Thank you and hello everyone. I want to welcome you to Dukhan Bank's second quarter and first half 2026 financial results conference call.

On this call from management, we have Osama Abu Baker, the bank's Group CFO; Riaz Khan, Head of Reporting and Budgeting and IRO. As usual, we will conduct this call with first management reviewing the company's results followed by a Q&A session.

I will turn the call over now to Osama. Please go ahead.

Thank you, Shahan, and good afternoon and welcome, everyone. At first, I would like to briefly frame our performance within the broader economic and sectoral developments in Qatar during the first half of the year.

Continued geopolitical developments introduced a degree of uncertainty across the GCC countries with implications on energy markets, trade flows, and economic activities. Within this context, the group has maintained stable operations, supported by well-established operating framework and prudent risk management.

These factors have enabled the bank to provide consistent, secure, and reliable services to its customers. The bank's business continuity and crisis management frameworks remained integral to its operational resilience.

Through disciplined execution, robust infrastructure, and ongoing coordination with regulators and relevant stakeholders, the bank has ensured continuity of operations while maintaining a strong control environment. The Qatari banking sector continues to demonstrate sound fundamentals, characterized by strong capitalization and liquidity levels.

Qatar Central Bank also has introduced a range of precautionary measures aimed at supporting liquidity conditions and preserving financial stability. These measures provide an additional layer of assurance for the continued smooth functioning of the financial system.

During the first half of this year, we progressed well on our strategy focusing on enhancing liquidity measures, risk management protocols, and selective growth. Additionally, we continued to deepen our engagement within the broader financial ecosystem through targeted partnerships and collaborations supporting innovation across key areas of the sector while contributing to the development of Qatar's digital economy.

At the end of the first half of the year, our liquidity remains strong with all key ratios above regulatory thresholds. Total deposit base remained at historic levels, underscoring customers' confidence and strength of the bank's value chain.

Our group's total assets reached the highest level at 129 billion Qatari riyals, underscoring balanced growth across our portfolio. However, our profitability remained flat versus last year to reach 813 million Qatari riyals.

Our capital adequacy ratio stood at 18.6%, well above the minimum requirements required by the central bank. These results reflect a disciplined approach to growth, underpinned by a well-managed balance sheet, a diversified financing book, and a stable funding base.

Continued customer confidence and a clear focus on operational efficiency and asset quality remain central to sustaining this performance. Our focus for the rest of the year 2026 will remain firmly aligned to our strategy, i.e., building a leading digital-enabled bank centered on exceptional customer experience, delivering sustainable, well-balanced growth with continued discipline on capital, liquidity, and risk, strengthening our people, culture, and capabilities, ensuring Dukhan Bank remains a place where talent thrives, creating long-term value for shareholders while contributing meaningfully to Qatar's economy and social development.

For the rest of this year, we expect a low single-digit balance sheet growth led by wholesale and private banking. Profitability growth is expected to mirror this trend, supported by stable NIMs.

We will maintain a conservative provisioning approach, continuing to build buffers. I will now turn it over to Riaz for a detailed overview of the quarter-end financials.

Thank you, Osama. Let me begin with a brief overview of the group's balance sheet performance as at the end of June 2026.

Our total assets reached all-time high at 129.2 billion Qatari riyals, underpinned by financing assets of 94.7 billion Qatari riyals, representing 73% of the total asset base. Investment securities contributed 20% of the total assets and reaching 26 billion Qatari riyals.

On the funding side, we continued our efforts to diversify while leveraging long-standing relationships with clients and maintaining a balanced maturity profile. This led to a growth of 7% in the group's customer deposits, reaching 94 billion Qatari riyals.

Henceforth, we maintained a regulatory loans-to-deposit ratio of 95.6% with both the LCR and NSFR comfortably above the regulatory thresholds. This demonstrates bank's sound liquidity management.

Also, non-resident deposits remained at minimal of 7% of the total deposit base. This is in line with our strategy to focus on stable domestic funding sources.

Now turning to profitability, for the first six months of 2026, the bank reported a net profit of 813 million Qatari riyals, edged up by 0.2% versus the same period of last year and supported by a robust 7.4% increase in the net banking income. This uplift in the net banking income reflects the group's continued emphasis on revenue diversification and the strengthening of non-financing income streams.

Prudent management of funding costs, even in difficult external conditions, provided an additional layer of support. We remained committed to protecting our margins and managing the cost of funds efficiently.

Our NIMs are currently stabilized at 2.1%. Operational efficiency also remained a key strategic focus with continued optimization efforts enhancing the group's overall profitability.

These results highlight the group's resilience and its ability to sustain in an evolving operating environment. On the credit quality, NPL ratio was reduced to 3.9% from 4.2% at the end of 2025.

Stage 3 coverage ratio increased to 76.2% from 75.7%. The coverage would be over 95% when including the effect of eligible collaterals.

Stage 2 loans represented 8% of the gross loans with a solid coverage of 12.3%. Our financing book remained well diversified wherein the government exposures account for 21%, reflecting strong sovereign linkage and stability.

Real estate financing represents 22%, commercial lending contributes 14%, while consumer financing adds 9%, supporting the retail growth. Contracting remains minimal at 3% while industry and manufacturing together makes up 3%.

Finally, services and other sector represents 28%. Exposure to government-related entities account for 15% of the total financing book at the end of June 2026.

GRE exposures are currently reported within their respective sector classes. Our capital adequacy ratio stood at 18.6%, well above the regulatory minimum requirement of 14.63%.

On the tax front, based on the assessments performed for the period 2026, it was concluded that the parent company and its subsidiaries that are tax residents in State of Qatar are not subject to Pillar Two requirements. Accordingly, there are no impacts on group's condensed consolidated interim financial statements.

In summary, our financial performance reflects the strength of our fundamentals, strategic clarity, and prudent financial management. We remain focused on sustainable growth, margin preservation, and long-term value creation for our stakeholders.

With that, we now open the floor for your questions. Thank you.

Hello, can you hear me? Hello?

Yes, hi. We can hear you.

Please go ahead. Oh,

okay. Thank you.

Thank you for this presentation first of all. I have two questions.

The question number one, on the deposit and credit growth, if you could please provide the breakdown for the first half flows, what was the share of the public sector, especially on the deposit side? The second one, on the capital allocation and capital distribution plan, is there any potential trigger over the second half of the year in terms of the asset quality migration once the regulatory concessions are lifted?

If you could give us any idea on that part. Thank you.

Okay. In terms of the deposits, the first question, we see a robust growth in our deposit base.

On a year-on-year basis, we added almost 7% on the total deposit base. They are mainly from the wholesale funding side.

Wholesale banking means corporate banking, government banking, and a mix of private banking. I think there is a note we are mentioning in the segmental reporting where you can see the liabilities breakdown, and you can assess the exact contributions from each segment per se.

Now, in terms of the credit quality, as you would have noticed, we have remained conservative in terms of our provisionings, and we are continuing to build provisions. As the current situation is quite volatile and there is a lot of things happening.

What we are doing is we are remaining conservative in terms of our credit provisioning. We are continuing to build buffers for any unprecedented or any unknown or any unwarranted credit quality issues.

The situation right now, it's wait-and-see, and we are continuing to build provisions. In the next two quarters also, you will see provisions flowing through.

We are targeting a cost of risk close to 60 bps by the year-end. That will continue to progress.

That's how I can sum it up how things will look like in the future.

Thanks. One more quick follow-up on the capital distribution: if there are any triggers that could change the payouts or distribution plans?

If you are asking about the capital allocation in the way I understand is more about the overall capital adequacy ratio, in that case, we are well ahead of our minimum requirements. We don't foresee any hiccups there, and we'll continue to remain robust at that front.

Thank you so much.

Am I audible?

Yes, you are audible.

Thank you so much. Congratulations on a good set of numbers and thanks for the opportunity.

I have a few questions. In previous conference call, full-year loan growth guidance was around 3% to 5%.

However, bank has done well in first half of year, is there any change in your loan growth guidance, or you expect loan growth to be muted for second half of the year? Secondly, regarding deposit growth, again very strong quarter.

Just wanted to understand what was the driver for deposit growth in second quarter? Thirdly, net fees and commission income jumped to QAR 130 million.

Just wanted to understand is there any one-off involved in this or we can expect similar run rate going ahead? Lastly, on dividend plans, you haven't disclosed any interim dividend in first half of year, is there any change in dividend policy?

Any clarity on this will be really helpful. Thank you.

Thank you for your questions. If I take the first question, it is more about the loan book growth.

If you remember the guidance during the earnings call today as well as the last time's Quarter 1's earnings calls, we identified or we highlighted that we expect our balance sheet to grow by mid-single digit or somewhere lower mid-single-digit growth. That growth, I think, we continue to estimate because there are some deals which came a bit earlier than what we expected, and there are certain deals where we expect certain repayments to flow through in the coming quarters.

So 3% to 5% or per se 1% to 3% would be a good number on that front. As well as when we talk about the deposits, at certain times, we try to build buffers because the situation was quite volatile in the second quarter, and we were continuing to build additional liquidity buffers, and we remained successful on that front while maintaining our NIMs or stabilizing our NIMs at 2.1%.

That itself is an achievement. However, going forward, I think the estimates or the anticipation is still in a mid-single-digit range.

The deposits will sustain on a year-on-year basis. Then on your third question about the fees again was an interesting quarter where there has been convergence of certain things or certain activities or certain deals which were in the pipeline.

They got converged at the same point of time. Certain deals within the treasury segment, certain deals within the wholesale banking segment, certain even early settlements also happened during this quarter.

They all converged at a certain given quarter, and that's how there has been significant increase on a quarter-over-quarter basis or sequential basis. Going forward, I think for your estimation purposes, a good reference could be an average of the two quarters if you want to estimate for the next two quarters.

That's what I can say. There's been no one-offs, but there were certain deals which happened and got converged.

On the dividend policy, maybe Osama will say something.

Yes, there is no change in the dividend policy. The only change that we skipped the mid-year dividends in order to have liquidity buffers and to have a clear picture from now till the year-end.

I don't expect any change in our dividend policy. As Riaz mentioned earlier, our capital adequacy is high, we enjoy liquidity buffers, it's about timing only and wait and see till the year-end.

Thank you.

Thank you. Thank you so much.

That was really helpful.

I have a question on impairments. Now, if I look at your six-month impairments, it's around 93 million more than last year.

What is your expectation for the full year? Because from history, you have a big impairment in the fourth quarter.

One question is that. Second thing is to increase the net profit by low single digit, do you expect it to entirely come from fee income and net interest income or there are some other moving parts?

Thank you.

I think it's a matter of the quarter-over-quarter moves. Historically, we were backloading or we were loading it in at the end of the year, let's say latter part of the year.

Now this year, we started to streamline our impairment provisionings. Now we are more about allocating it equally or allocating more on every quarter rather than waiting for the year-end.

This is, I think, the effect what you're seeing. On an overall basis, as I mentioned earlier, we will continue to estimate a 60 bps in terms of the cost of risk.

The coverages remain strong. Major allocations, if there is a need, we will go with Stage 3, otherwise more on the Stage 2 and Stage 1 front, allocating more, being more conservative on the policy front, on the credit quality front, and just trying to build buffers basically.

Understood. Thanks.

Hi. This is Lee here from Al Rayan Investment.

I think you've answered some of my questions, but just to quickly like to just add on to the question on the impairments. I take note that you're increasing your loan loss charges to about 60 bps, cost of risk for the year.

Is there is there any Is it because on the ground, you are seeing some slight stresses on the loans book, even though it's not yet recorded? If say, for example, for the full year, you actually don't need that provisioning level that you've done, is that in chance that in the following years that could have in the in the following year, that could be reduced or even reversed?

I think actually there's been no reductions per se in terms of the provisioning. While 2027, 2028, I think it will be too early to say at this point of time.

There's a lot of moving parts around. So 2027 and 2028, let's keep it maybe for Q3 or Q4 how things look like, and by the time we'll have a clearer picture.

As far as current year is concerned, 60 bps, 55 bps could be a good reference point.

Sorry, that's 55 to 60 bps annually is what you're targeting?

Exactly.

Okay. Thank you.

Thank you, and I'd like to thank management for giving us an update on the second quarter, and thanks for all the participants for joining in. We will pick this up again in the third quarter.

Thank you very much.

Thank you.