Thank you, Adam. Good morning, good afternoon, everyone, and thank you for joining us today.

This is Janany Vamadeva, and on behalf of Arqaam Capital, I'm pleased to welcome you to Qatar National Bank's Q2 2026 earnings conference call. I have with me here today from QNB management Mr.

Ramzi Mari, the Group Chief Financial Officer; Mr. Noor Mohamed Al-Naimi, Group Treasury and Financial Institutions; and Mr.

Mark Abrahams, Group Treasury Trading. Without further ado, I'll now turn the call over to Mr.

Mark Abrahams. Mark, over to you.

Thank you very much indeed, Janany and Arqaam Capital, for your hosting of our call today. Before we begin our call, it is customary to remind everybody that this call is for investors and analysts only, and media should now disconnect, please.

The beginning of 2026 was characterized by resilient global economic backdrop, driven by artificial intelligence and technology-driven investments, and private sector demand. The IMF, in its January 2026 update, continued to project global growth at around 3.1%, with inflation expected to ease further, while noting downside risks from geopolitics, trade friction, and potential market corrections.

Momentum has weakened since the beginning of March '26 due to the geopolitical events in the Middle East. This resulted in disruption of commodity and energy markets, and heightened volatility with potential downward revision to the global growth outlook.

These events also affected the overall outlook and macroeconomic landscape for GCC countries, primarily due to the suspension of trade via the Straits of Hormuz and the impact of the region's energy, transport, and other industrial infrastructure. While the conflict initially affected economic activity and market sentiment, the situation remains fluid.

Despite these challenges, the local economy has proven resilient and has returned to normal operation in terms of government institutions, financial markets, aviation, trade, and other businesses. Once the situation stabilizes, economic activity is expected to strengthen as the resumption of hydrocarbon production and output, trade, and services supports a broad-based recovery across the economy.

For Qatar, the short-term impact is concentrated in the hydrocarbon sector following the disruption to LNG production and exports. Higher energy prices are expected to provide support to external and fiscal balances.

Furthermore, QatarEnergy revenues, and in turn Qatar government income, will also be helped by a ramp-up of operations of the Golden Pass terminal in Texas, United States. Non-hydrocarbon sectors are expected to recover steadily as domestic demand normalizes and business confidence improves.

On the non-hydrocarbon front, the sectors most impacted include accommodation, transportation, and recreation. These are expected to recover in due course.

We understand that the remaining sectors, including construction, real estate, wholesale and retail, and finance and insurance, are less impacted. Against this backdrop, Qatar's medium-term economic outlook remains constructive.

The country's strong sovereign balance sheet, prudent macroeconomic policies, and continued investment program provide a very solid foundation for the recovery. We also continue to expect not only the recovery, but also the expansion of LNG production capacity, together with new export infrastructure, to support economic growth over the medium term.

Against an expected GDP contraction for 2026, according to the IMF, we expect a strong recovery and GDP growth in 2027, which will continue at accelerated pace 2028 and onwards, as new LNG production comes online. The Qatari banking system remains robust and resilient.

Following its review of recent geopolitical developments, the QCB has reiterated that the financial system is operating from a position of strength, highlighting strong liquidity, capital levels significantly above regulatory requirements, and strong provisioning coverage against credit risk. In summary, while the geopolitical events temporarily increased uncertainty and disrupted economic activity, Qatar has demonstrated remarkable institutional, operational, and financial resilience.

The banking system has continued to operate from a position of strength, with no disruption to physical or digital services. Normal economic activity resumed across the country before any other impacted peer economy.

The ongoing resumption of domestic demand will support a strengthening of economic growth over the coming quarters. I will now move on to QNB's financial results for the six months ended 30th of June 2026.

Key financial results were as follows: Net profit was 8.7 billion Qatari riyals, or $2.4 billion, growth of 3% compared to last year. Robust revenue growth resulted in an increase in operating income to 24.1 billion Qatari riyals, or $6.6 billion, up 11%, demonstrating QNB Group's success in maintaining growth across the full range of revenue sources.

QNB's cost-to-income ratio remained strong at 24.1%, which is one of the best ratios among large financial institutions in the Middle East and Africa region. Total assets are at 1.44 trillion Qatari riyals, or $395 billion, up by 6% from the same period last year.

Loans and advances reached 1.04 trillion Qatari riyals, or $286 billion, up by 8%. QNB continues to attract deposits, which increased by 4% from June 2025 to reach 973 billion Qatari riyals, or $267 billion.

This reaffirms the strong confidence of our customers and investors, in addition to the quality and resilience of the QNB Group. The Group's regulatory loan-to-deposit ratio remained at 99%.

QNB Group's ratio of non-performing loans to gross loans is at 2.5%, reflecting the high quality of the Group's loan book and the effective management of credit risk. In addition, the coverage ratio on Stage 3 loans remains at 99%.

Total equity increased to 130 billion Qatari riyals, up by 10% from June 2025. The bank's capital adequacy ratio at 19.8% is comfortably higher than both QCB and the latest Basel III reform requirements.

In relation to the QNB buyback program, the bank has completed buyback of 136.3 million shares at a cost of 2.3 billion Qatari riyals up to June 30th, 2026. The buyback execution remains in progress.

We will now turn to questions and answers. Thank you very much.

Thank you, Adam. Before we open the floor, I have a couple of questions if I may.

If you could give us some color on deferral requests so far and whether the support package has been extended by the QCB? My second question is around guidance, given the H1 results and recent developments, would you have any update to the full-year guidance you gave after the Q1 results, and what sort of assumption are you using in terms of end of conflict and normalization?

Thank you.

Yes, thank you, Janany. This is Ramzi.

In terms of update on the deferral, the deferral when it came, it was for three months, which ended at the end of 30th of June. The total amount of installment which has obtained deferral is about 480 million Qatari riyals, and the total loans of which these installments are is about 5.2 billion Qatari riyals.

Again, we have a total loans exceeding 1 trillion Qatari riyals, this is a very, very small portion of the balance sheet. Almost 3.7 billion Qatari riyal of these loans are in Stage 1, and 1.4 billion Qatari riyal loans are in Stage 2 already, on which we already have certain provisions.

The program has been extended only for corporate customers up to 30th of June 20 30th of September 2026, and of the 5.2 billion Qatari riyals of which deferral were obtained, 2.4 billion was individual customers, the remaining were corporates, those customers, which are Stage 1, will get off deferral in July, August, and September. On the second question in terms of guidance, at this time, we do not have any change in guidance.

We stick to what we have said in Q2 of profit growth of 5% to 7% and balance sheet growth of 6% to 8%. In terms of end of the conflict, again, we don't have a crystal ball.

What we expect that the recent skirmishes would rather end quickly in less than three to four weeks.

Thank you, Ramzi. That was very helpful.

Our audio question comes from Jon Peace from UBS. Please go ahead and unmute yourself.

Hi, thanks very much for taking the question. Would you be able to give us any update on your guidance, please, for your local operations in Turkey and Egypt in terms of lending growth and cost of risk?

Then, just looking at your group numbers, the banking fees were very strong this quarter. Wondered if you could give us any thoughts on the sustainability of that run rate.

Thank you.

In terms of loan growth, there is no change in guidance for Turkey, it stays the same, between 20% to 25% growth for full year. Again, QNB Egypt, in terms of loan growth, there is no change in guidance, 25% to 27% in local currency terms for full year.

In terms of cost of risk, again, in the outlook for the full year, we expect the cost of risk to remain at similar levels for both Egypt and Turkey that we talked about in Q2. What was the second part of your question?

It was the banking fees at group level were very strong this quarter. How sustainable do you see that?

Thank you.

In terms of banking fees, I think when we had investor engagement, we were telling that the only portion where we would see the non-funded income would be under pressure to a small extent would be our credit card fee in our consumer business. Other than that, we do not expect any major impact, and we expect it's going to be sustainable.

The only area again I would like to highlight is the FX income, which comes from our subsidiaries in Turkey and Egypt, they are driven by volatility in the respective markets. If Turkey and Egypt display volatility in FX, we would expect higher income.

If it's lower volatility, the FX income from these markets is lower. In terms of other non-commercial or non-funded income excluding FX, we expect a decent, stable growth.

Great. Thank you.

Thank you, Ramzi. Next question comes from Rahul Rajan from Bank of America.

Please go ahead.

Hi. Good afternoon.

Thank you for the earnings call. A few questions from my side.

Firstly, on the macro side of things, if you can sort of help us understand as to how do you see the evolving macro conditions affecting your loan growth, what has changed since pre-conflict to now, and how do you see loan growth going forward from here, and what could be the drivers of loan growth? That's number one.

Secondly is from a deposits perspective also, if you can help us understand as to, it's been sort of flattish to down quarter-on-quarter. How should we see deposits from here, and how do you see the overall macro environment in terms of oil prices, etc.?

How are the government financials basically impacting deposits? That's number two.

Finally is on a capital perspective. We see that the bank has not announced interim dividends.

How should we see dividends from an annual basis? Number one.

Number two is on buybacks. Any guidance on when do you see the current buyback program completing, and any color on a new buyback program, please?

Thank you.

Thank you, Rahul. We have a lot of things to cover.

In terms of macro outlook, we expect GDP contraction this year. IMF talks about close to 8% GDP contraction in real terms, followed by very strong recovery next year.

The loan growth guidance that we gave at the start of the year was 7% to 9%. In Q1, we had trimmed the guidance to 6% to 8%, and at this time, on a year-to-date basis, we are up 2%.

We are slightly slower in loan growth. However, what we think is that once situation stabilizes, there are a lot of transactions in pipeline, and those will kick off once the situation stabilizes in terms of geopolitical events.

In terms of deposits, yes, we are flattish or slightly negative in terms of quarter-on-quarter, but what you would also note is that we are using this to try to increase our long-term funding, particularly other borrowings has more than offset in the small decrease that is coming in deposit on a quarter-to-quarter basis. We are using this opportunity particularly for deposits which are coming in from our foreign operations which were short-term, trying to actually increase the duration of that directly in the other borrowings by directly contracting by our counterparties and taking longer-term money.

In terms of macroeconomic outlook, surprisingly, the local deposits, and people would expect that because of government revenues, the local deposits would have been impacted, it's not the case. On a local franchise perspective, actually, our deposits are up 10% on a year-to-date basis, primarily because of resident depositors.

As you are aware, in normal circumstances, Qatar government and all its subsidiaries and entities are net providers of capital to the world, and currently, some of those deposits have come into the country to help their own operations, which is helping our operations as well. In terms of interim dividends, interim dividend was not announced, but there is no change in payout policy or payout ratio.

This year, we are going back to the annual dividend. In terms of buyback, we are progressing on the buyback, and we expect it would finish sometime in Q3, Q4.

As we go closer to finish, we will request the board for a new program, and we'll take it from there. At this time, execution is in progress.

I hope I've covered all your answers.

Yes, absolutely. Just one follow-up, please.

You mentioned the change in the deposits more towards longer-term funding. How should we see the impact of this on your NIMs?

I understand please correct me if I'm wrong, you guided for around 2.6% to 2.65% NIMs for the full year. How should we see the impact of this on NIMs, please?

In terms of NIM, it is going to be marginally negative, but it's going to be a smaller impact, we stick to our guidance between 260 to 265 basis points. Probably at the lower end of the guidance, we might end up, but we'll stick to the guidance.

Thank you so much.

Thank you, Ramzi. Next question comes from Chiro Ghosh from SICO Bahrain.

Go ahead, Chiro.

Hi. This is Chiro Ghosh from SICO Bahrain.

I have a few questions. First one is if you can give us some more clarity on why did you witness such a strong NIM contraction in Turkish business, if you can give us some clarity on that one?

Second is other provisioning. We saw that there was a sharp increase.

If you can please explain it again, why the other provisioning shot up in this quarter? Third one, just quickly, if you can again remind that why the share of Qatari loan have reduced?

If you can explain that as well.

Hi, Chiro. I got three questions.

In terms of Turkish business, the first one is why has the NIM contracted this quarter? Generally speaking, when interest rate reduces, because the liabilities are extremely short-dated, we get a NIM jump, and then assets reprice later, in which basically NIM then contracts to counteract that NIM jump which initially happened.

What we are seeing in the Turkish business, particularly in Q2 strongly, is the impact of rate cuts which happened towards the end of last year. Other provisions is provision taken on certain customers which have what we call loan guarantees and letters of credit.

We give full details in our annual financials, but this is for certain customers which were classified as non-performing, which also have guarantees and letters of credit, for which we have to take provision against it. Contribution of Qatari loan in the franchise itself, there is no major change in terms of Qatari loans.

Sometimes for residential classification, it's simply because maybe the loan is taken by an SPV which is located out of Qatar, but from a franchise or risk perspective, there's no change in loan composition.

Okay. Just one small thing on the very small follow-up.

In the past, management have said that in a strong quarter, there might be additional provisioning that might be taken. Is that still continuing or is our core provisioning requirement, if you clear that?

If we actually break down our provision in Stage 1 and Stage 2 and 3 this quarter, we have taken 17 basis points provision on Stage 1 and 2 loans this quarter, which is in some cases higher than what other banks take in for the full thing. No, we continue to be prudent in provision management.

Net operating income pre-provision is up 11%, post-provision profits are up 3%, yes, we are not leaving that behind.

Okay. That's all from my side.

Thank you.

Our next question comes from Naresh Bilandani from Jefferies. Please go ahead.

Yes. Hi.

Thank you. It's Naresh Bilandani from Jefferies.

Hi, Ramzi. Just two quick questions, please.

One, Ramzi, if I see the Qatari segment NII, that has actually come through quite strong in this quarter. I think you've recorded 5.2 billion NII, which is probably the highest that we've seen.

Could you please explain the drivers of the strength of this trend? That's the first question.

Second is, I'm just looking at your trend of impairments, and clearly, I think what you've taken in the first half of this year kind of indicates more of a business-as-usual scenario rather than an economic stress resulting from the conflict. How should we expect the trajectory to pan out over the next couple of quarters?

I assume the second half is likely to be a lot probably higher as compared to what we've seen, and probably follows the pattern that we've seen in the previous year. Any indications if the pace of impairments kind of follows the strong GDP recovery expectation that you are setting in for 2027?

Impairment charge outlook for 2027 looks somewhat moderated to you at this stage, or should we still maintain a conservative outlook in the impairment charges as we go forward from here? Just two questions.

Once again, first is the strength in the Qatari NII, and the second is how should we think of the trajectory on the impairment charges, because I don't think that the first half is fairly or intuitively reflective of the stress that we've seen at the macro level. Thank you.

Yes. Naresh, let's look at the first one.

See, our core business, Qatar business, continues to perform extremely well on the top line. From a NII perspective, we are probably up 8%, 9%, principally because of balance sheet growth year-on-year basis, even on a quarter on a quarter basis.

I think from an underlying business perspective, pricing the loans right, pricing the deposits right, making the right decision on a pre-provision basis is something that is helping us, and that's always the strength of the business. I think a lot of times we don't get credit for the very strong business that we have.

You're linking impairment to the economic stress, and I think we tried to explain it a lot during an investor engagement that we have in Q2. Yes, there is GDP contraction this year, but this is concentrated in a sector of the economy in which the bank does not have any direct exposure, which is oil and gas.

There are second-order and third-order impacts of economic stress, but again, the sectors which are more likely to be impacted, things like trade, things like SME, things like retail or individuals, they are extremely small for QNB, not now, have historically been, for whatever reasons. Yes, there is a very large headline GDP decrease, but linking that to bank's balance sheet and then to bank's P&L, there is no direct linking between those.

Our exposure is primarily to corporates, which are at this time not that much impacted by this compared to others. Similarly, when the GDP recovers, again, since we did not take the hit, GDP recovery will come principally from oil and gas.

Since we do not have any large exposure to that sector, we do not expect that impairments will be materially lower next year because of strong recovery. That is our message, that we want to be similar in outlook in terms of cost of risk.

We said that we will have cost of risk of 75 to 80 basis points. We stick to that guidance.

We are at 74 basis points this year, and we expect it to be in similar range.

Got it. Ramzi, if I can just reconfirm one point.

If I calculate the NII from the Qatari operations only, and I know this can be a bit volatile, but if I calculate the annualized kind of the NIM based on the reported assets, I think there's a significant jump. It's 257 in Q4, 265 in Q1, and it's jumped to 310 on my calculation.

Just could you please reconfirm if there was any one-off in the Qatari segment NII in Q2, if yes, what was the quantum? If no, should we expect a kind of similar run rate going into the second half of this year?

What particularly has changed is that our international deposits have reduced. When we have international deposits, the Qatari segment has to pay for international deposits to our international segment.

That is something that benefits Qatar's directly paying for those deposits. It stays within, but when it pays to our international segment, there's also a margin for that international segment built in when we pay for it.

I think there are no one-offs here. It is simply the better way to look at it would be exclude Turkey and Egypt from international, and put the remaining international as part of Qatar operations, because that's how we look at it.

Got it. No, that makes sense.

Thank you so much, Ramzi. That's helpful.

Thank you, Ramzi. We have a few questions in the chat box.

The first one is from Nitesh Agarwal from Citigroup. Why did corporate segment's Q2 NII go up so sharply?

Were there any one-offs? There are two more questions.

Shall I read it one by one?

Yes, I think we addressed it earlier with Naresh, that this is particularly because some deposits have moved from international to local.

Thanks, Ramzi. The second question is why have consumer banking fee income jumped to 108 million in Q2 from 65 million in Q1?

There were certain incentives paid by the payment schemes, which are recorded in Q2.

Thanks, Ramzi. The third question is on other impairments, which has already been answered.

The next set of questions are from Varun Kumaravel from SICO. Can you shed some color on the 6.5 billion Qatari riyals of write-offs in Q2?

Yes, those write-offs are principally coming in from our Qatar operations. These were loans which were provided for some time ago, and as we finished the process, we got the approvals, they were written off now, but these were provided at least two to three years ago.

Next question is around fee and commission, which I think is already answered. The next question asks about impact on loan growth in Türkiye from the recent tightening of monthly growth caps.

At this time, we don't have any change in guidance for Turkey for loan growth. We stick to 20% to 25% local currency loan growth in Turkey.

Thank you, Ramzi. Next question is from [unclear].

Several Gulf states are accelerating investments in logistics and energy infrastructure. How does QNB project mid-term credit growth from these initiatives, and specifically from North Field expansion?

Are there any anticipated delays in the project pipeline, or does the bank expect execution to continue at the current pace?

Our mid-term credit outlook is mid-single digits, maybe mid to high-single digits in certain years, primarily because of LNG expansion. In terms of pipelines or execution delays, we are not aware of, but at the same time, till the time situation remains fluid, we expect that the work will not begin till the situation stabilizes.

When the situation did stabilize, and there was an announcement by QatarEnergy that it would ramp up production very quickly within six to eight weeks, go back to pre-war production as much as possible, and it would also resume work on expansion. Again, as the situation will stabilize, we expect work would commence rather quickly.

Thank you, Ramzi. Next question is from Murad Ansari from GTN Middle East.

Loan growth in Q2 was largely driven by international business. How do you see Qatari business loan growth?

Loan growth in Q2 is coming principally from Egypt because they had upward devaluation, followed by Turkey. Qatar, we had things in the pipeline, but most of the quarter was impacted because of the geopolitical events.

Once things stabilize, we expect Qatar loan growth would resume.

Thank you, Ramzi. Next question is from [Ashwash?]

from Goldman Sachs. What are your expectations for NIM this year in your Türkiye and Egypt subsidiaries?

For QNB Egypt, current NIM is at around 644 basis points. We expect NIM to be between 655 and 665 basis points, we expect slight NIM pick up for the rest of the year.

QNB Turkey operations, current NIM is 740 basis points. We expect NIM to be 700 to 750 basis points.

We expect, assuming no interest rate changes on the horizon, NIMs to slightly contract this year.

Thank you, Ramzi. We don't have any more questions on the audio or text.

Thank you so much, Janany, for the call. We'll hand over to Mark for closing remarks.

Thank you so much again, everyone, for joining us, and we will see you in Q3 call. Thank you.

Thank you, everyone.