Bank Dhofar SAOG (BKDB) Earnings Call Transcript & Summary

[Foreign Language]. Good afternoon, everyone. I would like to welcome you all to Bank Dhofar's MSX Discussion Call, where we will be discussing the bank's financial performance and the key highlights for the first half of 2026. Joining me today, we have our acting Chief Executive Officer, Mr. Gopakumar; our Chief Islamic Banking Officer, Mr. Amor Al Amri; and our Chief Financial Officer, Mr. Vikesh Mirani. From the Investor Relations team, we have Mr. Hilal Al Yarabi, Ms. Maram Al-Hadhrami and myself, Sundus Al Lawati. Thank you all for joining our call today. As usual, our call will be divided into 2 sessions. The first session will take you through the bank's strategy and the key performance highlights for the first half of the year. The second session, we will address all of your questions through a Q&A session that will be interactive. [Operator Instructions] With that, I would like to hand over to Mr. Vikesh to start the presentation.

Thank you very much, Sundus, and good afternoon, everyone, and welcome to you all on our earnings call for the period ended 30 June, 2026. We'll run through the presentation and then, as Sundus mentioned, open this conversation for further Q&A. A quick disclaimer. Of course, we will be shying away from making forward-looking statements, and this presentation is for information and not for any investment decisions. We will be covering -- our agenda essentially covers highlights and financial performance. We will be looking at Oman's overview as well as the Omani banking sector. We will look at strategy and digital footprint for Bank Dhofar, also the initiatives that we have undertaken for ESG. And we'll be then deep diving into the financial performance, both for Dhofar Islamic, which is our Islamic Banking Window, as well as Bank Dhofar, followed by concluding remarks. Moving on. First slide in terms of performance, talks about Bank Dhofar at a glance as at the 30th of June 2026, the first half of 2026. Our operating profit increased by 17.3% year-on-year to OMR 51.33 million, an increase of OMR 7.5 million as compared to last year. Our net profit stood at OMR 27.26 million, which is an increase of 15.2% as compared to last year, an increase of OMR 3.6 million. Last year, first half 2025, our net profit stood at OMR 23.6 million. Both our fee-to-income ratio as well as cost-to-income ratio continue to be good stories. Fee-to-income ratio reached 35%, a shade above 35%. Cost-to-income ratio continues to decline and improved to 45.44% as of the end of first half of 2026. Next slide talks about loans and advances, both for the conventional bank as well as the Islamic Bank at a consolidated level at OMR 4.58 billion. Our loans to advances increased by 9.78%. As of the end of December last year, it stood at OMR 4.176 billion. So in absolute terms, it was an increase of OMR 408 million. Our deposits kept pace with the increase in loans. It went up by 9.04%, an increase of OMR 370 million and stood at OMR 4.49 billion. Our total assets crossed the OMR 6 billion mark and stood at OMR 6.08 billion in the first half of 2026. Our return on equity, both the ROE at shareholders -- average shareholders' equity as well as including the additional Tier 1 of OMR 155 million that we have on our books, stood at 9.03% and 7.19%, including the additional Tier 1, respectively. Our ECL coverage ratio stood at 88.8%, and gross NPL was at 5.26%. Our capital adequacy ratio at 16.72%, higher than the regulatory requirement of 13.5%. The boxes that you see on the right, which is the social impact, something that we closely continue to follow; 16 nationalities of full-time employees, working with the bank. 44% of the employees are women. In terms of credit rating, we are rated by both Moody's and Fitch. Moody's rates us at Baa3 with a stable outlook, the latest revision by July 2026 and Fitch at BB+ with a stable outlook again and the latest was in December 2025. This slide shows the branches and the expanse of our branch network for Bank Dhofar. We are the fastest-growing branch network in Oman. In fact, pretty much represented across the large landscape of our country. We are operating with 145 branches as of the end of June. In fact, by the end of July, we had reached 146 branches with conventional at 114 branches and Islamic at 31 branches. You will recall in terms of our strategy of growing branch network, reaching out to our customers, we started with 54 branches for conventional as at the end of 2021, added 60 branches to our conventional network, which now stands at 114 branches. Our Islamic network, which was operating with 10 branches, now has 31 branches across Oman. Our ATM footprint also has increased and kept pace with the branch network increase. We have now 353 ATMs, 188 CDMs and 5 multi-functional kiosks. We have a market share of 12% for loans, deposits as well as assets. So, whilst we had close to almost 240,000 customers as at the end of 2024, clearly, the expanded branch network has grown that network to 831,000, which is close to almost 3.54x with our conventional retail business having a customer base of 661,000, our corporate SME with 55,000. Dhofar Islamic also crossed the 100,000 mark at 113,000, taking the total customers that we serve at 831,000. Next slide. A bit of detail on our balance sheet, key ratios, as well as the income statement. I've largely covered this. Net loans and advances grew by 9.8% to OMR 4.585 billion as of the end of June as compared to December last year. Most of the growth came in the second quarter, in fact, pretty much close to the second quarter, and that's the reason why you haven't seen that translating into much of NII, but we expect that to continue to perform in the coming quarters. Our investment securities grew by 3.3% at OMR 737 million. Customer deposits kept pace, as I said, with the increase in loans and grew by 9% to OMR 4.489 billion. The table at the bottom left shows the income statement. Our total operating income grew by 11.4% to OMR 94.1 million as compared to OMR 84.5 million last year, an increase of OMR 9.6 million. Operating expenses have grown by 5.1%. Again, you would recall the investment that the bank was doing in the expanded branch network, new businesses, have increased the cost base in the year 2023-'24 and '25, which has now come down to 5.1% increase and is also reflecting on our cost-to-income ratio, which is getting influenced both by the increased operating income, as well as a lower pace of increase as far as the cost is concerned. Overall, profit before impairments grew by 17% at -- from OMR 43.8 million to OMR 51.3 million. Impairments, which is the cost of risk, increased by 20% from OMR 16.2 million to OMR 19.5 million, an increase of OMR 3.3 million. This is in line with the guidance that we had issued earlier. We do expect a continued cost of risk or higher cost of risk for the next 2, 3 -- or actually 3 quarters. Our total capital adequacy ratio as at the end of June 2026 was 16.72%. CET1 continues to be healthy at 11.19%. NPL at 5.26% went up from 4.8%, and I'll cover the reasons in my subsequent slides. Our return on shareholders' equity, which is pure shareholders' equity stood at 9.03%, and our ROE, which includes the AT1 interest, our AT1 stood at OMR 155 million, stood at 7.19%, again, an increase of 34 basis points as compared to December 2025. ROA at OMR 0.96. Our NIS, which is the spreads -- net interest spreads, stood at 2.09%, a shade below 2025 numbers at 2.11%. Our cost-to-income ratio, as I mentioned, continues to decline and improved to 45.44% as at the end of June 2026. Moving on. Slide 9 shows the bank's performance over the last 12 years -- 11 years and 2 quarters. 2025, we saw the highest total income, the highest operating profit and the highest net profit the bank has achieved since inception. We continue to hope for a good 2026 as well. As you would see in the slide, our overall RoASE, continues to grow, grew from 4.64% from 2021 to almost twice of that at 9.03% in the first half of 2026. This slide shows the historic evolvement of the bank since inception 1990 to the first half of 2026. Some of the key events over the last 1 year includes the successful acquisition of Bank of Baroda branch here in Oman, the issuance of OMR 100 million of Tier 2 sub debt. And we have now reached, as I said, a milestone of 146 branches as of the end of July. As at the end of June, it was 145 branches for the first half of 2026. In terms of some of our key strengths, we are a leading franchise in Oman, offering retail banking, corporate banking, wealth management and private banking services. We have a strong corporate banking platform supporting our corporates. We also have an award-winning and one of the fastest-growing Islamic Banking windows in Oman. In terms of government and protection funds, we are co-owned by both government and protection funds to the extent of 28%, giving us high stickiness and relationship with our government entities. We are operating out of a stable and growing operating environment with a stable banking sector, as well as a prudent regulatory environment governed by both FSA as well as the Central Bank of Oman, supported by a solid and robust capitalization. As I mentioned, our capital adequacy ratio at 16.7%. Our CET1 at 11.19% continues to be higher as compared to the minimum regulatory requirement of 13.5% and 9.5%, respectively. We operate out of a diversified smart distribution channels, both the network of branches as well as the investment that the bank has done in various digital initiatives, including Internet Banking, Mobile Banking for the bank. Needless to say, an experienced and seasoned management team and a very dedicated set of staff. A very quick overview of Sultanate of Oman. You've seen this slide earlier. We are the second largest country in GCC with a population of almost 5.4 million. The total GDP -- the real GDP is expected to be at 4%. This is the earlier estimate by MOF, and that's the estimate that we continue to work with. Next slide, again, closer to home, in terms of the Omani banking sector. We have 20 licensed banks, including the conventional, the state-owned specialized bank as well as full-fledged Islamic banks. In terms of the total assets, deposits and loans in the Omani banking sector, OMR 52 billion being the total assets and OMR 37 billion and OMR 36 billion being loans and deposits, respectively. The Islamic Banking business continues to grow at a CAGR of 10.3% and stood at OMR 9.83 billion in terms of total assets as of the end of May 2026. Looking at the bank's strategy. And again, this essentially summarizes the 6 key pillars of the bank strategy, and you will have seen how that is translating into our overall growth. We are basically building a future-ready bank through various initiatives that we have undertaken and how that is being executed. First, clearly being the distribution expansion. Our distribution network, as I mentioned, has grown from 64 branches to now 145 branches, with both conventional and Islamic Banking branches growing, essentially allows us to reach closer to our customers. In terms of products and partnership, we have had many global alliances, segment repositioning. And again, I'll talk about it in detail in my subsequent slide, providing us an extensive products for our customers. Whilst we continue to invest in our branch network and ATM network, we have also invested significantly in our digital capabilities, providing a faster turnaround time for our customers, both in terms of speed of delivery as well as efficiency. In terms of our technology landscape, the bank continues to invest in systems, omnichannel, core modernization, cloud native and AI technologies. The bank has a very data-driven culture, is what we are trying to inculcate in terms of how we can make real-time and near real-time data inputs to make our decision-making a lot faster. In terms of financial prudence, again, it's very high-up on the agenda; the governance, efficient growth as well as controls across our businesses. Next slide, how our transformation pillars are really making a difference and in terms of the action. Distribution expansion, as I talked about, from 64 to 146 branches as at the end of July. We are now the second largest branch network in the country. It's not only the digital investments that I talked about, it's how we are getting humans across and closer to our customers. So it's really a combination of both digital and probably human approach that we are adopting here through a multi-channel deployment, our branch network, ATM network, direct sales, OTMs, our relationship managers and mobile vans, operating closer to our branch network and reaching out to our customers. In terms of products and partnership, we talked about global alliances to offer best-in-class products to our customers. We have launched private banking, wealth management offerings to our customers over the last 2, 3 years. And that's also now reflecting both in terms of the offerings that we have to our customers, but also contributing directly to our bottom line. In terms of the products, it's bancassurance, asset management, corporate advisory, new businesses that are now being offered to our customers to improve both customer engagement as well as stickiness, rebranding and repositioning our SME offerings to improve our customer experience, as well as we have tied up with some of the global alliances, which includes BlackRock, Mastercard and MetLife offering better and improved products to our customers. In terms of digital capabilities, an expanded digital landscape, allowing us to reach to our customers with an end-to-end digital onboarding and self-servicing channels, enhanced mobile and web banking experience being offered to our customers. It's clearly improved the instant remittances, opportunities for our customers as well as card management services through our digital banking platforms. Virtual accounts, e-mandates, WPS and mobile banking vans, again, improving the overall customer experience and an expanded ATM and CDM network, allowing us to reach closer to our customers. Technology landscape, again, a digital engagement hub. We are also looking at implementing a new core banking system for our Islamic business, which will help us improve customer experience for our Islamic Banking customers. In terms of deployment of specialized platform for our trade, investments, bancassurance and CRM business. Focused investment on our cybersecurity capabilities, clearly, this is an important area. We are the custodians of our customers' money. So, investment in cybersecurity is absolutely critical. We are also deploying cloud, micro services, as well as APIs and automation, both for scalability and improved experiences for our customers. A very data-driven culture is what I talked about, not only real time but also very near real-time data enablement, enabling our businesses to take real-time decisions as well as improving customer experience due to use of data. A robust sales productivity tracking, allowing us to improve overall customer experience as well as the portfolio analytics and allowing us to have a rapid decision-making whenever it comes to customer servicing. Financial prudence, again, as I mentioned, it's a very way of life for the organization. You have seen that getting translated into how our cost-to-income ratio continues to improve, our cost of funds being managed, as well as the fee-to-income ratio improving from the lows of 14% to now 35%, our disclosure practices as well as our robust governance standards that we have applied in our businesses. Moving on. ESG continues to be an important element of our strategy. We have actually moved from ESG strategy now to early-stage execution, so to say. The 4 key pillars of our ESG strategy includes the climate action, the customer and communities and how we respond to our people as well as governance. We are also nearing a certification of our sustainable finance framework and working closely with some of our partners to put this into action. Moving on. Some of the key digital initiatives that we have launched other than the expanded branch network, next-generation corporate internet banking platform, an FSA-integrated insurance claims payment platform, e-Mandate and direct debit services with API connectivity, a tailored SME digital banking platform, and EasyBiz, a virtual account-driven collection platform, enhanced card management, enhanced remittance services, improved salary processing as well as implementation of government revenue collection systems. This slide, whilst a bit detailed, shows how our each business is contributing to the overall operating profits, revenue and some of the key segment highlights, followed by the contribution of liabilities and assets on the extreme right of the slide. As you can see, our operating profit from the retail banking stood at OMR 7.68 million, with 31% contribution towards revenue coming from our retail business. In fact, if I look at my retail business from a net profit perspective, from a low of 12% as of the end of 2023, it has now increased to 24%. So clearly, our strategy on branch expansion has played out well for our retail business, both in terms of the customer reach that we have had. I talked about the increased number of customers from [ 240,000 ] to almost 800,000 as at the end of 2026 first half and how that's translating into a better reach to our customers. In terms of corporate business, our total revenue contribution from corporate business stood at 36%, and the total operating profit stood at OMR 22.58 million, clearly, a relationship-led banking business, focusing on our corporate business, providing end-to-end financial solutions for working capital, trade finance, project finance, treasury, cash management, et cetera. We are also offering transactional banking services, which includes cash management, trade services, digital collections and payment solutions to our corporate customers. In terms of treasury, investment and financial institutions, the total operating profit contribution to the bottom line or to the operating profit was OMR 12.19 million, which represents 16% in terms of overall revenue, providing foreign exchange, money market, currency swaps, interest rate swaps and other hedging solutions to our customers. Corporate finance advisory, again, a new business initiative of businesses that was introduced 2 years ago is contributing good to the bottom line as well as supports our customers whoever needs this kind of advisory support. Asset management, overall improving the net bottom line for the bank. Last but not the least, Islamic Bank contributes 17% to the overall revenues with a net contribution of 8.8% -- OMR 8.8 million of operating profit to the operating profit line. Clearly, the largest Islamic Banking branch network in the country. We are now with 31 branches, the largest network across the country, offering Sharia-compliant solutions to our Islamic Banking customers. As I mentioned, we are also looking at changing the core banking for our Islamic business, which will further improve our product and offerings to our customers. In terms of liability and asset contribution to the business, retail contributed 21%, corporate and government was at 51%, Treasury and FI at 9% and Dhofar Islamic at 19%. In terms of assets, 19% from Dhofar Islamic, 24% from retail, corporate stood at 40% and treasury and FI at 17%. Looking at the consolidated profit and loss, our NII, which is the net interest income grew from OMR 59 million to OMR 61 million. As I mentioned, most of the asset growth came in the second quarter of 2026, and that's not entirely translated into NII as a plus. The growth has come from both the retail business as well as our government business, which is again working on thin margins. So, that's why it doesn't really entirely reflect on the NII. We are hoping going forward, this should improve further. On the fee income, as I mentioned, it continues to be a good story with an increase of 34%. We hope and expect this to continue to be sustainable in terms of the absolute numbers. The pace of growth may slow down because we are now already at 35% in terms of overall fee to total income ratio. Our operating expenses went up by 5% from OMR 40 million to OMR 42 million. We continue to manage our costs better, and that is reflected in our overall reduction in cost-to-income ratio. Our operating profit went up from OMR 43 million to OMR 51 million, an increase of 17%. Net provisions increased by almost OMR 3.3 million from OMR 16 million to OMR 19 million. Our cost of risk, as I mentioned, from an overall total assets perspective stood at 0.69%. And if I just look at loans and advances was at OMR 0.90, and we expect that to continue to be around those levels in the next 2 to 3 quarters. My total net profit at OMR 27.26 million, went up by 15%. For Dhofar Islamic, the overall operating income had a growth of 9.34%, stood at OMR 15.82 million. Fee and other income continue to be a good story for Islamic Bank as well at OMR 4.25 million, an increase of 17%. The impairments for Islamic business also increased by 22% at OMR 6.45 million. Net profit at OMR 2.43 million, was an increase of 6.7%. In terms of financing and deposits, went up by 21% in terms of financing at OMR 981 million. Our total deposits went up by almost -- went up to OMR 915 million. Our CASA, in fact, as far as Islamic business is concerned with an expanded branch network increased from 53% to 58%, and that's also getting reflected in the overall cost of funds for Islamic business. Loans and advances, as I mentioned, went up by 9.7% to OMR 4.809 billion. The chart on the top right shows the key sectors with which we have grown the loans and advances, retail being OMR 125 million, communications at OMR 124 million. Government was at OMR 232 million and services at OMR 110 million, leading to an overall increase of 4.8 -- overall increase to OMR 4.8 billion in the first half of 2026. Credit quality, NPLs went up from OMR 210 million to OMR 252 million, an increase to 5.26%, whereas my Stage 2 exposure came down from OMR 651 million to OMR 603 million in the first half of 2026. So this is mainly because of one large account that's what is causing this movement. In fact, the entire -- most of the movement from -- for the Stage 2 decline as well as Stage 3 increase is because of that account. This is in line with the Central Bank guidance, that's the change that you see. That clearly has led to a reduction in my overall coverage ratio because when the overall NPL increases, the coverage has declined to that extent. Whereas if you look at the Stage 3 coverage ratio actually improved from 57% to 63% because the account that moved from Stage 2 to Stage 3 was significantly provided for. So that has clearly improved the overall Stage 3 coverage ratio. But given the overall increase in NPL from OMR 210 million to OMR 252 million has led to a reduction in the overall coverage ratio. Our restructured loans, which is the last bullet point on the right-hand side actually came down from OMR 438 million to OMR 379 million in the first half of 2026. Very quickly on the funding side, our CASA ratio improved from 48% to 50%. We are not really, again, chasing a headline CASA ratio here. The objective is to pay off some of the expensive core deposits that we have and improve and increase the overall contribution of savings deposit to the net funding side of the balance sheet. We continue to increase that with the expanded branch network, and we have seen an overall increase in our liabilities from OMR 4 billion to OMR 4.49 billion in the first half of 2026. This slide shows the profitability and performance. The top left slide shows the income breakup. Again, the way to read this is the block -- the bottom block shows the net interest income followed by the net income from Islamic business, which is basically the funded profit income from Islamic business. The top 2 blocks show the net fees and commission as well as the other income. What we want to show here is how our fee income has grown year-on-year starting, let's say, 2020, '21, '22. In fact, if I look at 2022, and that is something that you can see on the chart bottom right, our fee-to-income ratio as at the end of 2022 stood at 14.49%, which was the lowest in the industry. This now has improved to 35%, clearly giving us a substantial contribution from our fee-based business. And again, the investments that the bank has done into new businesses, which includes private banking, asset management, corporate advisory, et cetera, is now reflecting into an increased fee income. It's almost all sustainable, and that's what you can actually see in the table on the bottom right. Most of the fee increase is coming from net fees and commission. Our miscellaneous income contributed only to the extent of around OMR 3.6 million to the overall fee increase with foreign exchange growing from OMR 6.8 million to OMR 4.8 million in the first half of 2026. Our investment income stood at OMR 4.3 million as compared to full year OMR 7.9 million last year. Again, as I mentioned, we do expect this to be sustainable going forward. In terms of our yield, cost of funds, net interest margins, our yield stood at 5.69%, a reduction of 18 basis points as compared to last year. Our cost of funds down by 16 basis points, again, largely mirroring the reduction in yield. As I mentioned, we are trying to manage our cost of funds by paying off expensive call deposits, et cetera, and managing our overall increase in savings deposits that's directly contributing to the reduced cost of funds. The net interest spreads stayed flattish as compared to last year at 2.09%. Capitalization, I talked about total capital adequacy ratio at 16.72% higher as compared to the regulatory requirement of 13.5%, 11.2% being our CET1. Our overall risk-weighted assets grew from OMR 4.3 billion to OMR 4.9 billion. We continue to pay dividends year-on-year. In fact, it has improved from 2% to 7.5% cash as at the end of 2025. With this, I will conclude my presentation with some of the key messages. Fee-to-income ratio that I talked about, which was a low of 14.5%, the lowest in the industry, now stands at 35.2%. Our net profit [indiscernible] our CASA increased to 15% consolidated with Dhofar Islamic at 58%. Our focus on increased footprint now, we are operating out of 145 branches. We are continued -- we continue to be supported with an experienced management and a very dedicated staff for the Bank. With this, I will conclude my presentation and pass it back to Sundus and Hilal to manage the Q&A.

Thank you, Mr. Vikesh. Now, I will open the floor for the Q&A session. [Operator Instructions]

[Operator Instructions]

Mr. [ Srinath ], please go ahead and unmute yourself.

Congratulations on good set of numbers. So I have 2 questions. First one is regarding loan growth. So considering current geopolitical environment, how do you see loan growth evolving for remainder of the year? Where do you -- which sectors you see contributing to loan growth? And is there any change in customer demand or lending appetite? Second question is regarding -- if you can please provide guidance regarding important line items like loan growth, margin, cost-to-income ratio, cost of risk and capital ratio, that will be really helpful from a modeling perspective. These are my questions.

Thank you, Srinath. With regards to loan growth, as I mentioned, our loan growth stood at 9.78% in the first half of 2026. We do expect this growth rate to continue for the remaining of 2026 as well, which means higher side of single-digit growth. The opportunities are across various sectors. You would have seen my presentation on various sectors from which the loan growth actually came in the first half of 2026, which includes retail business clearly. We are taking advantage of our expanded branch network. The loan growth was also from government sector to the extent of almost [ OMR 213 billion ], which is almost half of my overall increase in loan growth as well as communications, et cetera. So we do expect the same level of growth rate to continue for the remaining 2026 as well some of the new sectors like renewables, et cetera, are also expected to contribute to the overall loan growth. So that pace or pace we expect to maintain. In terms of some of the -- I cannot really share some forward guidance with regards to key ratios. But directionally, if you see the cost-to-income ratio for the bank used to be upwards of 57%, Srinath, in 2020, 2021 and 2022. From 57%, it has now come down to 45%. We believe that it's still high as compared to the overall market, but the investment that the bank has done clearly is now translating into higher top line as well. So going forward, we do expect our cost-to-income ratio to continue to decline. In terms of our fee-to-income ratio, again, it's a good story. It used to be 14.5%, the lowest in the industry. It's now amongst the best performing fee-to-income ratio at 35%. The pace of that increase now will slow down. But clearly, mostly fee is sustainable given the additional businesses that we have inculcated and what we are doing. So we expect that to have a healthy growth in the coming quarters and years. In terms of capital adequacy ratio, it stands at 16.7%. It supports our current balance sheet requirements. However, we will be looking at additional Tier 1 in the next few months and quarters depending on the opportunity. We did raise OMR 100 million of Tier 2 last year in 2025. That was a conscious call because clearly, the Tier 2 allows us to amortize that over a period of 5 years, and that goes and adds to the overall CET1. And it's essentially a payback to the shareholders. So that's again something that's going to help increase our CET1 over and above the clawback that we'll be doing for our profits over and above the distribution. So we expect our capital adequacy ratio to continue to be robust in the coming quarters with the additional capital that the bank is expected or will be raising depending on the balance sheet. Our ROE currently at 9.03%. Again, I will shy away from making any forward-looking guidance. But given the way our operating income has been growing, our costs are being managed. Yes, we have a higher cost of risk. And as I mentioned, it is expected to continue to be elevated over the next 2 to 3 quarters, after which we do expect our ROEs to improve significantly going forward if as and when -- and as when our ROE -- as our ECL cost of risk gets more -- comes to a lower level. I think if that answers your question, Srinath.

Yes.

Are there any questions? Yes, [ Joyce ]. Go ahead.

My question is primarily on the NPL trends that you are seeing for the bank and for the sector as a whole. So can you please share some thoughts on the NPL trends that we are witnessing? And what would be a comfortable coverage ratios that you would be looking at?

Thank you, Joyce. As far as NPL is concerned, the first half of 2026, we did see an increase in the NPL. In fact, the first quarter itself, and as I mentioned, this was on account of one account that led to this increase. This account based on Central Bank guidance was in Stage 2 and which has now been moved to Stage 3. As I said, it was significantly provided for, and that's the reason why you saw the overall Stage 3 coverage, in fact, going up from 57% to 63%. However, since the overall numerator has gone up, the overall coverage has declined to 88%. In terms of a comfortable coverage ratio, clearly, you've seen the bank continues to be prudent in terms of ECL that it continues to provide quarter-on-quarter. We are whilst increasing the overall top line with improved and increased business, a significant portion of that is set aside to improve the coverage ratio. So I can't really give you a forward-looking number as far as coverage ratio is concerned. You will see the coverage ratio continue to improve from this level. Earlier, we have kept coverage ratios close to almost 100% prior to the classification of this particular account, and that's where we'll eventually be heading to, Joyce, industry-wide. In terms of industry-wide, again, NPLs are in the range of around 3.8% to 4%, and this is what we'll be targeting in the long run. Clearly, there are some legacy challenges that we have, Joyce, which we are trying to manage both in terms of how we resolve those accounts as well as how we manage our coverage and NPLs associated with that.

Sure. And the next question is on the recent regulatory developments that we have seen both from CDO as well as from the FSA. One is on spinning off the Islamic banking and the other one is spinning off the investment banking. Right now, what we are seeing is Islamic banking for Dhofar is quite big, and it contributes meaningfully to your bottom line. So, just wanted to pick your brains on your initial thoughts. I know it's very early, but how do you see the sector evolving on these developments? And also on any initial thoughts on what's going to be the strategy for Dhofar as well on these 2 aspects?

Sure. So as you have seen from the numbers, the Islamic banking growth in Oman has been significant in terms of a compounded growth rate, though it's from a smaller base, it is much higher than the conventional over the last 13 years or so that Islamic banking has been in the country. And the recent development of the announcement of the Central Bank in terms of development of the Islamic banking industry is a very welcome step and it will help the growth of Islamic banking in the country. We welcome this initiative and we are looking at from the bank side, what are the different options that we can look at. We have been given as you might have seen the regulations, 3 different options, be it a merger into one of the Islamic banks or between windows or again as a separate subsidiary. We are looking at all these options. We are still not finalized what is the best interest of the shareholders as well as the best interest for growth of the Islamic banking industry and our franchise in particular. As you rightly said, it's a large part of our business, and we want to grow that further. On the investment banking side, we are again reviewing the regulations, which has come from the FSA. And we think some additional guidance on this will be available from the Central Bank. And once that comes through as well before end of the year, we could take a clear position on which we want to go on that, what are the best options for the shareholders for developing this business, et cetera. And specifically on the Islamic banking business of the bank, I will ask my colleague, Amor, to talk further on business, how he sees Islamic banking growth for Dhofar front.

Yes. Thank you, sir. As you mentioned, I think the Islamic banking sector is growing fast with the increasing demand on [indiscernible] products and services. And also regarding the latest central bank's guidance, I think I can see it positive while further to develop like Islamic banking sector in Oman. And I think this is aligned with Oman Vision 2040.

If you see today, among the Islamic banks or windows, our network is among the largest in terms of the network of the Islamic branches, banking branches in the country. So I think it's a very strong franchise and I think we are quite positive that franchise can be developed further.

Yes, [ Prashanth ], go ahead.

Congratulations on a good set of numbers. Also wanted to especially mention the growth we've seen in your fee income. I think it's remarkable compared to previous years. I just wanted to touch -- pick up on the asset management sort of division. Do you see that as complementary in terms of offering alternate products to clients once you've seen a sort of decline in interest rates? Also in terms of client retention, if you could just touch upon that, how is that sort of feeding in? And what sort of growth do you see over there?