Ahli Bank Q.P.S.C. (ABQK) Earnings Call Transcript & Summary

Good afternoon. This is Ahli Bank Investor Conference Call. Good afternoon. This is Ahli Bank team. Myself Shankar. Can you introduce yourself, please. There's -- I got my colleagues also, Trevor and Johny. So welcome to the call. We'll wait for some more people to join in, please. Good morning, everyone. This is Ahli Bank team here. We'll walk you through some numbers, and then we'll take some questions. Please introduce yourself, [ Sam ] from which company you're representing, which investor.

[indiscernible]

Hello? Okay. I'm not -- we are not able to hear you, but in any case, we will start. So we just start with the key performance highlights, as always. It's been a year which is -- we kind of get a mix feeling. It's the highest ever profit in the history of ABQ. We recorded QAR 772 million and year-over-year growth of 8.2%. We continue to hold strongly capitalized in terms of and -- in line with our strategy. Some significant development during the year was we repaid tranche 2 of EMTN $500 million in February 2022. It got down the NPL ratio from 3.74% to 2.57% with an improved coverage of 119%. Some other regulatory related developments where the COVID-related support of the industry, that is loans and concessional rates, both was withdrawn by 31st of December 2022. We don't see a significant impact of that. And we have appointed a global advisory firm to assist us in developing a comprehensive ESG strategy. Again, going back to the numbers, we had overall a very satisfactory performance considering the circumstances and all the load of so many things happened in Qatar, the World Cup and everything. So we had to be on our toes throughout the year in terms of technology, and so many other things. So we recorded a net interest income growth of 18.3% year-over-year. Operating income also grew 11.2%. Net profit grew 8.2%. Loans and advances grew by 1.4%. Most importantly, customer deposits grew by 3.7%, which is our kind of primarily locally sourced. So this is the highlights of the performance. And the NPL ratio, et cetera, we can discuss, it actually came down because, one, we had one good recovery. And -- so I'll pause here. If you have any other questions, please -- any questions, please, we'll take it at this point in time. Any concerns, any observation, we'll take care. Good afternoon, this is Ahli Bank team. Any questions, we'll take that. Just to repeat for any investor who's joining late -- who has joined late. So we recorded our highest ever profit in the history of the bank at QAR 772 million, it's a growth of 8.2%. And key -- the key drivers behind this is core income, core operating income, which grew 11.2%, which itself was driven by net interest income, which grew by 18.3%. So we had a very volatile situation in terms of interest rate environment where the Fed kept on increasing the interest rates. We have to respond to that. So there is a lot of action on that about rates. The loans got repriced, the liabilities are getting repriced and all those things are happening on the ground. But as we all know that at some point in time, the customers will resist the increase in pricing of assets, the liability pricing, and we have to respond with not increasing deposit rates, et cetera. So we are on our toes trying to manage the NIM, which is the biggest mover and will remain the biggest mover in current year 2023 and was the biggest mover in last year also. We're strongly capitalized at 20% of -- in terms of capital adequacy ratio with primarily Tier 1 and Pillar 2 capital is also strong 1.49%. We are not a [DC'ed] bank. We all know that. In every conference call, we say -- keep saying this. In terms of operating-wise, there is a lot of digitization related initiatives going on. We launched Apple Pay, Samsung Pay, Google Pay, Fitbit and Garmin Pay, et cetera. so to be on the payment side. Every transaction in our life needs a payment, be it school, be it hospital, be it restaurant, be it airline ticket booking. So we want to be present in all those segments, wherever there is a payment that takes place. This is apart from the credit cards. So all that digitization initiative is ongoing, and we have implemented that. We see the benefits of all this thing kicking in this year onwards. And also gives us visibility in the market for other products and to launch other products and take a foothold in the market share. We'll pause here again. We have -- the results are published. It will be followed up with publishing the investor presentation, which we are talking about it today very soon. So if we have any questions, we will answer that. The bank has declared 20% cash dividend, which is in all in line with the kind of markets. So I will pause here and take your questions if you have any.

Hello. Good afternoon. Just to add, this is Trevor Bailey speaking. Throughout 2022, ABQ has maintained a very healthy credit rating with Moody's at A2/P1 levels. And in line with all other category banks excluding QNB, we maintain rating to Fitch A-, F2. So in that way, we have obviously maintained the confidence of the international community. And this helps us with our investor base and bank relationships.

Good afternoon, Ahli Bank team again. Any questions we can -- if you have, please, we are reachable anytime. In the meanwhile, I'll also walk -- we will also walk you through some regulatory development. So during the year, which are very significant, including the long-term impact of those things playing up. So for example, the LDR ratio, which is 100% loan-to-deposit ratio, that is the QCB allowed, the Qatar Central Bank allowed debt securities like EMTN to be added or considered as a part of deposits or denominator. But it's got some weightage. So they've also made sure that the resident deposits and non-resident deposits are differentiated. The non-resident deposits are not that encouraged these days because the increase -- the QCB has increased the requirement for mandatory reserve, that is cash reserve from 4.5% to 9% for non-resident deposits with [12%] less than 1 year maturity, 7% for 1 to 2-year maturity. So if at all, we have a non-resident deposits, they are saying bring it greater than 2 years deposit at 4.5%, which is same as resident deposit in terms of cash reserve requirement. So basically, the cost of borrowing deposits or bringing deposits into the country from outside has gone up because we think we need hot money less than 1 year, 6 months, and those kind of people, who -- they can take advantage of that and cause some disruption in the system. So that is being discouraged this year onwards, and we are fully cognizant of that. We have factored all those things in our deposit. Irrespective of that, you can see the customer deposits going up by 3.7%, primarily mopped up from local sources. So these are significant developments, but we think we are in control, as you can see from the results. It's been a fantastic results, of course we are cautious. We managed to always cautious in lending. That's why you see an NPL ratio coming down to 2.57% from 3.74% last year. So there is an improvement overall in the quality of the portfolio, the profitability has gone up. The threat we see going forward is the interest rates, which is now playing out. It's volatile. We all know the Fed is tinkering with rates. Markets don't fully understand it. There is a risk related to volatility in rates, which means all of it, we cannot pass it to the customers. The customer deposit rates are firming up. So this is something we are managing very closely right now. So this is the situation as of now, but we are comfortable. We'll defend the NIM but beyond the point, we will not let go that we have to -- we cannot compromise on our margins and profitability. That is how we have been in the past, that is how we will be in the future. So if there's any question we'll ask. And please feel free to contact us. Even if you don't have a question now, we will respond if you have an e-mail IDs, et cetera, and you can call us any time. Thank you. We just wait for some more people to join and then wait for any questions. Thank you. This is Ahli Bank team. Good afternoon. We will just -- for the benefit of investors, we'll repeat ourselves one last time, and then we'll close this call. And any questions you have, you can always come back to us any time. So we had a very good year. This is the highest ever profit in the history of this bank. The profits went up by 8.2% driven by core operating income, which went up 11.2%, driven by net interest income, which went up by 18.3%. Overall, we saw moderate growth in assets like loans and advances grew by 1.4%, customer deposit grew by 3.7%, et cetera. So in terms of quality of assets, which is important for any bank. The NPL ratio stood at 2.5% as against 3.74% last year. We also improved the coverage to 199% from 107%. So overall, we've entered 2023 with confidence with a lot of risk covered. The only thing what we are concerned about is the interest rates, which has moved up quite sharply. The full year impact of that, we'll see this year. So we are on top of it. We know as a bank, we have to support our customers at the same time it has to be a win-win in terms of banks also controlling its NIM at an appropriate level. So this is the story. And more importantly, these days, there is something called ESG. We are approaching that by appointing a global advisory firm to assist us in developing a comprehensive ESG strategy. So that's environmental, social, governance, et cetera. And we are very serious about it and address any investor concerns globally on that area -- in that area. So with that, we will conclude this investor call as there is no questions. If ever you have any questions, please feel free to talk to us, call us, send us an email and we will respond. Thank you very much.

Thank you.

Thank you.

Thank you.