Thank you, Drew. Good afternoon, everyone.

Thank you for joining us today to review FAB's financial performance for the second quarter and first half of 2026. Today's call is hosted by our senior management team, represented by our Group Chief Financial Officer, Lars Kramer, and our Group Chief Risk Officer, Chris Jaques.

They will be answering your questions at the end of this short presentation. With that, I will now hand over to Lars for the presentation.

Thanks, Sofia. Good afternoon, everyone, and thanks for joining us.

As usual, I'll go through the slides quite quickly, and then hopefully we have sufficient time for Q&A. Starting with slide 4 of the deck, which summarizes our key highlights.

FAB delivered a record set of results in the second quarter as well as year-to-date. The H1 2026 profit before tax was at 13.2 billion dirhams, and this was up 3% year-on-year, or 8% if you exclude management overlays.

The group return on tangible equity was at 18.5%, and this is firmly above our guidance of 16%. Group revenue was up 7% year-on-year, reflecting sustained momentum across the franchise, together with disciplined growth as well as active balance sheet and liquidity management, which drove earnings accretion as well as strong capital generation.

Importantly, we maintained robust balance sheet fundamentals across asset quality, liquidity, as well as capital, and with our AA- or equivalent credit rating recently reaffirmed by all three major rating agencies. Overall, these results reflect consistent strategy execution and a continued focus on shareholder returns.

Given our strong year-to-date performance and confidence in business momentum, we are reaffirming all elements of our guidance, and with loan growth now expected at the upper end of the guidance range. Turning to slide 5, which demonstrates progress against our strategic priorities.

We're delivering broad-based growth, and supported by deep client engagement as well as diversified sector exposure. Our leadership in MENA investment banking continued to strengthen, reflected in top-tier league table rankings and record DCM execution, with deal volumes up 58% year-on-year, and this was complemented by continued franchise expansion across Islamic, retail, SME, as well as wealth, and evidenced by 17% year-to-date growth in Islamic financing, and 85% growth in new-to-bank SMEs, and a 7% year-to-date growth in retail deposits, as well as a 20% growth in retail assets under management.

The international franchise continued to build momentum, reinforcing its strategic importance as a key driver of growth as well as diversification and cross-border flows. International revenues grew 35% year-on-year, and now contribute 22% of group revenue.

International loans grew 6% year-to-date, supported by diversified growth across strategic markets, while continuing expansion of our network and capabilities is enhancing connectivity across key growth corridors. We are also seeing tangible benefits from our investments in AI, leveraging a rapidly expanding library of agents as well as use cases.

Productivity improvements are exceeding 20% across key workflows, with manual effort reductions of between 70% to 80%. This supports greater scalability as well as enhanced client service.

These outcomes reflect meaningful progress in executing our AI strategy as well as our regional leadership, which has been validated by leading external benchmarks. We've achieved a top three ranking overall in the 2026 Evident AI Middle East and Africa Banking Index, and were the only bank to lead across multiple pillars, ranking number one for both leadership as well as transparency.

The group has also been recognized as a Microsoft leader status for AI and digital workforce maturity. Sustainable finance remains embedded in our organization as well as our client strategy.

To date, we facilitated around 395 billion dirhams in sustainable and transition financing, reaching 79% of our 2030 target of around 500 billion. We've also maintained leading ESG credentials through an MSCI ESG rating of AA and the highest LSEG ESG score in MENA.

Now turning to the next slide, as I mentioned earlier, all three major rating agencies recently affirmed our AA- or equivalent credit rating with stable outlooks. These ratings reinforce FAB's status as one of the highest-rated banks globally, reflecting a uniquely strong credit profile and proven resilience through economic and market cycles.

Together with our systemic importance and sovereign linkage to Abu Dhabi, they underpin our funding advantage and consistent access to global capital markets. Year-to-date, we've managed to raise over $6 billion equivalent across multiple formats and currencies.

Each issuance was oversubscribed, reflecting sustained confidence that global investors place in our credit profile and underlying fundamentals. Slide 8 summarizes our financial performance for the second quarter as well as first half.

Our operating income rose 7% year-on-year to 19.5 billion dirhams. This was driven by 14% growth in net interest income, which reflects strong business volumes as well as margin expansion.

Non-funded income remained resilient year-to-date, reflecting strength of our diversified capital-light business mix, with higher global market sales income and stronger investment portfolio performance, fueling a strong rebound in the second quarter. Operating profit grew 7% to 15.25 billion dirhams, reflecting sustained revenue momentum and disciplined cost management amid continued investments.

Net impairment charges were up 39% year-on-year, primarily reflecting management overlays, while underlying asset quality remained resilient. Group net profit reached 10.73 billion dirhams, which is up 1% year-on-year, with Q2 net profit increasing 14% quarter-on-quarter and 4% year-on-year to 5.72 billion dirhams.

The next slide highlights our diversified and broad-based momentum across our franchise. All three businesses delivered revenue growth, supported by increased client activity, deeper relationships, and consistent strategy execution.

Investment Banking and Markets revenue grew 8% year-on-year to 6.42 billion dirhams, driven by strong client engagement across the entire platform, and this resulted in a 22% year-to-date growth in loans and a 10% growth in deposits. Wholesale Banking revenue increased 16% year-on-year to 3.41 billion dirhams, with loans up 9% year-to-date.

Non-funded income grew 28% year-on-year, and this highlights clear momentum in deepening client penetration. Personal, Business, Wealth and Privileged Client Banking delivered revenue growth of 2% year-on-year to 6.58 billion dirhams, supported by continued execution of its growth strategy.

Importantly, this franchise momentum is increasingly translating into diversified and higher quality earnings. Our international franchise contributed 22% of group revenues, while overall non-funded income now represents 41% of total revenues.

Together, these results demonstrate the strength of our diversified model and our continued progress in delivering sustainable, capital-efficient growth. Turning to slide 10 on net interest income and margins.

Net interest income grew 14% year-on-year to 11.48 billion dirhams. Group net interest margin was 1.97% over the first half of '26, which is 7 basis points higher year-on-year, supported by targeted repricing across both assets and liabilities, active treasury and balance sheet management, and a more efficient liquidity deployment profile, including lower placements with the Federal Reserve.

Q2 '26 NIM was at 1.99%, and this was up 4 basis points, reflecting continued pricing discipline, active liability management, as well as the benefit of higher interest in suspense recoveries during the quarter. This demonstrates our ability to protect margins even as market dynamics continue to evolve.

In terms of interest rate sensitivity, a 25 basis point parallel movement in rates is estimated to impact the bottom line by about 200 million dirhams, and this assumes no offsetting management actions. This is also unchanged from the previous quarter.

We now expect full-year NIM to be at the top end of the 180 to 190 [unclear] percent range in light of the year-to-date performance. Turning to the next slide on non-interest income.

Overall, our non-funded income performance highlights the strength of our diversified earnings engine, enabling us to deliver resilient earnings across varying market conditions. Non-interest income reached 8.02 billion dirhams in the first half, representing 41% of group operating income.

While 2% lower compared to the first half of '25, this performance remains robust by historical standards, with Q2 '26 representing the second-highest quarterly non-funded income performance for the group. Looking at the various components, fees and commissions grew 20% year-on-year, supported by strong origination as well as resilient trade-related fees.

FX and investment income was 7% lower year-on-year, yet recovered strongly in the second quarter, rising 39% sequentially, with higher client flows and transaction volumes driving a 67% increase in global market sales revenue. This was complemented by stronger investment portfolio performance, supported by favorable fair value movements across our equity positions, which partly offset the normalization in trading revenues following a very strong prior period.

Turning to the next slide on costs. Operating expenses were running at 4.25 billion dirhams in the first half, and this was up 6% year-on-year, driven by an 8% increase in staff costs from very targeted hiring as well as expanded AI capabilities, and a 14% rise in IT costs linked to ongoing investments in the franchise.

Group cost-to-income ratio remained at an industry-leading level of 21.8%, underpinned by disciplined cost management and continued productivity gains, with AI increasingly enhancing efficiency at scale. On the next slide, we look at our disciplined growth.

We delivered strong and well-diversified lending growth in the first half, with gross loans increasing 7% year-to-date, or 46 billion dirhams, to 679 billion dirhams. Loans were 1% lower sequentially, primarily reflecting the proactive optimization of selected lower return exposures, particularly within the international portfolio, and this was alongside origination discipline as well as some repayments.

This is while underlying client demand remained healthy, with diversified growth across client segments, client sectors, and geographies, supporting portfolio resilience. Looking ahead, our healthy pipeline, together with the UAE's accelerated infrastructure investment cycle, gives us confidence in the outlook for the second half and beyond.

FAB's market-leading franchise, global reach, and proven execution track record position us well to capture these opportunities. Just to give you a bit of perspective on this, FAB has consistently maintained leading positions across all major MENA investment banking league tables, including ranking as the number one MENA loans bookrunner by both volume and deal count over the past 6 years, arranging over $70 billion worth of transactions and a transaction count of about 189 transactions.

This is almost double the activity of the nearest competitor. This reflects our ability to originate, to structure, to underwrite, and to distribute complex financing solutions at scale, leveraging an extensive network across more than the 20 markets we operate in, connecting the UAE's investment opportunities with global capital.

It's a clear competitive advantage that enables us to capture value across the entire financing chain, drive capital-efficient growth, diversify earnings, and deliver attractive and sustainable returns. Looking at deposits on slide 14.

On the liability side, customer deposits were up 1% year-to-date, or about 12 billion dirhams, to 853 billion dirhams, while the group maintained a strong liquidity position, with June-end LCR at 140%, which is well above regulatory requirements. The sequential decline in deposits was primarily attributable to seasonal factors as well as the redemption of CDs, partially offset by healthy inflows across corporate, retail, and CASA balances.

From our perspective, the focus is on maintaining the right mix of stable, cost-efficient funding to support our business growth, leveraging our strong credit profile and one of the broadest funding platforms in the region. On slide 15, we look at asset quality.

Overall, our group asset quality remains resilient, underpinned by prudent underwriting, a high quality portfolio mix, and strong coverage. Against an evolving macroeconomic backdrop, we continue to maintain a conservative approach to provisioning while closely monitoring developments across our markets and sectors.

Group NPL ratio was at 2.2% at June-end '26, which is an improvement of 60 basis points year-on-year, with a healthy 108% provision coverage ratio, which strengthens to over 160% when we include collaterals. Net impairment charges were up 39% year-on-year to 2.05 billion dirhams, primarily reflecting management overlays of 650 million dirhams.

In the second quarter, the reported net impairment charge was 950 million, which is 14% lower quarter-on-quarter, as higher recoveries of approximately 185 million dirhams were partially offset by additional management overlays, reflecting the recalibration of forward-looking macroeconomic scenario weightings and our ongoing assessment of emerging risks. Overall, our provisioning levels remain appropriate for the prevailing risk outlook, underpinning balance sheet resilience.

Turning to capital on slide 16. Capital generation was a particular highlight in this quarter, with CET1 ratio increasing to 13.7%, up from 12.8% at the end of March.

This represents a strong quarterly accretion of 92 basis points. The increase was driven mainly by strong capital generation from earnings, contributing 63 basis points, alongside a further 7 basis points from lower RWAs, mainly reflecting reduced market risk.

Favorable fair value reserve movements also added 21 basis points, largely reversing the mark-to-market impact from the widening of credit spreads that we mentioned in Q1. On slide 17, the key message is that we are reaffirming our full-year guidance, but with our loan growth now expected towards the upper end of our low to mid-teens guidance range.

While we've revised our '26 GDP growth assumption to 3% from 4.2% to reflect the impact of ongoing disruptions on economic activity, we do remain confident in the medium-term outlook and expect real GDP to recover to around 4.8% in '27. The prevailing interest rate environment also provides a supportive backdrop for net interest margins going forward.

To conclude, the bank delivered a record first-half performance, generating a RoTE of 18.5%. These results reflect the strength and resilience of our diversified business model as well as the disciplined execution of our strategy.

As we look ahead, we remain focused on capturing the significant opportunities arising from the UAE's investment and growth agenda, while maintaining rigorous capital allocation and risk discipline. With a strong balance sheet, with our top-tier credit ratings, our market-leading capabilities, and clear strategic momentum, we're very well-positioned to convert those opportunities into attractive long-term returns for our shareholders.

Now with that, I return you to our operator as well as open the floor to Q&A. Thank you.

Hi, Lars. Rahul here from Citi.

Thanks for taking my question. I have two, actually.

The first one is on portfolio optimization that you alluded to earlier, which resulted in negative sequential loan growth during 2Q. Just wanted to get some more color on this optimization.

What kind of loans are you letting go here? In which sectors are we talking about?

Are these government sector loans or non-government loans, because assumed they are low-margin products which are being let go? You mentioned they are international largely.

Just wanted to reconfirm on that. Will this optimization continue in the second half of 2026, resulting in further boost to margins in the medium term?

How should we think about this portfolio optimization process? Where are we in that process?

That's the first question. My second question is on the SME sector.

The slide you mentioned that SMEs are up 85% year-to-date, if I got it correctly. Is this the new focus area of the bank to get the margins higher?

Can you talk about your kind of exposure in the SME space, how big is the portfolio compared to your current sort of loan book, and is there a target to move it to a particular sort of range in the medium term? That would be useful.

Maybe one quick one before I let go. The Tier 1 capital notes, I see that the second-quarter coupon payment on Tier 1 capital note is considerably higher compared to what we had in second quarter of 2025.

Could you please clarify what is driving this much higher payment for coupons in second quarter '26? Thank you.

Rahul, hi. On portfolio optimization, this is not a sort of one-off thing.

This is something that we are continuously doing. Really, it's also not specifically a particular country or a particular sector.

Generally, most banks' loan portfolios have a component of low returning, and pretty much where we get the opportunity, we will always look at either repricing, or if we aren't able to reprice, to upsell in terms of getting a broader relationship with customers. Then, if neither of those work, and if we also don't have a sort of strategic relationship, then we would, in some cases look actually at exiting relationships, and that really does free up RWA or capital.

It's a normal course of business. That's a way that we maintain our portfolio.

You're right, though, it is an area which has been more skewed towards, let's say, the international franchise. We've been very focused over the last couple of years on improving returns in the international franchise, it's not really a surprise.

It's actually a strategic intent to both grow the international franchise, but also to grow it with decent returns. This is something that we've spoken about quite often over the last few years.

On the SMEs, absolutely. SME growth is a real strategic focus for us.

We've said before in terms of consumer, in terms of SME, in terms of wealth, relative to the various revenue streams and the capital allocation in the group, these have tended to be underweight areas which we have been very focused on growing out. It's actually very pleasing to see the growth in SME lending.

At the same time, it's also on the liability side that we're focused on growth. Then so I think your other question was on Tier 1.

In terms of payouts, we did have higher balances in Q4 and in Q1 '26. Over here we've now normalized our Tier 1.

There's not really a decrease in Q2.

Yes, hi, Lars. It's Naresh Bilandani from Jefferies.

Thank you for the presentation. Just three questions, please.

One is very keen to hear thoughts on the outlook for the NIM somewhat more near-term going into the second half of this year, as we've seen domestic liquidity tighten and the cost of deposits from the smaller banks moving up. Now, if we assume we don't get a Fed hike, is it fair to think of a somewhat more pressured NIM in 2H compared to what we've seen in 1H?

That's the first question. A second is, is it fair to think that you've seen some good gain from the bond market recovery between May and June, and that has fed into your non-interest revenues?

If that is indeed the case, should we see these gains kind of subdue again in Q3, given that the spreads have widened once again in the recent weeks? That's the second question.

My third and the final question is, if the status quo stays on the current elevated geopolitical risk going into the second half, would you say that the impairment charges for the franchise likely to increase in the second half of this year compared to what we've seen in the first half? Any guidance there, that would be super helpful.

Thank you so much.

Hi, Naresh. Look, on the NIM outlook, it's always a difficult one.

We've tried to give a bit of help in terms of our range, where we talked about in the first quarter we expect it to be around 180 to 190 for the year. You can see we're a bit more positive this quarter in terms of where we see it at the top end of that range.

I think we've done a really good job in terms of managing that NIM and keeping it resilient, despite what you're seeing in the market over here in terms of there's definitely funding pressure in the deposit markets. You're seeing actually some anomalous pricing going on.

Now the good thing is because our franchise has a very wide footprint and a very diversified set of options to gather funding, we haven't had to put pressure on pricing in the market, and we've been able to, in a way, even diversify our mix. What we've actually been focused on when it comes to funding as such has really been in a way extending the duration of our funding.

That's been a primary focus, and diversifying the mix of that funding. Now, our funding costs, if I remember correctly, has stayed stable at about 2.9%.

I think that gives you an indication of how successful we've been in managing the cost side of that equation. This ties back to the earlier question around managing the capital and optimizing, one of the ways of optimizing that capital has obviously been in terms of going for repricing.

We've spoken before how there is a lag also in terms of loan repricing relative to deposit repricing. Your deposit repricing always leads.

The bulk of our loan book is floating, there will be a catch-up through the year. We've said before that that catch-up is anywhere between 3 and 6 months of lag effect.

The bond market recovery really has been something where you've seen it manifest itself in what I spoke about earlier, which is that 21, 22 basis point pickup on the capital, because we have a lot of our bond book, our HQLA book, running through AFS, therefore through OCI. If you're going to see volatility, it's going to be around that.

Yes, where we have some credit tightening or credit widening, we do see a bit of that volatility, but it's not as wide, I would say, in the second quarter or as we're sitting here now in the first start of the third quarter as we saw in terms of Q1. On the impairment front, I'll let Chris give you some insights on impairments.

Thank you, Lars. Thank you, Naresh.

I think so in terms of the outlook for the second half, I think as you were asking around if the sort of the situation, geopolitics, remains similar, then I think obviously if it remains similar, then we will just want to continue our prudent approach that we're currently taking, and obviously be sort of forward-looking. As you've seen in this quarter where we've continued to look at that from an overlay perspective.

I would expect us, really if it stays the same, to just remain cautious. Obviously we also, today we reiterate our guidance for the full year, as we said at the beginning of the year.

I think at this point in time, that's our perspective on our outlook.

Can you hear me now?

Yes, hi. Thank you very much for the presentation.

My first question is around margins. I don't know if you've disclosed this, but how much of the margin uplift was due to the reversal of interest in suspense?

My second question is around the loan growth guidance that you've given, which is mid-teens. I think you are currently standing at 7% in terms of loan growth in the first half.

If I remember in the first quarter, there was quite a strong contribution from shorter-tenor lending. Considering that some of that can potentially unwind, how comfortable are you with your full-year guidance?

Secondly, again we've heard, we've read a lot about potential projects that are going to kick-start in Abu Dhabi. How much of that pipeline you see actually being realized in the second half of this year?

My final question is around a piece of news that came around a deal that you did in Nigeria. It was basically, if I'm not mistaken, a $1.5 billion financing agreement.

I was just wondering what is the economics of this transaction? How does it fit in your strategy or strategic framework?

Any color on that would be quite useful. Thank you.

Hi, Shabbir. In terms of the margin uplift, we don't talk about specific basis points on interest in suspense, but there was an effect.

If we go back, I would say there is a little bit of interest in suspense every quarter. I would say over the year-to-date or the half-year to half-year, I would say it is not that meaningful.

In the end, the number that I gave you in terms of the 180 to 190 with the top end of the 190 range, that's what we're looking at defending. The question on the loan growth, yes, definitely the trade financing that we put on in the early part of the year, which was predominantly January and February, does tend to have a tenor of 6 to 9 months, we haven't yet seen it come off.

It will come off in Q3 and Q4. Obviously we've taken that into account when we've looked at our projected forecast and our guidance.

You asked me how confident I am. I wouldn't have upgraded, in a way, the guidance to top end of the mid-teens of our range if we weren't seeing And in fact, that is exactly to your third question on I suppose what's become known as the capex supercycle.

We do anticipate, and of course it's a multi-year investment flow, but we do expect to start seeing origination in various areas, starting already probably tail end of Q3, Q4. That is one of the key underpinnings of our projection.

In terms of the Nigeria total return swap, maybe Chris can give a little bit of color.

Thank you, Lars. Shabbir, around that coverage, I think how does it fit into the economics and our strategy, I think we continue to strengthen our international footprint.

Where we are a strategic partner across some key trade and investment corridors. Obviously we continue to build out our representative offices and also our sort of branches from that strategy.

Really it fits into our strategy from that perspective in terms of our international footprint and expansion. Obviously we have defined risk appetite frameworks and governance that oversees all of that, that aligns to everything from a group perspective.

Shabbir, I hope this answered your question. Drew, can we take the next question, please?

Yes. Hi.

Thank you for the conference call. Thank you for your answers and insights so far.

I wanted to focus on the asset quality, right? Let me just ask two things here.

The first one, as you explained, you've taken additional ECL overlay in the second quarter, right? Which is tied to the uncertainty from the ongoing regional conflict.

Can you please explain what explicit risk factors and triggers determine whether overlays will increase, stay the same, or maybe released, right? That's the first one.

Secondly, you have a very useful discussion of non-distressed restructurings in your financial statement, and that there are loans which are being impacted by the conflict since the end of February, right? They remain Stage 1 if the criteria are met, right?

I'm summarizing what's in your discussions on this. How can we kind of understand what proportion of the book has received payment deferrals, restructuring under this framework?

Right? My understanding is that, and correct me if I'm wrong, but is it correct that obviously if the loans stays in Stage 1, doesn't trigger any modification losses, and doesn't trigger any additional provision expenses, right?

What could be the triggers that these loans eventually will go on to Stage 2 or Stage 3? Is it removal of the resilience package by the central bank, or could it be something else?

Right? These are my two questions.

Thank you for your questions. It's Chris.

Let me first talk to the ECL overlay and I think your question was asking about sort of triggers and also looking at sort of any future overlays and what we would be looking at. In the second quarter, what we were looking at really is the continued level of uncertainty and also specifically around what we would call sort of model uncertainty within the IFRS 9 framework.

That really was from our perspective taking a cautious and prudent approach at this point in terms of establishing a management overlay for that sort of level of uncertainty. Going forward, I think yeah honestly there are a broad number of triggers that you would be looking at across the portfolio and the macro environment that may trigger some form of management overlay.

Whether that be something around the macro variables as we update those in Q3, whether it be around sort of further uncertainty do we see in the macro environment, or indeed something within our portfolio. I think it would be reasonably broad, but what we have is an established governance where we discuss those types of overlays and also the calibration of them through sensitivity and scenario analysis within the portfolio.

A fairly sort of broad array could trigger something, but obviously at this point, we're already looking at sort of how we view the outlook today and with the portfolio and the macro view that we've seen. From the loans that have been impacted, I think sort of really what we would say is across both the retail and the institutional portfolios, it's really been a very small number of loans, whether that be from retail customers or indeed corporate, that we have entered into some form of deferral or restructuring upon.

It is not a material view in terms of the impact into the portfolio from a numbers in terms of the outstanding loans, and therefore I think if you're thinking about the credit quality, the staging of our books, then really there wouldn't be any impact on the staging. We're comfortable with the staging of our portfolio as we see it.

As the central bank support package was updated and a lot of those sort of deferrals, etc., start to come away in the third quarter as well. Really, there's not a meaningful impact at all on our portfolio from staging or from the total number of clients impacted.

Good day and thank you very much. Question 1 is on your slide 11 on FX and other investment income.

What what what was why was GM trading segment so weak and treasury segment so solid in the second quarter? Maybe you can help us give us a bit more clarity.

Second question is on the strategy. At the very beginning of Q&A, you did mention this rationale for portfolio optimization and you've mentioned that it's not new, it's lasting for some time.

I I'm trying to understand this a bit better. You have ample capital, you have availability of funding, RoTE is above your long-term target.

What is behind this intention to to optimize? Thank you.

Hi, Olga. All right, look, on the non-funds income, specifically the two buckets, on the GM trading, I think you'll remember we had an extremely strong first quarter because over here we were really able to see a lot of volatility in the market, clearly as a result of the conflict.

There was a lot of volatility around commodity pricing, there was volatility on gold pricing. We had a good quarter in terms of trading positions and results.

Now clearly things calmed down a bit in the second quarter, and therefore the opportunities were also not necessarily there to have a repeat of Q1. On the other side, if you look at Q1, we really in that bucket of treasury and other, and I think the important thing here is other, because the treasury side of things is pretty stable.

We're running anywhere between 300 and 500 million a quarter on that bucket. The other bucket was where we saw equity repricing that happened in Q1.

We have an strategic equities portfolio, and that's actually where Q1 we saw pain, and that's reversed, in the same way as you saw the reversal on our available-for-sale HQLA portfolio. Now clearly the equities portfolio is running fair value through P&L, and the bulk of the HQLA portfolio is running fair value through OCI.

I think that's why you see that volatility on effectively two very contrasted quarters. Your question on our RWA optimization strategy, look, I think it's just good business.

That's why we are in the business of deploying capital, deploying balance sheet for good returns. Clearly if we can deploy less capital for higher returns, that's good for our shareholders.

You hear me talk about capital-light, that we're trying to move our business more and more away from a pure traditional lender and deposittaker to diversifying the income streams. That's why I talk a lot about how we are working on effectively building out the non-funds income as a proportion of our total income, because that tends to be income that does not consume capital and does not consume a lot of balance sheet.

Therefore, where we do consume balance sheet, we will continue to be driving that we get the right returns on that balance sheet, specifically on the loans. If we're not getting the right returns and we're not able to upsell and we're not able to diversify the income stream by being able to do our broad range of products and services with that customer that we're looking at in terms of underperforming, then, as I said earlier, we will look at exiting, and that will then free up capital to be deployed in better-returning business.

Sorry, I hope you can hear me now?

Kato, we can.

Great, thank you very much. The first question I wanted to ask was about the competitive environment.

The banks like yourselves that are growing are all growing with sovereign exposure on the corporate side. It's very focused where you're seeing all public or public-related entities.

It's very focused and I just want to get a sense of just how intense it is, and how comfortable you see that space, or are you having to compete on rates on that side? Then, I just wanted to clarify, because, I'm not clear, were there or were there not overlays in 2Q?

Are you happy with the levels you were at the one quarter? Then, I just wanted on the guidance, which is really encouraging and very impressed that you've raised it.

This assumes that the current status quo remains for the full year, correct? I.e., the conflict that is as it is today continues till the end of the year?

Just want to clarify that. Lastly, on the total return swap with Nigeria, isn't that exposure actually 5 billion, but they've just drawn down the first 1 billion 1.5, but there's more to come, right?

Thank you.

Hi there. Competitive environment, it's a highly competitive market at the best of times, right?

That is really, you can see we're a universal bank. We compete internationally, we compete locally.

In a way, we have 40 banks operating in the home market, you can imagine there is a lot of competition. For sure we are competing on price, but this is what I was saying I think earlier in my introductory remarks.

What actually differentiates us here and why I think we are particularly well set up, and this I think should also then answer your question on guidance, is exactly that with the phase that we're going to go into now in terms of the infrastructure investments both onshore and offshore, building out more resilience, in terms of basically the overall infrastructure, whether it is logistics infrastructure, whether it's rail infrastructure, whether it's ports, whether it's defense, you name it, we as a bank have been leading anyway over the last 6 years in terms of league tables and structuring these types of complicated loans, lead arranging syndicates, that will only continue going forward, and again we'll be in the leading position to benefit from that. Also our entire franchise when it comes to investment banking, global markets, sector-based corporate focus, again ideally suited and fully differentiated from the competition in terms of project financing capability, structuring capability, advisory capability, just knowledge of sectors.

Then also in terms of our global reach, having our network now of 23 countries, again that gives us a both on the lending side gives us a big distribution capability when it comes to syndicates, but also obviously on the deposit side an ability to access deposit pools and funding pools globally. Look, on the TRS, I don't think we're going to talk more on the TRS, because we don't really talk specific customer.

Just rest assured that TRS is a common instrument that we use. It's part of business as usual.

You'll see all banks do TRSs. Whatever we do, we have our limits, we have our risk appetites, and we operate within that, and whatever deals we've done and whatever has been talked about in the press, it's completely reviewed against those limits, those risk appetites, and for me more importantly, against whatever returns we're making and are we getting good returns for the risk that we're taking.

On the overlays, maybe, Chris, you can say something on that.

I think Kato, just to confirm, the answer is yes, we did overlay in Q2, we have a total of 650 million overlays for the first half of the year.

Hi, thank you for taking my question. This is Jitendra Singh from Al Ramz Capital.

Two quick questions. First, maybe can you just confirm on the effective tax rates?

Is it again higher because of this Egyptian franchise where you gained from your devaluation of Egyptian pound? Could you confirm that, and how do you see this for the second half?

That's one. Second, I just wanted to get your comments probably on South Africa.

You have recently announced plan to get license in South Africa and you plan to establish your banking presence. Could you help us understand the strategic rationale, why does South Africa make sense at this point in time in the group's expansion, and what's the competitive advantage do you believe FAB can build there?

Then third, maybe if you could comment on your Saudi franchise, what's the size of the business today, what's the growth there in the last few quarters, particularly in 2Q, and how do you see the trend, and how do you see the opportunities in that market given the current geopolitical situation? Thank you.

Jitendra, hi there. Look, talking about effective tax rates, it's something that's going to be volatile.

It's very much driven by what percentage of a quarterly bottom-line result we're making in the international versus the local. You're right, yes, Egypt is a big driver there.

This quarter we also had certain sort of withholding tax effects that weren't necessarily there this quarter, but they were there last quarter. They tend to also change throughout the year.

That's why, in terms of giving you guys some insight as to what is the number that we expect on a full-year basis, it tends to be below this 20% number. That's what we are really actively managing.

If you look at the second half versus the first half, and you look through the lens of that 20%, that's roughly what we'd expect to see. South Africa, look, South Africa is a non-story.

Okay? We are not opening up anything in South Africa.

The story was triggered by an old court case which came to life after I think it was either 5 or 10 years, there is no strategic rationale for me to discuss. Our strategic rationale in Africa, you saw what we did with Nigeria.

We've talked about that for the last 6 months. We've opened up a rep office in Nigeria.

That is where we're active for Africa. In terms of KSA, it's a key part of the group.

It is apart from Egypt, it is the country that is also fully universal outside of the home market and outside of Egypt. What you've also heard me speak about when it comes to KSA in the past has been we have for the last 2, 3 years been very focused, yes, on building the franchise, but building the franchise in a very disciplined fashion when it comes to returns.

If I go back to the earlier part of this call and we're talking about capital optimization and we're talking about the international network and we're talking about improving returns, this is one of the countries. It's about 4% of the total group's asset base.

It's from a liability base, maybe about 1%. It's meaningful because it's a strategic development area, but in terms of overall materiality, those are the sorts of sizes that we're talking about.

Hello. Hi.

Good afternoon. Am I audible?

Yes, Waruna, we can hear you.

Yes. Thank you very much.

Just one question from my side regarding the different segments of growth that you have achieved in second quarter. I was wondering if I look at the trend from 4Q onwards, there was spike in FIs in 1Q which has kind of gone out of the system.

At the same time, even similar trend can be seen in government also. There is a growth in 1Q and then it's like a wind-down.

I want to know, from the government loans point of view, do you expect return to growth in second half, given this infrastructure projects which has been announced in UAE? What kind of trends can we expect from the FI side?

Thank you.

Waruna, hi there. In terms of the FIs, that was exactly the short-dated trade finance that we put on in January and February.

That's why you saw the big spike, and as I said earlier, this is what's going to pull back over the remainder of the year. I don't expect to see another spike.

It's a very seasonal approach that we take, actually also part of our capital optimization. We utilize some excess capital during the year, and then it comes off at the end of the year.

The other one is when it comes to government, you're right. This is in terms of the infrastructure expected sort of build-up of lending, it will be partly government, it will be partly GREs.

It's going to be spread across different segments. Yes, this will definitely come back in the second half of the year.

Hi, thank you for letting me on. I have one question.

A big part of the UAE growth story, and therefore banking demand, has been the inflow of affluent expats and the real estate activity that comes with it. It's something that investors ask us about a lot.

Could you talk about how important that cohort is to your medium-term growth outlook, and when a high net worth individual relocates to the UAE, where do you see the biggest benefit for the bank? Is it primarily deposits and CASA balances, mortgages and lending, or wealth management and investment fees?

Finally, just the last part of this is, how much of your recent deposit and fee income growth would you attribute to this customer segment, and do you still see the inflow as a structural tailwind, or are you starting to see signs of it normalizing?

Vineet, hi. Look, demographically, the country is on a path of increasing population, and if you go back over the last 10 years, 15 years, you've seen how the population has doubled.

We continue to try and build out population, this will be an undertone to any strategy that we have as a bank, is that that demographic effectively positive momentum will be beneficial to our business. It will be a key part of the strategy.

Again, it ties into what I was saying earlier in the introductory remarks. If you have a look at what we would call our underweight areas of business, which we are trying to also grow at bigger than market, it's certainly in this area of wealth.

This is where, if you're talking about the high net worth expats, this would be an area. Very much in our wealth, as well as then in our asset management, which is a new line of business that we're also trying to grow out.

I would say you would see some benefit because generally these high net worth individuals probably a number of them are also having their own businesses, and that could be an SME business that gets established here or a mid-corporate business. That is, again, an attractive part of why we would be servicing them, and in that sort of overall full-spectrum relationship.

It would be at a personal level, but it would also then be looking at a corporate level. We would be benefiting on all of that.

In terms of a percentage of our overall business, it is still, as I say, an underweight percentage which we see as a really big opportunity over the next 3 to 5 years to grow into.

Thank you, everyone, for joining today's call. As usual, if you have any further questions, don't hesitate to reach out to us in IR, whether myself, Ravita, [unclear], anyone.

What to do. Otherwise, you know that there is the AI chatbot on our IR website, you can also use that to find answers to your queries in a convenient way.

Thanks again. I think you have a very busy day today, all the best, and let's keep in touch.

Thank you.