, the timing would purely be dependent upon the needs of the bank and the prevailing market conditions. We have enough liquidity, and there are alternative sources of repayment that are available to us, which we can use to go and repay maturing bonds. In terms of your second question, we do have Additional Tier 1 issuances, which were done privately placed about six, seven years ago, and we continue to have them. These were all issued to government and government-related agencies in Qatar. Some of them are fairly priced. Our capital adequacy is very strong and really doesn't justify that why we should be going and raising more capital, unless and until that we really have a need or an opportunity coming from some inorganic growth, etc., which is nothing at this moment in the plan that I can talk about. So overall, I would say we continue to generate a lot of capital through net income retentions. However, we continue to make sure that we continue to improve our dividend. I think we raised our total dividend to QAR 0.8 this year, improving the payout ratio to 43%. So we believe the right balance is to say how you do internal capital generation as well as try to keep the shareholder dividends, etc., well managed so that you have a strong capital adequacy. And at the same point of time, make sure your capital structure is very efficient. Understood. That's very elaborate and clear. Thank you very much. Your next question comes from the line of Murad Ansari with GTN. Your line is now open. Yes. Hi. Good afternoon. Thank you so much for the presentation and your detailed answers. Just a couple of quick questions. One is around provisioning and cost inflation. Appreciate you've spent quite a bit of time in answering that. But if we just look at your last four quarters, you had first quarter, which was higher and aimed at building up coverage. Your fourth quarter is low because of NPL recovery that you highlighted. So maybe it's what we've seen in second and third quarter is kind of a baseline for us to look at in terms of modeling for next year, one. Second question, I appreciate that there are more details to come out on the taxation front, but could there be a case if because one of your peer banks has suggested that there is a to use a 15% base case tax rate for Qatar. But I mean, in your case, could there be a situation where tax rate is actually effective tax rate could be less than 15% if this is a base case is kind of implemented in Qatar on corporate tax? Thank you. Answering on the first question on the provisioning and cost of risk, I think if you look at not 2024 alone, if you look into going to the previous years, we as a bank have a kind of we tend to build provisions earlier in the year, and you'll always see by Q4 the provisions go down, irrespective of whether you have recoveries or no recoveries, etc. So it is more of a trend. We do not believe one quarter is any fair representation. It is a full-year picture that you need to take to really, if you want to do any kind of a modeling. So I think I've given my guidance in terms of where we see the cost of risk evolving. We are well covered in terms of where our asset quality lies at this point of time. And so we see room for reducing it. However, if we have strong operating performances, we'll continue to build provisions. So that's one of the strategies that the bank has adopted since more than, I think, almost a decade, I would say. And I think we have been very successful, and that's what really drives the stability of the bank's performance and ability to make sure that we are better positioned to handle any challenges, if any. In terms of effective tax rate, each bank is positioned in a very, very different perspective. It is dependent upon what is the size of the bank, which countries you operate in, etc. So it is very difficult to comment on one bank's tax rate and try to equate it to another bank. As I mentioned in my detailed explanation, we need to wait for the final effective regulations of the amended tax law to be published. There are certain provisions that are allowed under the GloBE Rules for transition, etc., which, if applied in Qatar and if we are eligible to it, maybe there'll be no taxation to us. That's the best-case scenario. On the worst-case scenario, we could have the 15% tax rate, right? So I would not like to make, let's say, give you any guidance on something that I am not in control of, right? So it's purely a regulatory thing. We need to see the regulations. And once I see the regulations, we would be able to tell you exactly where we stand. Got it. Got it. Thank you so much for that detail. I appreciate your detailed answer. Just one question. I mean, you've got capital ratios already strong. Your asset quality is in extremely good shape. You're looking at 5%-7%, let's say, loan growth, which can be easily managed through where you are in terms of capital adequacy, and you're generating sufficient capital. You mentioned that the bank has raised the dividend for this year. I mean, with such healthy capital ratios, I mean, is there a possibility that we could continue to see a steady improvement in payout ratios going forward? Any buyback plans, anything like that that we could expect? Because, I mean, otherwise, I mean, this capital generation continues to build on. At what point does it? Yeah. Thankfully, we are still able to maintain a very healthy return on equity. So I think the shareholders should fairly be happy that we have been putting yes. Could it be? Could the payout ratios improve or be maintained? Definitely, in the sense that I said, we are in a much better situation in terms of our ability to make sure that our shareholders are rewarded. In terms of your other questions related to buyback, etc., I think a lot of it is these are things more where the board has to take a call, and I would not be able to give you any guidance on it till the board takes any decision whatsoever. As of now, they have not given any specific guidance in terms of if and when they would like to embark on any buyback plan, if any. However, I think, as I said, yes, you can expect that the dividends of the bank will remain steady or have room to improve given where our profitability and our capital positions are at this point of time. Any possibility of switching to maybe a quarterly dividend or half-year is the way to go? Semi-annual dividends is what you will. As of now, I think we will continue with more of a semi-annual dividend. However, what we will continue to keep looking into it is in terms of what could be the size of the dividend and etc. It can always be looked into it. However, I don't think so. I think it's just one year that you have started. You want to get a little bit more, let's say, both the bank and the investors need to be ready to adapt to the new, let's say, the dividend strategies and the policies that are being implemented by different banks. So I don't think so that we are going to have quarterly dividend, at least not for 2025. Forward, I can't add that 2026 is next year, and we'll take it again at the end year end next year. Great. Thank you so much. Really appreciate your detailed answers. Your next question comes from the line of Ravi Moosun with Epicure Investment Management. Your line is now open. Hi. Hello. I just had one question regarding tax. Will the Pillar 2 tax be implemented from 1st January? As per the announcement made by the General Tax Authority, they have indicated that the domestic minimum tax will be implemented effective 1st January. However, till the law is passed, because it's still waiting to be officialized at Amiri Diwan and waiting to be published in the official gazette and then the executive regulations to come out, till it is there, can't give you a firm answer. But from the indications, as of now, it appears to be 1st of January. Okay. Thank you. Your next question comes from the line of Aybek Islamov with HSBC. Your line is now open. Yes. It's Aybek Islamov from HSBC. Thank you for your Q&A so far. So I think, yeah, I've listened to your answers earlier. So it looks like, given the tax rate goes up this year instead of 25%, let's say it's 15%, it does look like you have some levers in your cost of risk to mitigate that negative impact of taxation, and your margins are going to be resilient, right? I just want to summarize and just have your opinion on this. Is it the correct way to think about it based on what's been discussed so far? And secondly, looking at the asset quality of Qatar Islamic Bank, I think this year you've made very good progress bringing some of the Stage 2 loans into Stage 1 and keeping your Stage 3 loan ratios quite in check, I would say, right, during 2024. Should we expect more of this trend in 2025, like further reduction in the Stage 2 loan ratios and an increase in the Stage 1 loan ratios, right, improving quality of loan portfolio? Thank you. Thanks, Aybek. I think I would not like to mix the topic related to cost of risk and taxation. As I said, cost of risk is more driven by how our operating performance is out there. Taxation is a regulatory matter. So I would not say that they are fungible. So it's not fair to say cost of risk and tax can be managed. I don't like that word because you're not managing them. It's about trying to make sure that we are well provided, and we are trying to make sure that the bank's balance sheet continues to improve. So I would say they are not related. On the second part, on the terms of how we are managing our cost of risk, and I think we had been telling that we continue to evaluate on an ongoing basis. When there were concerns raised in terms of the high level of Stage 2, we had tried to assure that a large part of it is good quality assets waiting to be migrated to Stage 1. Sometimes it is also that we deliberately keep them in Stage 2 because we want to be fully sure in terms of how the asset quality is really improving. We are fairly comfortable with the levels they are. I think it is the percentages that don't matter from our perspective, but it is what is underlying, which we monitor as a bank on a name-by-name basis. Anything in Stage 2, Stage 3 is monitored very, very closely on a name-by-name basis, so yes, for an external reader, ratios do give you guidance, but in terms of our perspective, we are fairly comfortable. We continue to improve our coverage ratios across all the portfolios. It's there. Yes, we'll continue to see once we are comfortable with certain assets that we believe are ready to migrate to Stage 1, we'll work towards that. And similarly, if we believe that the asset quality has deteriorated or there is a chance of deterioration and we have an ability to be able to absorb it, we move them to stage three, like I just mentioned earlier to one of the questions that we did voluntary downgrades in Q4 to stage three just to make sure that the cost of risk that we have built can be properly allocated across the financing portfolio. Okay. Thank you very much, Mr. Gaurang. Your next question comes from the line of Andrew Brudenell with Ashmore. Your line is now open. Great. Thank you very much. I just wanted to just maybe, if we assume that there is some sort of tax coming, timing and size unknown, fine, there's a tax coming at some point. So just thinking about a few things, just to circle back on dividend per share, can we assume that the absolute dividend per share, at least in the short term, will be protected from this? As I think another caller mentioned, there's plenty of capital, etc., and returns are pretty high. So should we assume that there won't be a commensurate drop in absolute DPS, they'll be protected? And then two, thinking sort of more medium term, does the management have some plans to mitigate this coming hit to returns? And I guess maybe related to that, cost control has been phenomenal. As you mentioned, cost-to-income ratio is lowest in the country, is one of the lowest in the region. So maybe that isn't a lever that can be pulled to bring returns back up, net returns back up once you've got a tax. So maybe it is. I don't know. Are there management strategies in the medium term in place to get returns back post-tax hit? Thanks very much. Thanks. So on the first side, as I said, we have adequate profitability and adequate capital to be able to support dividends at the current levels. In absolute terms, our payout ratio is 43%. There is nothing to stop us to increase our payout ratio if required. And as I said, the payouts are not always dependent on whether you are going to get, whether the tax is going to come or not going to come. So I would say in terms of our ability and from whatever we know from the board, they are committed to make sure that the shareholders are well taken care of through dividend payments. In terms of tax, as I said, I don't want to preempt. As I said, there are two very 180-degree situations whereby we could not be subject to tax all the way up to being subject to tax to 15%. The bank continues to work towards operating performance, whether it be improving the revenues, improving the margins, improving the cost-to-income ratios, improving the cost of risk. And that's an ongoing exercise, right? And it's not, I think, driven by the fact is the bank's management style, the bank's strategies and policies going to change because the tax is going to come? No, I think we want to run our bank as efficiently, as risk-averse as we have been doing. And if there is a regulatory change and the tax comes in, I think that sometimes will have to be taken as it comes. I don't think so that is going to change the behavior and the pattern in which the bank has been managed and run over more than one decade. Okay. Thank you. Your next question comes from the line of Jas Pasnuri with NBK Wealth. Your line is now open. Can you hear me? Yeah. Yeah. This is Jagadeeshwar Pasnuri from NBK Wealth. Thanks for taking my question. One question I have, I know I see there is a significant improvement in Stage 2 loans from the beginning of end of 2023 to end of 2024. That's very good news. But my question is, you have close to QAR 18 billion in Stage 2 loans. Can you help me understand by which are the significant sectors that are contributing to these Stage 2 loans? There's no specific sector. It's widespread, fairly evenly across our asset sector-wise distribution. Yes, there are a few concentrations which are there, which are related to maybe a bit of contracting, etc. But in general, it follows the pattern. Retail and personal banking would be there. You will have some industries. You will have some services sector. So there is no specific concentration that I would like to say that really changes it. It's fairly widely distributed across based on the portfolio distribution of the financing book. Okay. How about malls and hotels? Do they contribute outside? They're in line with the proportion? They're more or less proportional with a little bit more concentration towards contractors, etc., which is there. But other than that, there is no specific sectoral concentration that we see. A bit of real estate. As I said, it's all about our loan book is fairly, shall we say, 50% is personal banking and real estate. So that would contribute accordingly in the Stage 2, and the rest all will follow as well. Okay. And you're confident that there will be a continual growth in our improvement in the Stage 2 loans going forward as it happened in 2024? As I said, at this point of time, I have no reason why we have to believe that we should see a significant deterioration. We continue to work towards how we can improve it and try to make sure that we also continue to be well provided for it as well. So yeah. Okay. Yeah. Great. Thank you. There are no further questions. I would now like to turn the call back over to the speakers for any closing remarks. Okay. Since there are no more questions, we can wrap up the call. I'd like to thank Gaurang and Vinay for giving us an update on the Q4 and fiscal year figures, and we can pick this up again next quarter. Thank you. Thank you, everybody. Thank you. Thank you, Shahan. That concludes today's call. Thank you all for joining. You may now disconnect.