AlRayan Bank Q.P.S.C. (MARK) Earnings Call Transcript & Summary

Hello, everyone, and welcome to AlRayan Bank conference call. Please note that this call is being recorded. I'd now like to hand the call over to Shahan. You may now go ahead, please.

Thanks, Eli, and hello, everyone. I want to welcome you to AlRayan's Third Quarter 2025 Financial Results Conference Call. So on this call from management, we have Shahnawaz Niazi, the Bank's Group CFO; Tahir Pirzada, Group Head of Treasury and Financial Institutions and Alexis Neeson, Group Chief Risk Officer. So 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 Shahnawaz. Please go ahead.

Thank you very much, Shahan. Good afternoon, everyone, from Doha. We'll start the call. So on our profitability, we reported a consolidated net profit of QAR 1.3 billion year-to-date September 2025 versus QAR 1.288 billion year-to-date September 2024. Earnings per share for the period were slightly higher at QAR 0.142 versus QAR 0.139 last year. The book value per share went up compared to Q3 2024 at QAR 2.64 versus QAR 2.58 last year. The return on average equity as of September '25 is 7.24% against 7.23%, more or less the same number last year. Despite the high cost of funds and the pressure on the margins, profitability remained stable in Q3 2025 compared to Q3 2024. The cost-to-income ratio is at 27.8%, slightly up from 26.4% last year, and this is mainly due to our ongoing IT digitization and the transformation process. On the balance sheet, the group achieved its highest ever total asset base, reaching QAR 176 billion as of September 2025. This represents an increase of 6.4% compared to last year, September '24. Customer deposits closed at QAR 114 billion. Last year were QAR 109 billion. Financing assets grew by 3.1% year-on-year at QAR 113 billion. This was driven by continued demand from both corporate and retail clients. And our investment securities also increased by 19% year-on-year to QAR 47 billion, reflecting our continued focus on value-generating assets. On the asset quality, 50% of our financing book continues to be with the government. 88% of our investment securities is sovereign debt and 84% of investment securities is with State of Qatar. The coverage ratio of Stage 3 financing assets is 65.6% against 63.3% last year in Q3 2024. The group's nonperforming financing assets represented 5.34% of the total financing assets. On our ECL, 81.7% of the total exposure subject to ECL are in Stage 1, 14.9% is in Stage 2. Last year was 23.7% in Stage 2 and 3.4% is in Stage 3. Last year was 3.8%, demonstrating the bank's consistent strong base of high-quality assets. The total ECL provision booked during Q3 2025 -- year-to-date, sorry, 2025 was QAR 610 million compared to last year's number of QAR 732 million, making overall coverage ratio stable at 2.9% in Q3 2025. On the capitalization, the bank's capital position continues to be strong and well above the minimum regulatory requirement of 15.73% as a DSIB. Capital adequacy ratio stands at 26.24% and core capital CET1 ratio is at 24.02% in Q3 2025. Last year, the same numbers were 23.34% and 21.25%, respectively. Tahir?

This is Tahir and on the Basel III ratios and liquidity. Qatar and GCC markets remain sufficiently liquid. U.S. treasuries stabilized a bit in Q3 further from last previous 2 quarters on the back of interest rate cut projections. We have seen the second rate cut on 29th of October. Markets are still expecting another 2 to 3 rate cuts in 2026. There was a rate cut projection in December. However, the probability of that is going down. So we don't expect much going on further this year, but we are aligned with 2 to 3 rate cuts in 2026. Liquidity position in GCC remains comfortable. We continue to see interest from diverse investors taking exposure in this market, while picking up decent premium from that of the regional peers. Nonresident pool of liquidity in Qatar remains more or less at the same level. That is about 18% as of now. High-quality liquid assets are roughly at around QAR 44 billion, reflecting a strong liquidity position that continues to support financing asset growth in the wholesale banking sectors. In May 2025, we issued QAR 500 million of 5-year senior unsecured regulation, as Sukuk, which was 3x oversubscribed, reflecting strong investor confidence and financial strength and creditworthiness of AlRayan Bank. We do have liquidity position comfortable. However, we have seen increased interest for local currency issuance from the peers. And we are also aligned with that and might look to do something this year or next year -- early next year. Thank you.

Shahan, back to you.

Okay. Great. Eli, we can open it up for Q&A, please.

[Operator Instructions] We have our first question comes from the line of Murad Ansari of GTN.

Just wanted to get a bit more insight on the fee and other income. I mean, similar to last quarter, I think you had a few one-offs in the first 2 quarters. Just wanted to get a sense of that's -- what's continued into this quarter as well because the numbers are quite significant, both on fee income and other income.

Yes, Murad, that is correct. We do have one-offs even in Q3. But in Q4, we do not expect to have any one-offs. So in fee and commission income line, yes, there is a one-off. And in the other income line, there are recoveries -- one-offs consist mainly of recoveries from old outstanding written-off debt.