Good afternoon, ladies and gentlemen, and thank you for joining us today. I'm Mohamed Farhan, Head of Investor Relations, and I'm pleased to welcome you all to the Commercial Bank's first half 2026 earnings conference call.

On this call, I have on to my left, Stephen Moss, who is the Group Chief Executive Officer, Commercial Bank of Qatar, and on to my far left is Noman Ali, who is the Chief Financial Officer of Commercial Bank of Qatar. During the duration of this call, we'll put you on mute, and once the presentation is complete, I'll come back to you for question and answers.

Now, I request everybody to please put yourself on mute, and now I hand over to Stephen Moss.

Thank you, Farhan. Good afternoon to all.

Let me first start by providing some comments on the regional situation. As I said last time, Qatar entered this period with strong macroeconomic fundamentals, significant sovereign buffers, prudent fiscal management, and strong credit fundamentals.

The country continues to navigate the ongoing uncertain environment from a position of strength. Situation clearly remains fluid, but what we have seen on the ground is a return to normal operations across government, financial markets, aviation, and trade.

Construction, real estate, and finance have held up well. The sectors most affected, in particular hospitality and recreation, we very much expect to recover, although the timing clearly depends on how the situation develops.

That said, the foundations for a recovery and growth are robust, further supported by the planned LNG production expansion. Moving to Commercial Bank, our established business continuity arrangements enabled us throughout the first half to maintain seamless and secure access to banking services for all of our customers.

We at Commercial Bank continue to operate from a position of institutional strength with a very clear strategy as we set out earlier this year for the period from the 1st of January 2026 to the 31st of December 2030, supported by prudent risk management, a resilient balance sheet, and a clear focus on delivering sustainable long-term value for our customers, our people, and our shareholders. We also benefit from the support of a proactive and forward-looking regulator.

The Qatar Central Bank has, during the period, as you would expect, taken prudent precautionary measures to support liquidity, customers, and orderly market functioning. Let's turn to strategy execution.

In January, when we announced our strategy for the period 2026 to 2030, I said that 2026 would be a period of execution. I want to give you an update of where we stand at the half year.

The newly established strategy execution office tracks the execution of the strategy with strategic initiatives across retail, wholesale, treasury, and the group's enabling functions, supported by detailed actions, milestones, and executive accountability. The outcomes during the first half demonstrate that our strategy is well into execution mode.

Overall, we delivered a resilient operating performance. We made progress in managing our funding costs, we continue to work on the legacy book, we progressed our digital and AI agenda, and we maintained strong capital and liquidity.

In retail and wealth, we continue to deepen customer and wealth relationships while protecting the strength of our core businesses across cards, employee banking, and remittances. We strengthened our position as one of Qatar's leading wealth advisory providers for affluent and high-net-worth clients, supported by our digital wealth platform.

Assets under management increased by 18% year-on-year to 3 billion Qatari riyals. Fee income continued to grow, supported by wealth management and remittances.

In wholesale banking, lending growth remained selective and focused on higher return customer segments. We continue to strengthen our transaction banking proposition and deepen cross-sell opportunities through cash management, payments, and trade finance.

Furthermore, we enhanced collaboration between our wholesale and retail businesses across salary accounts, paycards, commercial cards, wealth management, and insurance. In overview, we remain very focused on achieving five clear outcomes: drawing a line under our legacy book; reshaping the bank to a more capital-efficient and fee-driven business model; capturing growth in our underpenetrated segments, including Qataris, SMEs, and affluent clients; delivering sustainable shareholder returns; and embedding AI across the bank.

Turning to AI, AI is an enabler of our strategy and an area where we are making tangible and measurable progress. Priority use cases continue to be identified, and during Q1, I highlighted the progress made through our customer retention AI program, our credit card spend and activation predictor, and the launch of the bank's proprietary generative AI platform.

In Q2, we've continued to introduce new initiatives as part of our AI roadmap. We developed our proprietary agentic AI credit proposal platform.

This supports end-to-end credit request workflow from document collection and data preparation, through analysis, review, and approval. This materially reduces the time required to produce a credit proposal.

We also introduced an AI agent assistant for our contact center. This provides agents with immediate access to information on products, services, scripts, and standard operating procedures through a single interface.

It's designed to improve the consistency and accuracy of customer interactions, reducing handling time and supporting faster resolution of customer inquiries. We also introduced machine learning enabled point-of-sale back lending proposition for SMEs.

This uses transaction-level business performance data to identify customers with a strong propensity for a particular product and provides relationship managers with targeted data-driven actionable opportunities. The product is now available through digital banking, giving eligible SME customers more convenient access to financing.

Our AI program continues to be focused on unlocking new income opportunities, improving productivity, and reducing cost. Now, let me walk you through our consolidated performance and targets, which is a chart you will see quarter-on-quarter up to the end of 2030.

The group delivered good operating performance during the first half. Core operating performance remained solid, supported by good momentum in net interest income, fee income, and underlying lending, excluding acceptances.

Net interest income increased year-on-year, driven by growth in earning assets and disciplined liquidity deployment. On liquidity and capital, our position remains strong, and we remain focused on improving our funding mix, building customer deposits, and reducing the cost of funds over time.

Overall, reported profit was, as it will be for each of the first three quarters of this year, lower year-on-year as a result of our more balanced approach to provisioning as we set out at the beginning of the year. As opposed to the previous practice of carrying a significantly larger provision charge into the fourth quarter, we are provisioning more consistently throughout the year.

In the first half, we also adjusted our ECL model so as to have a higher weighting to the downturn economic scenario to account for the regional conflict. This has contributed to higher provisions and entirely accounts for our first half net cost of risk being slightly higher than our target range of 90 to 100 basis points at 106 basis points.

Our full year 2026 net cost of risk guidance remains 90 to 100 basis points, to be clear. From 2028 onwards, we continue to target a more normalized net cost of risk of 70 to 90 basis points as we continue to work through our legacy exposures in an orderly and proactive manner and reduce our NPL ratio to below 5% by 2030.

A prolonged regional disruption could at some point affect provisioning and recovery timelines, and we will continue to reassess the position through our normal governance processes. At present, there is no change to our cost of risk targets that we set out at the start of the year.

Regarding loan growth, we expect selective growth of approximately 3% per annum, subject to market conditions and our strict return discipline. As I will continue to say, we will not pursue balance sheet growth at the expense of appropriate risk-adjusted returns.

We continue to target a steady improvement in our return on equity, with our targets reflecting the impact of the global minimum tax, and our cost to income ratio does remain work in progress and is currently above our target level. Our thorn costs reflect continued investment in our people, technology, digital capabilities, and AI.

Our focus remains on converting these investments into sustainable operating leverage so that we can deliver positive jaws from 2027 onwards, supported by ongoing digital simplification, operating leverage, and cost discipline. In terms of our dividend, we remain committed to targeting the delivery of a sustainable dividend.

Finally, on asset quality, our 2030 target for our NPL ratio is below 5%, and we target improving our Stage 3 coverage ratio to above 70% by 2030. On capital, we continue to target maintaining a strong CET1 and total CAR comfortably above regulatory minimums while creating room for selective growth.

To close, the regional conflict has of course created uncertainty for our customers, the businesses that we bank, and for markets. We will continue to monitor developments closely and manage the bank's operations accordingly and prudently.

However, I wish to reiterate that we remain very focused on the execution of the 2026 to 2030 strategy as announced in January this year. Thank you.

Thank you, Stephen. Now, we'll go on to a financial performance update by Noman Ali.

Noman, over to you.

Hello, everyone, and thank you for joining in. Getting into the results for the six months ended 30th June 2026, I will focus mainly on slide number 11, which shows the consolidated financial highlights of the group.

In summary, the group reported a net profit before the impact of Pillar 2 tax of QAR 1,083 million. The year-on-year movement in profit was supported by strong and resilient operating performance in the first half of 2026.

Net operating income increased by 9.4% to QAR 2,459 million, driven by increase in net interest income and fee income. This was offset by higher net provisions due to a more balanced approach of loan provisioning across each quarter and increased operating expenses as the group continued to invest in digital capabilities, including AI and people.

The results also include a reported loss of QAR 28.2 million from Alternatif Bank after the impact of hyperinflation accounting. The group also accrued for the BEPS Pillar 2 tax charge, a charge of 69.3 million.

As a result, the group's reported consolidated net profit after tax for the six months ended 30th June 2026 was 1,013 million Qatari riyals. Talking about our businesses, the retail and wealth business continued to perform strongly with good and consistent returns supported by higher fee income.

We also continued to strengthen our advisory-led wealth proposition through enhanced digital capabilities supporting deeper penetration of the mass affluent and private banking customer segments. On the wholesale banking side, our lending book, excluding acceptances, grew, with growth remaining selective and focused on high-return customer segments while we continue to deepen cross-sell opportunities.

Treasury continued to make progress in diversifying the funding mix and managing funding costs while maintaining a strong liquidity position and access to funding markets. Our associates continued to perform well as we continue to work closely with them in the execution of their strategies.

If we deep dive into the numbers, our consolidated net interest income increased 14.4% year-on-year. Firstly, in relation to interest income, the gross consolidated interest income increased by 6.5% when compared to 30th June 2025.

This was driven by growth in loans and advances to customers, excluding acceptances, and investment securities. Alternatif Bank also contributed to the growth in the interest income.

Our interest expense increased by 2.4% when compared to the year-on-year 30th June 2025, mainly due to higher funding volumes, including customer deposits and wholesale borrowing. Despite the increase in absolute interest expense, the group's overall cost of funding reduced as a result of growth in low-cost retail deposits and the replacement of high-cost international deposits with repos.

As a result, our net interest margin stood at 2.2%, similar to the levels reported in the previous three quarters. For the rest of 2026, we will work towards maintaining our NIM around 2.2% with a downward pressure of 10 to 15 basis points.

NIM pressure is mainly due to stiff competition for domestic deposits and refinancing of some of our medium-term debt issuances, which were previously at a lower rate. In the next phase of our strategy, we specifically identified the need to optimize our funding mix by increasing CASA deposits and improve the deposit composition in the overall funding pool.

We made progress during the first half, and we will continue to do so in the future. Moving on to non-interest income, our net fee and commission-based income increased as a result of retail banking fees, in particular higher wealth management and remittances fees.

Further, there was a reduction in net income from investment securities due to lower dividend income and mark-to-market movements related to investment securities at fair value through P&L. In terms of operating expenses, the reported costs were higher year-on-year, primarily reflecting increased staff costs and continued investment in technology, digital, and AI capabilities as part of the execution of our strategy.

As a result, the group's reported cost to income ratio reached 31.6%. At domestic level, the cost to income ratio on a reported basis now is 26.9%.

Alternatif Bank reported a cost to income ratio of 68.2%. Our cost to income ratio remains a work in progress and is currently above our targeted level.

Going forward, we expect to maintain positive jaws, reflecting revenue growth outpacing cost, not just in one year, but consistently across the cycle starting from 2027. Moving on to net provisions, net provisions increased to QAR 717 million as compared to 295 million for the same period in 2025.

In relation to provision to loans to customers, the increase in our provisioning for the first six months reflects our approach towards maintaining a more appropriate balanced provisioning throughout the year and also includes an ECL charge due to the regional conflict. Our ECL model includes a higher weightage for the downward economic scenario.

The macroeconomic indicators will continue to be reassessed as the situation continues to evolve. In relation to recoveries, we continue with our robust efforts, resulting in an increase of 39.7% year-on-year to 187 million Qatari riyals, which supported the net provision position.

As a result, our gross cost of risk was 142 basis points and our net cost of risk was 106 basis points. The net cost of risk is slightly higher than our full-year guidance range due to the conflict-related ECL charge, as mentioned earlier.

Our Stage 3 coverage ratio has improved to 61.5% at 30th June 2026 versus 60.4% at 31st December 2025. The NPL ratio slightly decreased to 6% at 30th June 2026 from 6.1% at 31st December 2025.

There is also reduction in Stage 2 balances year-on-year, and our Stage 2 coverage ratio increased to 14.2% coverage ratio from 10.4% reported at 31st December 2025. Moving on to the balance sheet, total assets were up 1.4% year-on-year to 284.5 billion, which included an increase in investment securities.

Loans and advances to customers stood at 102.7 billion Qatari riyals. Excluding acceptances, loans and advances to customers increased by 3.6% year-on-year to Qatari riyals 98 billion.

This is driven by growth in wholesale lending, both in government and public sector, as well as corporates. Further, retail lending also continued to show good progress with year-on-year growth.

On the wholesale side, our focus will be on lending to high-return customer segments and high-growth sectors. On the retail side, we will aim to accelerate growth in Qatari customer segments and maintain our leadership in the expat segment.

From a 2026 perspective, we continue to expect selective loan growth of 3% till the end of the year. Investment securities increased by 15.4% year-on-year to reach 41.3 billion Qatari riyals, with the group continuing to invest in high-quality market securities.

Customer deposits increased by 1.8% year-on-year to 85.1 billion at 30th June 2026. The year-on-year increase mainly is driven by time deposits.

Further, we continue to focus on low-cost deposits, which increased by 1.6% year-on-year and represent 42% of the total customer deposit mix. There was a change in the funding mix as decrease in wholesale deposits was replaced by repo transactions and syndicated borrowings.

The proactive management of funds during the conflict period was mainly done through a combination of short- and medium-term repos. This was timed with the maturities of certain high-cost bank borrowings and more expensive international deposits.

Our capital remains strong. CET1 ratio increased to 12.8% at 30th June 2026 from 12.5% at 30th June 2025, and the total CAR increased to 18.9% at 30th June 2026 versus 17.2% at 30th June 2025, mainly as a result of a new AT1 issuance at Alternatif Bank level and lower AT1 deductions.

Alternatif Bank reported a net loss of 28.2 million Qatari riyals after hyperinflation for six months ended 30th June, compared to a net loss of 107 million Qatari riyals for the same period in 2025. Although there is an improvement in the performance at the operating profit level, the results were impacted by hyperinflation accounting.

Alternatif Bank at consolidation level represents only 4.9% of the overall balance sheet size. That was all from my side, and happy to take questions.

Thank you, Noman. We can now move on to question and answers.

If you have any questions, please raise your hand, or you can ask the question in the Q&A box. We have our first question from Rahul.

Rahul, please go ahead.

Thank you. Hi, this is Rahul Bajaj from Citi.

Thanks for taking my question. I have three questions, actually.

The first one is on margins. We see very good improvement in sequential margins, and Noman kindly explained the maturities and how the cost of funding has helped the bank.

Can you please, one, highlight if there are any one-offs in the second quarter sort of margin number? You mentioned 10 to 15 basis points decline from here on into the second half of the year.

Just wanted to understand what are the kind of moving parts here. Is it again mainly purely because you're expecting higher cost of funding as we move into the second half of the year?

Also, A-Bank, if I look at A-Bank's margins, it appears quite strong in 2Q, whereas some of the other MENA-based banks, GCC banks who've had Turkey business, they've seen Turkey margins compress quite considerably in 2Q. Why is there divergence wherein CBQ's Turkey business margins have gone up in 2Q whereas most other banks are seeing margins decline in Turkey?

Just wanted to understand that on the margin front. My second question is on provisioning.

I see, of course, a sizable jump in provisioning in second quarter. Just wanted to understand to what extent—and you mentioned that this increase is driven by kind of changes to bull, bear, base case sort of scenarios in the IFRS 9 model, but I just wanted to understand to what extent the increase in provisioning is driven by deterioration in accounts because of the conflict.

Has the conflict resulted in an increase in sort of bad loans or accounts defaulting? Just wanted to understand that, and to what extent that is the reason for the increase in provisioning.

My third and final question, if I may, please, is on lending growth. Noman just said, from a 2026 perspective, you continue to expect 6% loan growth till the end of the year.

Just wanted to clarify, do you mean 6% on top of the first half number, or is it for the whole year 6%,

and

does this include...

Yeah.

Rahul, just I think you've had four. I think that was four by my counting.

Anyway, Rahul, go ahead.

On the lending growth, Rahul, it was 3%, actually.

You did say 6%.

Apologies, I think I just misstated there, but it was 3% lending growth we are expecting.

That's why on margin...

3% for the full year, is it?

3% for the full year,

yes. That's right.

Just on the margins, as we mentioned that we have maintained margins over the last three quarters, and one of the reasons, as I explained, was that the way we were managing our cost of funding, we were able to do certain repo transactions and replace it with some of the high-cost borrowing and some of the international deposits. That helped us in maintaining some of the pressures.

On the interest income side as well, I think we are being selective and getting loans at a rate which is meeting our internal target thresholds. Overall, from a pressure which I mentioned about 10 to 15 basis points, that remains there because of two main reasons.

One is that there is stiff competition for local Qatari deposits, and secondly, we had our EMTN which matured in May, around $700 million, and we are looking at the market conditions and whenever the market improves, we'll go to the market. That was done a few years ago at around 2, 2.1%.

Whenever that gets refinanced, that will be at a higher level. We do expect some margin pressure from that side.

On the Alternatif Bank side...

Just to add on margin, Rahul, you can see from the investor presentation and we can talk about this later in the week when we meet, but we've taken the acceptances down quite materially, and that's a highest cost source of funding certainly for us. That's been a reasonable contributor, and you can see we're talking about billions of Qatari riyals lower.

That's one. Then just to address the sensitivity, the 15 basis points potential reduction, that's not a position for between now and the end of the year, to be clear.

That's just a medium-term, we think there is a risk there could be a decline in margin over the medium term, certainly not by the end of the year. Clearly, if there's a 25 basis points interest rate rise, that's going to help us on the margin, it'll make the 2.2% more resilient.

Alternatif Bank...

Alternatif Bank, as you can see that the Alternatif Bank lending has significantly increased, year-on-year there is a significant increase in lending, which has helped. I think in Alternatif Bank the NII has increased considerably because of our lending growth.

Then I think some of the swap cost has also increased, although the interest expense has increased a bit, but we also had some swap cost which is going in the fee and expense line. Overall, as the rates in Turkey at the start of the year, the interest rates went down by 300 to 400 basis points, and that helped us during the year in improving the net interest income at the Alternatif Bank level.

Then you had a question on loan provisioning. As I mentioned on loan provisioning, one of the key things was that instead of taking a large provisioning in the fourth quarter of the year, we are basically making sure that in the first three quarters of the year, we are taking more balanced provisioning.

Hence, what you will see is, Rahul, that in the first three quarters of the year, you will see more provisioning compared to year-on-year. However, then we will not have a big catch-up in the fourth quarter.

That is one of the main reasons for the increase in provisioning. Then similar to the first quarter, we have some property-related provisions as well which we have included, which is increasing the provisions as well.

Then, yeah, so that is the main thing. From an ECL perspective, yeah.

I'll add to the so the downside scenario point, Rahul. We're at 106 basis points net cost of risk for the first half, which, as I said, is above our range.

That in of itself is, we probably haven't disclosed the actual number, but you can work it out, because it's about 10 basis points. Without that downside the effect of the increase in ECL from the downside risk scenario being the weighting being increased to 25%, without that, you'd be within, you'd be bang within the 90 the 90 to 100 basis points range.

Are there any idiosyncratic, reasons for it? No.

It's purely there's nothing we are seeing that is that is, a concern linked to the current situation in terms of provisioning at all. Nothing nothing to to draw out there for you.

The provisioning is in line with our expectations as is ECL charge. Other than that, we have not seen any significant deterioration in any of the names till now from a credit perspective.

I'd say what I said at the first quarter, which is the retail book has held up much better than I expected. Yes, it's still surprisingly robust.

Just Rahul, one point...

Lending growth was the last one.

On lending...

Oh, we addressed that. 3%, not 6%, Rahul.

Rahul, just one point on the Alternatif Bank NIM, because they had strong 6.4% NIM. One of the reasons is that, if you remember last year, they sold two large properties that generated 3.2 billion of positive cash flows.

That also helped them to improve their NIM, and it's going to be there for a long time because money's been invested on interest-generating assets.

Finally, for good measure, the AT1 Alternatif Bank refinanced, it was at a lower cost than the previous AT1, so that's helped from a NIM perspective as well, Rahul.

Any further questions from you, Rahul?

No, all good. Thank you so much.

Thank you.

Thanks, Rahul.

We go to the second question. We have got a question from Bijoy.

Bijoy, please unmute yourself and go ahead.

Thank you, gentlemen, for the call. My question is mainly on the lending book.

How do you plan to increase the lending book and improve margins once the lending cycle picks up, given the lower CET1 versus some of the other private sector banks, especially when the bank is fixing the legacy book?

I think, to be fair, if you look back at our certainly our capital ratio itself, it's progressed quite nicely over the last year. If you look at it's moving around a little bit, you look at where we came from the end of '25 at 2.2 for CET1 and now we're at 12.8, and then for total CAR, you can see and we basically externalized the AT1 financing for Alternatif Bank and for NBO, we didn't participate in either, whereas we were pretty much the sole subscriber last time round, hence the increase in the total CAR.

We have balance sheet capacity. In terms of how do we, I think it's a margin-related question, in terms of, one, we have the capital.

Two, part of the underpin of the strategy is actually to do cross-sell and basically we may, on occasion, like many banks, do sub-return lending, but the discipline around making sure that you fill the gap in income to get above hurdle is something that we're very, very focused on from my date of joining, and hence that is serving, I think, as well to date, and we'll continue to do so. That's the further uptick.

Discipline around, as Noman said, the margin, discipline around return, and as I say, when you do pure lending and it doesn't hit return, then you do cross-sell. If the cross-sell today doesn't meet the requirement, then you make sure that the future cross-sell will meet the requirement, and you track it accordingly.

It's basically much more discipline around returns. As I say, from a balance sheet capacity perspective, we have the capacity.

Bijoy, does that answer your question?

Understood. Thank you.

I have another question. See, the previous CEO said that there are legacy issues, he fixed it, and improved the performance.

The incoming CEO, you came in and you said they're further legacy issues, fixed, you're planning to fix it again, right? This is something which is continuing and it's not getting fixed at all, right?

Look at five-year performance, 10-year performance, 20-year performance of CBQ other than dividend returns, there's not much for the investors, that barely covers the inflation, right? On your LTIS, long-term incentive scheme, right, how do you plan to retain your employees where part of your remuneration that you're paying to the employees is in a long-term incentive scheme, which, again, is not doing much?

Yeah.

On the legacy book question, that's why, if you go back to our strategy, the simple strategy on a page, it's pretty front and center. The legacy book relates to 2016 up until that time around that time.

Listen, I can't answer what came before. I wasn't here.

I can assure you the reason why I put in the strategy to draw a line under the legacy book is because I've sat down with many analysts who've said pretty much what you've said, sometimes more directly, which is you've been talking about this for 10 years, why are you still talking about it? My objective is by the time the end of my tenure, we won't be talking about it anymore.

I understand the frustration. We've got to put it behind us.

It is very much my priority. Linked to that, whilst we've set out these ranges for the cost of risk, and they are clearly higher for this year and next year for reasons we've said, we talk about net cost of risk is clearly a gross cost of risk, which if you look at the first half is 142.

That's high. We are taking provisions to address the legacy book, and we will continue to do so until it's behind us, to be very clear.

If we have significantly higher recoveries than that we anticipate, and we are planning for reasonable recoveries each year—the first half we had about 180 million,

187 million—then

we will provision more heavily if we have the ability to do so and use those advanced recoveries above and beyond what we've got in each of the next five years planned. Your question is understood.

I've heard it very directly from analysts publicly and privately, and hence getting our arms around the legacy book is, frankly, up front and center. It's something I think about every day because it's something I don't want to be talking about.

On the LTIS, I didn't quite get your question. I understand the frustration.

We don't want to be presenting two sets of numbers, because it's confusing and it's complicated. We understand, and yeah, we have to resolve that, too.

Thank you, Bijoy.

Thank you.

We go to the next question from Chirodeep. Please unmute yourself and go ahead.

Hi. This is Chiro Ghosh from SICO Bahrain.

I have a couple of questions. First, let's get into the non-interest income side of it.

The fee income this quarter was relatively lower than the past two quarters. Just want to get your sense of how should we model it for the rest of the year, how do you see it picking up, or what is exactly your fee income related strategy?

Also, if you can please help us understand what exactly comprised of the other income, which was not a very big component, but around 52 million, what exactly comprised of that? The third question is related more towards the domestic lending market.

From the previous question, I understood that you have the capacity to lend, but you want to get an understanding of how is the corporate appetite or the government appetite in the Qatari market, especially the domestic market, especially with the crisis going on? Do we expect projects to get halted or more aggressive project rollouts?

Just want to get a sense from the ground.

Yeah. Right.

Thank you for your question. In relation to non-interest income and fee income, I think, as we mentioned, in Q1 we had one-off wholesale banking fees in Q1 as well.

We did mention it at our Q1 results. Even if you strip that out, we have seen that from a core perspective, our core fee income relating to our retail business, wealth management, remittances is doing really well.

In the wholesale banking side as well, cash management, transaction banking, we are focusing on that. I think the way to look at it is I think quarter-on-quarter we would expect fee income to increase by around 3%.

That's what we are looking into. Then you asked about the other operating income from the financials.

You could see there is a big increase there. There are two reasons for it.

One is that last year in the other income operating income line, that number was netted off. There was a loss on sale of a repossessed property in Turkey, so that was included in that, so that is not repeated this year.

In addition to that, we were able to successfully sell some of our repossessed properties, there is a gain on repossessed properties in that other operating income line. Then from a project's perspective, I think we will see how the regional situation evolves.

I think some of the projects are continuing, and some of them, I think we'll just need to wait and see how things span out. That's the current situation there.

Just our 3% is based on our knowledge and what we're seeing in the market. That is our view of full year loan growth at the moment.

I think that's actually possibly slightly conservative, but let's see what happens. Clearly, if the current situation continues, then we're probably likely to be more aligned to the 3%.

If things get resolved, and hopefully the last three days continue, then it may be slightly better. There is we are seeing line of sight to 3% loan growth.

Okay. That's all from my side.

Thank you very much.

Thank you.

We have a question on the Q&A box from Andrew Brudenell from Ashmore. I'll read out the question: "Could you please give us an update on the real estate collateral that I believe is the source of the other provisions, which is a guided to be ongoing?

How much is to come for full year 2026? Does this run into 2027 and 2028?

Also, is there NFI growth target for full year 2026 and 2027, and maybe a percentage of the total income contribution?"

On the real estate property, thank you, Andrew, for your question. We have built up certain provisions, I think there will be some more to come in the second half, but maybe slightly less than what we have taken into the first half of the year.

I would say slightly lesser than what we had in the first half. Then in relation to your question on...

NFI

growth 2026 and 2027, what's the contribution of total income?

Yeah. That's clearly

a forward-looking forecast to include in your Excel spreadsheet, Andy.

Yeah. From an NFI perspective, as we mentioned that we will see a conservative growth is focused as part of our strategy on cross-selling.

Again, 3 to 4% NFI growth which we are expecting, both supported by retail and wholesale. That's what we are looking at at the moment.

Did I miss any question?

No, covers it. Now

we go to the next question in the Q&A box. The first question is from Vinod Surendran.

The first question is, "External funding requirements, any plans to issue Eurobonds, senior T2 or AT1?" Yeah.

I think on the external funding, as our EMTN matured in May, we would be looking at the market conditions, and I think from a debt issuance perspective, that is what we are looking for. Other than that, there is no new capital issuances which we are considering.

As and when things come for refinancing, then we'll look into it.

We were very fortunate to have completed just prior to the 28th of February a 900 million syndicated facility and a 500 million refinancing of a previous AT1. For once, we were very lucky in our timing.

We got it done just leading up to the 28th. That's obviously stood us in good stead.

The second question from Vinod is on the current situation and the asset quality: "Exposure to conflict-impacted sectors and any color on ongoing Qatar Central Bank support package to the banking sector? Is there any temporary relief on loan book staging from Stage 1 to Stage 2 and Stage 3?

Any other relief on capital and liquidity front?"

On the I guess loan book and sectors under stress, we have stayed away from some of the higher-risk sectors in the past. Our exposures to the contracting sectors at a CB level is 1.8%, quite low.

We are currently focused on ensuring that we stay away from the higher-risk sectors, such as contractors, and then so we haven't really seen any significant deterioration in our existing book post the crisis. Then the second question...

QCB, on the QCB, the central bank announced a deferral scheme for three months in April. This was a principal and interest deferral scheme, and it was extended to another three months for retail only, not for wholesale.

I think that's it. The reserve ratio in Q1 was reduced by 1%, so that was assistance from the central bank.

We, how much of principal has been deferred from the measure I said from the central bank, it's very small, it's 600 million Qatari riyals approximately from the start of the conflict to the 30th of June. Yeah.

In addition to that, Qatar Development Bank has also come up with a scheme where some of the working capital facilities will be guaranteed by them over a four-year period. There has not been any significant uptake of that, and there is a quite a strict criteria to meet those requirements.

Overall, I think the as Stephen mentioned, generally considering all the package from a customer perspective, there has been limited uptake from the customers.

Vinod's final question was, is there any temporary relief on the loan staging? There's none announced, and also any capital relief, there's nothing on those as well.

I'll go to the next question from Waruna Kumarage. Waruna, if you could unmute yourself and please go ahead, ask question.

Hello, hi. Am I audible?

Yeah.

Hello, Waruna. Hi.

Hi, thank you very much, and congratulations on your the good set of results. I have several questions.

The first question is on this other provisions. Pardon for my lack of understanding if I'm repeating others, but regarding this other provisions, I want if you could elaborate a bit more, is it what exactly this is related to, which I think one of the previous attendees also asked this question.

That is my first question. Secondly, just to clarify this 3% loan growth guidance, is it the guidance for 2026 excluding acceptances?

If my understanding is correct, that's my second question. Thirdly...

That's correct. That's easy.

That one's done. Yes, you are correct.

Okay. The last question is related to the current environment in terms of different projects and loan growth domestically.

As I understand, some of your competitors have managed to grow their lending book related to different projects like infrastructure projects. There has been some banks which have been able to grow appreciably.

I want to understand what is your appetite for these kind of projects. Has this been an option for you, or is it something that you kind of opted not to go with, considering what you call the risk-adjusted returns?

This is my last question. Thank you.

Okay. Other provisions?

Other provisions, basically, Waruna, there are two elements. One is that, obviously, in relation to our repossessed acquired properties, we are building some provisions, so that is primarily the main chunk of it.

Then in addition to that, there is one element in relation to some of the real estate leasing, ROU, IFRS 16 impairment which we have booked, which is more of a one-off thing. That is split into two amounts.

As I mentioned earlier that we expect that the provisions will be slightly lower in the second half of the year, it is what it is related to, acquired properties provisions, and then some of the ROU on the leasing.

Just on the loan book, and I haven't got the number to hand, but the central bank publishes loan growth every month or total asset growth, and if I'm not mistaken, 3% is about it. I don't know which banks you're talking about, but I don't believe we're that far off the overall market in terms of loans and advances growth.

Clearly I can't comment on what other banks are doing, but just to reiterate, I don't think we're that far off overall market growth. As I said in my introductory comments, and I will talk about this for as long as I'm here, we're not going to pursue loan growth at the expense of NIM and returns.

Okay. No, actually, it's not a criticism as such, as...

No, no, no, no.

No, I'm saying, yeah, as far as system loan growth is concerned, you're right. It's been weak.

I think my question is specifically on one bank, it's actually Qatar Islamic Bank, which managed to have a very strong growth in the first half because of this specific segment, which other banks actually haven't really participated. I was wondering whether this is something which, maybe it's probably specific to Qatar Islamic Bank or maybe this is not a syndication where everybody couldn't participate.

I'm interested to hear whether this is an avenue probably might be in the pipeline for second half, or is it something you would not be interested if that comes your way, because, as I understand, margins are not very good, but probably from risk-adjusted terms it could be okay. This is what it is.

Clearly it's very competitive market. I can't comment for QIB.

I'll let you ask Basil the question, or his team. I don't know what you're referring to specifically, but clearly we all participate when there's an RFP.

Sometimes you win and sometimes you lose, but I don't honestly know the specific case you're referring to. To be fair, loan growth of 3% doesn't feel to me to be too bad certainly in the current climate.

To your point, I am talking risk-adjusted returns. Cost of equity is probably—we can debate this with all of the analysts on the call—is probably at 11, 11 and a half, if not higher now.

That's the cost of our equity, and we've got to get our return to that level, in my view. Hence, clearly, the target by 2030, yeah.

Yeah. Just one more thing, one more follow-up regarding this other provisions.

You mentioned there'll be some in the second half as well, but what is the long-term visibility of this? Can we expect this to continue in '27, '28?

Is there any line of sight on this?

Just to highlight you that our strategy for five-year includes certain provision for the properties, we will build those in line with the strategy. You will expect certain level of provision to take place, and it's baked into our numbers and the strategy guideline that we have put in, factored in this increase in other provisions.

Sounds good. Thank you very much, and wish you all the best.

Thank you, Waruna. Thank you.

We have a question on expenses from Andy. I'll read that: "Guidance states positive jaws from 2027.

This looks tough without quite a drop in the pace of expense growth. Is this the driver?

Will the IT and product investment cost drop a lot in 2027?"

All of the above. Clearly, we're spending money on AI, a lot of it, if you look at the Q1 and Q2 individual initiatives, they're actually more skewed towards revenue growth than costs, but nevertheless there are some costs.

You're spot on. We have a lot of work to do on costs.

It's clearly a cost to income ratio and positive jaws. It's two factors: income and costs.

We have a lot of work to do on costs in the second half, and I would agree, it's not an unchallenging target. Norman, anything to add?

No, the only point is, obviously, hopefully once the inflation starts coming down in Turkey as well, that will also help our cost to income ratio. At the domestic level, we're still maintaining the cost to income ratio at 26%, and obviously the consolidated one is impacted by Turkey.

Hopefully that can also benefit in future once the inflation goes down in Turkey.

The underpin of the question is, yes, it's a challenging target and we know we've got a lot to do. Good challenge, and duly noted.

Another question from Andy on the Q&A box: "What is the group tax rate expected to be this and coming years? I thought it was 12.5% had been stated by full year 2025, was lower, as is 1H 2026."

I think, Andy, the effective tax rate should be around 12.5%, around 12 to 13 within that range, because we are recording the 15%, but then the sports and social levy 2.5% is deducted, net net 12.5%.

Taken entirely from reserves, yes, the 2.5%. On the face of the P&L, it's 12.5%.

It's very difficult to calculate because the 12.5% tax is on the domestic top-up tax, it's on the consolidated profit. You'd have to work on the domestic top-up tax and exclude the taxes paid as well as the sports levy.

We can take you through it offline, or my colleagues can. Tax is well beyond my capabilities.

Anymore?

Waruna, we have another question from you on the chat box. You want to ask the question?

Yes, please, just one question regarding associates. Now this is, again, a very promising performance from both I think NBO as well as UAB.

I want to understand what are the underlying drivers? Can we expect more from these associates going forward?

Because it has, I think, to your credit, and this is one bright spot, whatever the exercise that you did three years ago, it paid off and they are both doing well. What is your expectation going forward?

Yeah. As we highlighted that overall the associates contributed a 7% year-on-year increase.

UAB's share was, I think, 3% lower year-on-year, but NBO was 15% higher. As we mentioned, Waruna, we are working through our board representations very closely in providing input on the strategic execution of both these banks, and we expect them that they will continue to perform strongly and contribute towards our bottom line.

Thank you.

Thank you very much.

I think that's all we have for today in terms of audio and the Q&A box. That's the end of the Commercial Bank's first half 2026 earnings conference call, and we thank you everyone for joining this call, and have a good day.

Thank you so much, everybody.