Bank Muscat SAOG (BKMB) Earnings Call Transcript & Summary

Good afternoon, everybody. Thank you very much for joining us today. We are going to be presenting the 31st December '22 financial results. I want to ask just before I start, so that we can make this go as smooth as possible. Is there anybody who -- maybe I should ask it in Arabic, my question was going to be, should I keep translating every slide from English to Arabic. [Foreign Language] So in that case, I will start this session. Of course, we start with the regular disclaimer. And because this is a recorded and going to be kept in our website this session, I encourage those to read it, and it's the standard disclaimer in terms of few forward-looking statements and so on. I'll move on to the contents. I will be first talking about the operating environment in Oman, the economy. I'll move on to the banking sector in general, then I will talk about specifically Bank Muscat and its business lines as well as the financial highlights, and we will conclude after that with questions and answers. Sorry, I forgot to introduce the team here. My apologies. My name is Waleed Al Hashar. I'm the Chief Executive Officer of Bank Muscat. I have 2 -- my left is my colleague, Ahmed Al Balushi who is the Chief Banking Officer. In front of me, I have Mr. Ganesh, who is the Chief Financial Officer; and I have Mrs. Sheikha Al Farsi, who is our Chief Operating Officer, also here with me. So I will proceed to talk about the operating environment, of course, [Foreign Language] the economy has been quite resilient as we have -- and we have talked about this in the past, and it continues to be so over the last 5 years despite depressed oil prices. This was made possible from crude in terms of Roman taking a number of initiatives and measures to support and diversify the economy of course. Some of these initiatives like within the manufacturing, tourism, logistics, agriculture, fisheries, have all been rein enforced and continue to be reinforced. To enable the growth in these sectors, a number of initiatives have been taken, including changing and introducing new legislation and promoting foreign direct investments into Oman. Of course, also, in particular, during 2022 and due to the recovery in the oil prices and the increase in our Oman’s oil production and the momentum in the -- positive momentum in nonhydrocarbon revenues, strong financial measures taken by the government of Oman, the growth has been strong. After a decade long has witnessed fiscal and external surpluses in 2022. The elevated levels of the oil prices have resulted in a fiscal surplus of about OMR 1.15 billion against a budgeted deficit of OMR 1.55 billion. GDP is estimated to grow by about 4.5% for the first 9 months of 2022. Consumer price index inflation has largely remained muted at 2% in comparison to the global inflation average nearing 9%. The government was also able to utilize the excess surplus in paying the public debt due to its debt-to-GDP ratio reduced from 61% in 2021 to about 43% in 2022. These are all positive signs. Medium Term Fiscal Plan and Oman's Vision 2040 also provides a firm and a positive anchor in the direction of the economic diversification strategy, sustainable private sector growth and a higher living standard. Budget 2023 is also another sign another positive sign for us, giving growth positive expansionary budget, clearly focusing on good investment outlays, covering a wide number of projects across a number of core sectors in the economy. The government also expects the economy will grow by about 5.5% in 2023. The momentum and the positive momentum in the economy, of course, resulted in an upgrade in the sovereign ratings by certain rating agencies and hopefully, more of that will come as well. In terms of the banking sector, the banking sector, in general, has been performing relatively well during these challenging times over the past few years. In fact, some of the growth parameters, which are shown in the -- going to be shown in the next slide shows that sectoral performance has been good. And banking, of course, has been supporting various businesses and business segments in Oman through its sector credit support. Sector's key parameters, which include liquidity position, capital adequacy, asset quality are at healthy levels. During 2022, the sector actually witnessed a good momentum also supported by the economic recovery and positive macro outlook. Sector credit portfolio increased by about 1.35 billion i.e., a growth of about 4.8%, registering a growth of about 4.5% the year before at 1.2 billion. Deposits also increased by around 292 million, and about 1.5% in '22 when it has seen a 6% growth in 2021. But of course, we understand the story in 2021 due to the lockdowns and so on, spending was limited. Bank-wide net profits had also reverted back to pre-pandemic levels. As I had mentioned earlier, the budget of 2023 promoting investments in key core sectors of the economy with the elevated levels of oil prices and the lifting up of the pandemic-related restrictions at the government's continued focus on reforms and developmental strategies, we believe that this will further provide a needed booster for sectoral growth, helping it in achieving even better momentum and better financial performance in the coming period. In terms of the banking sector slides here, I can see that the stable growth in some of the key parameters, loan growth of around 4.4% compounded annual growth rate for the last 5 years, which is quite healthy, ensuring a good growth in customer deposits also of around 3.7%. In 2022, we can clearly see the momentum gaining traction and credit growth after a couple of years of subdued economic activities due to the pandemic. Profitability of the sector was stable until 2019. In 2020, it's understandable banks globally witnessed a sharp decline in profits and Oman, of course, was no exception. After witnessing close to 25% reduction, net profits for the banks have improved by almost 18%. So we're seeing them moving back towards the pre-pandemic levels and even improving further during 2022. We see clearly profit further improving by almost 27% year-on-year. The sector anticipating it to grow at around mid-single digits in terms of credit and deposit growth going forward. There could be some short-term impact, of course, and this is a continuation from the previous years in terms of asset quality and the collective provision. But also due to the global geopolitical factors that are still there, the interest rate situations, banks will have to continually tactically manage their liquidity position. But in the medium term, we expect to be a stable performance. Notwithstanding all the different dynamics that have been taking shape, of course, over the last couple of weeks and over the last 2 days, in particular. All of these are different dynamics. Nevertheless, I think it's very important to keep the focus on the ball and move forward and keep watching what the situation is around us. In terms of the Bank Muscat strategy, of course, the bank division is focused on key strategic pillars on customers, on the market leadership that we have, on efficiency and productivity, and, of course, technology and innovation. These are the focus and will continue to be our focus in terms of the strategy to make sure that we deliver the best possible returns and the best possible value for all our stakeholders. The Bank Muscat business plan, this is just a quick snapshot of the various business lines in the bank. Of course, we provide all banking services and well-established business lines, including corporate banking, personal banking, wholesale banking and Islamic banking. These business lines have been performing quite well over the past few years and continue to do so. In general, corporate banking, personal banking and wholesale banking contribute around 25% to 35% each, and Islamic banking is around 6% to 7%. Our overseas operations is coming back to the positive, contributing about 2% to our bottom line. Islamic Banking is continuing to have a good -- the highest market share in terms of assets in Oman and has shown quite a healthy growth since its inception. The bank is quite well diversified in terms of loan portfolio. As you can see in the graph on the right top side, on the deposit portfolio as well is quite strong, driven by deposits, in particular, retail deposits and also supported by government and private sector deposits. In terms of -- now we'll go to some of the key financial highlights for Bank Muscat for the year 2022, you can see that the bank's top line performance was strong in spite of the continued global and regional challenges. Net profit was higher by 5.9% over the last year. This is due to business conditions slowly going back to normal, along with the fact that those forward-looking provisions that were made back in 2021 has helped us actually moderate the levels of provision in 2022. Non-funded income also had improved in 2022, 13%. While some of that is due to gains on sale of certain investments by the bank, there is also some healthy growth in the nonfunded income. Operating expenses increased by about 8% relative to the growth in the business and the activities that we do. We have expansions in terms of our operations, and this is quite natural because of the fact that we have been controlling costs over the past few years due to the pandemic and due to the situation, the oil prices and the challenges that the economy was going through. Now we're coming back to normal business, and therefore, we have to continue investing in our businesses. In terms of the loan portfolio, it has also shown a healthy growth of 2.5% year-on-year, and the deposit portfolio also showed a growth of 1.5%. In terms of the operating performance and profitability in specific, this is a slide that gives a snapshot over the past few years. As you can see, the NIMs have been quite stable over the last 5 years. And we have been able to manage the yield and the funding cost in order to maintain these NIMs at these levels. The bank's fee-based income was stable, also at around 31% to 35% of total income throughout this period, and these are quite healthy levels. At the same time, our cost-to-income ratio consistently declined during 2018 to 2020 because we have deployed a number of cost reforms during that time to ensure that we align ourselves with the subdued economic situation during that time and also continued with that during COVID times matching it with the volatility that has taken shape in order to actually maintain a stable income stream as far as stable income results. Now due to the opening up of the economy, we can see a marginal increase in the bank's cost-to-income ratio reaching to about 41.2% in 2022. And that's intentional actually because we are back to reinvesting in our infrastructure and the development of our human resources. The ROE of the bank has also witnessed a significant improvement from the lower levels of 9% in 2020 to reach 10.5% in 2022, almost recovering back to the 2018, 2019 levels. Higher profits, and this is what has helped the ROE and also the positive impact of the capital -- structuring capital optimization exercise that the bank has done during the fourth quarter of 2022. ROA continues to be quite healthy, reaching 1.55%, the highest when compared to the levels seen in the last 5 years, especially when it reached lows of 1.32% in 2020. In terms of asset quality, it gives you a snapshot of the trend in terms of asset quality. As you can see, the bank has been able to maintain an NPL ratio of around 3% to 4% throughout these last few years. The coverage ratio, however, has continued to be at much higher levels, ranging from 125% to 145% for the last 4 years. And now it has reached 163% due to the prudent and conservative policies that we take in the bank in terms of coverage for risky credit. And as I said, the bank's gross loan portfolio is quite well diversified, you'll can see from the slide. There is a prudent credit policy in the bank was able to grow the gross loan portfolio is by about 3.3% in 2022. The bank continues this prudent provisioning and credit policy to ensure that our performance continues to be stable as we move forward. This is the last slide that I have in terms of financial performance. We talk about the funding and the liquidity situation of the bank. It's quite a well-balanced funding mix of about 70% coming from customer deposits and the balance from interbank borrowings and equity. This has been quite stable position for the bank for the last few years. The bank continues to hold a high level of liquid assets, and that has been the trend over the last few years. And as I mentioned earlier, the bank's capital position is one of the highest in fact, among the Omani peers and one of also the strongest in the GCC peers as well. The bank's capital position is largely driven by the core equity capital along with retained profits after paying healthy dividends over the last several years. Of course, due to global challenges, including supply chain, high inflation in many markets, rapidly increasing interest rate scenarios, the recent market developments in the U.S. and in Europe. We will and we continue to tactically work towards liquidity management and interest rate management to make sure that our top line remains stable and healthy and robust. With this, I have reached the conclusion of my presentation. I can open now the floor for questions. You can raise your hand, please, so that we can unmute you.

Question is with regards to cost of risk and how do you see that panning out? You mentioned that the bank was extremely prudent when COVID came and you took provisions accordingly and currently you build a sufficient buffer. And if you look at the coverage ratio, it's much higher than industry standards, right, at 160%. How do you see that panning out over the next 12 to 15 months or over the next couple of years? If you could just give your thoughts on the same?

I think it will be similar -- I can't give forward-looking statements. And of course, it's very difficult to predict what's going to be the future. But I can reflect on the previous year in 2022. We don't see the situation requiring any higher levels beyond the cost of risk that was achieved in 2022, frankly speaking at this stage. So is that a fair statement, Ganesh? So we're going to continue to be prudent, obviously. We're going to continue to be focusing on good quality assets. And that level of risk cost of risk is probably going to continue in the same levels as you have seen already.

Next question is with regards to the restructured loan book and we've seen that across the sector. So it's not like one bank is isolated. The entire banking sector has seen a surge in restructured loans for obvious reasons. How do you as Bank Muscat see that panning out? I mean as a percentage of overall loans, you're still on the lower end or along the average, but how do you see that panning out over the next 12 months?

I get forward-looking statement is very difficult, but I can just take you back to the history. And the current dynamics that have brought us here and looking at the positive momentum that is there. And if that continues and with all of these qualifications, we see that it's probably -- it's not going to be as worse than where it is already. Yes, there could be some certain areas of stress in certain credits. But then again, the situation that we have just come out of has been quite difficult. And there has been a large exercises done for restructuring and trying to make sure that we align cash flows to repayment terms. So from that perspective, I don't -- at this stage today, I don't have any reason to make me believe that it is going to get worse. Now again, if the dynamics globally changed and the whole situation changes globally, that's a different scenario. But if the current momentum continues, then I don't see any reason for me now to think that it's going to get worse.

Congratulations on a very, very good year. Thank you for the optimization plan. It's again, a very unique sort of endeavor undertaken by the Bank Muscat, much appreciated by the market and minority shareholders as well. When you look at '23, how do you see credit sort of growth behave, especially in light that dollar funding is going up and maybe some of the GRE growth demands can be met by Omani Real. Do you see that sort of transition happening? And how do you see credit growth behaving for Bank Muscat? That's my first question, sir.

There are so many dynamics in the market. If you ask me what -- somebody is unmuted somewhere, I think. Abbas somebody is talking with you. So to go back, the dynamics are changing rapidly. And this question, if you asked it 2 months ago, and if you asked it 4 months ago and if you asked it a month ago, they keep changing because interest rate scenarios, what we expected 6 months ago versus where we are today and so on. So from where I stood 2 months or 3 months ago, we were expecting mid-single-digit growth for the sector. Now of course, with all the dynamics globally, I'm not sure to what extent that will have impact globally. I'm not talking about Oman here, on people's plans on further capital expansions and so on. It's a situation that we need to see and how it continues to evolve. How liquidity globally is going to pan out when the dust settles down. But I am still optimistic. I'm still optimistic that the economy here is quite robust and the growth levels that we were projecting, we hope that, that will be achieved. Again, assuming that there is nothing drastic happens for a prolonged period of time globally.

And how are you seeing in a rising rate environment, how are you seeing domestic deposits and real liquidity behave? I mean, are you seeing the government continue to be a large provider of deposits? Because when I talk to other bankers, it seems there's like there's a rush to sort of rate deposits, rates have gone up. So how do you see Bank Muscat reacting in a scenario like this?

Liquidity is reasonably well within the country. Now you have to look at it from both ways, not just Omani rial. You have to look at it also from the U.S. dollar side. From our perspective, as the largest bank in the country, we want to make sure that we don't get into this price war within the sector. Otherwise, it's just going to create a really higher -- an increase in the cost of funds significantly. And that's why we are very closely managing our liquidity position to make sure it's at the optimal levels with sound buffers above that to make sure that we don't get into this not panic, I wouldn't call it panic, but in terms of getting into a price war with other banks. That's very important. Now there are certain pockets where, of course, liquidity may be -- not liquidity, I think liquidity is fair rate, at what price level is it going to be available? And yes, we understand that prices have increased. And that's where we need to continue to manage our balance sheet and making sure that it's done optimally. Yes, there will be an increase in the cost of funds, that's understandable. Where it will go, we don't know yet. Like I said, the situation, well, if you had talked to me in December, I had a different view. But now, and I'm sure you will do you see the interest rates possible scenario changing given the curve and where it went last few days. So yes, it's still volatile as far as cost of funds. Liquidity is not the issue. It's the price at which you can get to that. But nevertheless, if it's short term, then I think it's not going to have that much of an impact but if it is prolonged, then that's a different scenario altogether.

I had another question. So how do you -- in a scenario like this, when cost of funds is moving up, how do you see the pass-through mechanism work? What kind of conversations are you having with your customers? And specifically on the restructured loan side, do you feel in an environment where interest rates are going up, and we are just coming off a couple of tough years to go with the risk level, the risk will remain elevated for the bank? I'm trying to mix up in terms of how the mechanism of transferring this cost upon increase to end consumers. At the same time, banks sitting on large restructured books, companies that have been challenged for a while. And specifically, how will they behave? So it's like a twofold question, sir.

Yes. We have to be very careful as a bank. We have to be very careful in terms of this pass-through mechanism. It's not as straightforward as that. And that's where relationship comes in, we're understanding our customers' business comes in. We are managing our balance sheet in an agile way comes in tactfully to make sure that we balance the cost of funds because it's not a sail through process where the higher cost of funds means that we have to immediately pass that on through to our customers because in some cases, could break those customers. So we have been quite successful in managing that throughout the past few years while making sure that our NIMs remain stable. And I say this because that's how we work with our clients. Of course, on the technical side, we also have floating book where that also gets passed through automatically. But notwithstanding that, I think it goes beyond that, too, and we actually have those conversations, but making sure that we work together in a well calibrated way. But it's not a straight through -- it's not a straight through process Abbas, because otherwise, it could be with negative results.

And my last question is, you mentioned that provisioning coverage is really, really healthy. It's the highest in the sector by a mile. Some banks are even below the 100% mark. In an environment like this, do you feel Bank Muscat prudent policy, I mean you've been prudent, but in the sense, you feel you've been conservative and you feel like cost of risk coming down this year versus the last few years. Can we see a lower rate of provisioning for Bank Muscat in this year and the year going forward?

I guess that I had answered that before. It all depends on your act. What we have done in 2022 is something that we expect to continue unless the situation changes negatively. But again, these are -- you're asking me forward forward-looking statements and I'm just giving you guidance as to what we saw in 2022. Assuming that the trend continues in the way it is, we don't see any reason why that will get worse. If the situation becomes even better, who knows where we will be?

So now as a CEO of a bank that you said that you had one view going into the summer and then you know what's happening globally with interest rates, with dollar rates, what's happening to the banks, what's the one thing thats a priority for you as the CEO for this year, where you'll feel like you and your team have done a successful job navigating these markets/ What's that #1 priority for you, sir?

The #1 priority is navigating through all the different dynamics that are taking shape with positive positivity and hopefulness moving forward. This is the #1 priority as the CEO of Bank Muscat. Now I'll tell you why I'm saying this. You've seen the different dynamics. And now I will turn into Waleed's view. This is my view and where it's coming from. So it's not necessarily a Bank Muscat view. I am responsible for this view. You've seen the market, and you've seen how the Silicon Valley issue, now yesterday, Credit Suites, and that's still evolving. Now there are 2 ways to think of this. One is either we think it's worrying and it's God to help us, some analysts are equating it to what happened in the global financial crisis of 2008, 2009 and the contingent effect and so on. And that's possibly one view. But I'm not even going to go there and I'm not even going to go that far. I think what's important to realize is that from those times 2008 and 2009, the markets and in particular, regulators and financial institutions have learned a lot of lessons, and regulations are way different today than what they were before. And the responsiveness of the regulators and the decisiveness of the regulators today is way different from what it was in 2008 and 2009. The agility by which regulators today move when financial institutions move is much better than what it was in 2008 and 2009. So there are a lot of positive things, positive momentum, positive aspects today that are totally different from what it was back then and in fact this is even helped more. If you go -- COVID was unprecedented times, but you saw regulators, financial institutions, governments, moving together in a fashion where they all navigated through this pandemic, this Black Swan event, this major event globally and we came out of it as a global economy [Foreign Language] relatively well. And they move -- and that's the kind of experience. That's the kind of diligence. That's the kind of agility that makes me look at it positively moving forward because I believe whatever dynamics are taking shape today, I hope that their reason will prevail, calmness will prevail. Panic and worry is unnecessary and hopefully, markets will see their way through the high seas or the rough seas that we are seeing today. Now I've said that and this is my hope and my belief that it's definitely a different situation where we are today. So I come back to my priorities as a CEO. My priorities as a CEO is to navigate through all of this and to actually help those around us, the stakeholders around us also navigate through all of this. and make sure that everything remains calm and intact and moving forward. We actually stay focused on building business, serving our customers better, building our franchise, making sure that our technology is resilient and developing and helping our people and our teams grow and prosper within our organization.

Now I really appreciate the answer. I mean it's very easy to be pessimistic, but given everything that we've seen in the last few years, I completely agree with you. I couldn't have said it better myself. I think there's reason to be optimistic. At the same time, one needs to be careful and cautious and your views really echo that. So I appreciate that answer. My final question is, as analysts, obviously, in a lot of the call, I want to know what's going to happen in '23, what sort of growth are you seeing? And you sort of avoid giving me a forward-looking number, but at the same time, you've answered a lot of my questions. Now let me just fast-forward that for the next 2 to 3 years, given that the competitive landscape in Oman banking is changing given that we're coming off COVID years, there's a consolidation happening in the bank. How do you see Bank Muscat sort of fair in the next 2 to 3 years? You feel like you're going to lose market share because there are much aggressive, nimble, smaller competitors coming for your market share. How do you see Bank Muscat behave and react to competitive pressures for the next 2 to 3 years, in line of where you see Oman go?

No, it's a good question. I mean this is a question that I ask myself every day and that's my duty to ask myself every day this question, what's going to happen in the next 2 to 3 years. That's my job as the CEO, but I answer it this way. And not with a leap of faith, but I answer it this way. I say that the bank has the right solid fundamentals in terms of its people, in terms of its talent and in terms of its balance sheet, in terms of its culture, in terms of its infrastructure and in terms of its assets. So with that combination, when you have the right engine moving forward, I think making navigational moves along the way and making agile moves along the way becomes that much more, what is the word, not easier, but actually, the logical way. So as long as we have the right fundamentals, I think whether in competition -- yes, it's going to be difficult. Of course, it's going to be challenging. But you rely on the fundamentals to keep on building and keep on looking at different opportunities organically and inorganically and see where you can navigate yourself wherever within your own markets, outside. We have a number of different tools at our hand. But what's important is we have the right people in place and the right support from the Board of Directors, the right support from the regulators and the right support from the shareholders. I think it will work out very well for the bank and we are quite optimistic moving forward that we will be able to navigate throughout all of these challenges and make sure that we all continue to come out on top [Foreign Language].

I mean, do you have like an ROE target in mind, but if everything goes as planned? Are you going to improve from 12% to 15%...

I wish -- my goodness, if I have that, I would see. No, I don't --unfortunately, not unfortunately, but if I had that target, it would be in my brain, but not even in my team's brain.

I have a question on the chat from [ Mr. Pushpitha Ramalingam ]. I'm just going to read out the question as it is. "My question is on your debt mix. CASA percentage has remained more or less stable, and this has helped the bank maintain their NIMs. However, going forward, do you expect any shift in deposit mix, which could lead to NIM compression? Would the bank be able to maintain the current margin?"

Okay. This is why we manage the bank, and that's what I had mentioned earlier. Obviously, the cost of funds is a number of factors that come to play and the deposit mix that we have -- and yes, we see a possible rise in cost of funds, maybe in the short term. We don't know how it will continue or not for the long term. But we manage it through a number of ways. Like I said, quite an agile and tactical way when it comes to our liquidity management but we try to make sure that we don't -- and we'll remain optimal in terms of our liquidity, and we don't get into aggressive pricing of deposits, and we try to make sure that our cost of funds is managed. But yes, of course, there is pressure on time deposits in terms of that particular mix in terms of rates possibly moving up. Also, even in terms of the institutional -- I mean, the interbank borrowings, that's also increasing. But we manage it, and we manage the balance sheet and we manage the liquidity and we see where it can -- there are floating assets as well as floating liabilities and so on. But look at the history, the history of NIMS has been relatively stable, and that's due to the recent management of this now looking at the situation and how it will -- today and how it will -- in it's very difficult to say how rates globally are going to go. But historically, there has been volatility, and it's been managed well. We will continue to use the same tools that we have at our hands to manage the cost of funds to manage the NIMS and hopefully, they serve us well for the coming period as well.

I have one question is one of the aspects that we didn't touch upon is the liquidity management of Bank Muscat. When we look at your loan-to-deposit ratio, your gross loan-to-deposit ratio is around 115% and net loan-to-deposit is around 109%. And it's at a historically highest levels except 2017. So given the scenario that, if things go normal and if things improve, how do you manage to -- how are you planning to manage your deposit base? And given that Bank Muscat is the largest one with almost another 40% of the total deposit size, do you see there will be further pressure on the cost of funding, especially that your CASA is 65%? And then the next -- probably the next source that you have to look at is probably the time deposits. So do you think there will be a change in the market dynamics and on the deposits? Now how are you planning to -- what are your strategies for raising the deposits?

Okay. For that, I need to take you back a little bit to 2021 and 2022. In 2021, if you look at our loan-to-deposit ratios and iin general, our liquidity ratio, you see that they're quite healthy levels, and that was intentional. We were going through a pandemic time and so much uncertainty out there. So we made sure that the liquidity position of the bank is quite healthy. We came on to 2022. And of course, that comes at a cost. We came on to 2022, and we -- okay, now the situation is improving. Let us actually moderate our deposit base because that comes at the cost, like I said. And that's what we had done. And we have done that on purpose. And that's why you see the levels they are in a healthy level, but they've gone up compared to '11 where it was also intentionally done to remain low at that time. It was also lower at that time because the growth in the loan book was not there. And hence, the dynamics now have changed, there is growth, there is positive momentum. In terms of deposit growth, obviously, one main factor for us is the retail base that we have, the branch network that we have, and that continues to expand and the large customer base that we have, and that continues to expand. So CASA, it's a very important component for us. And it's not something that we -- we're going to continue to build on that, and we're going to continue to make sure that it's a large part of our strategy and continue to build on the strength of that. In terms of fixed deposits, yes, we are going to continue to build on time deposits, but only subject to recognizing and seeing the growth in loans coming through if situation changes globally and we see a slowdown in economies and we see growth rates not coming the same way that we had projected and therefore, our balance sheet growth is not as we had projected, then we will moderate our deposit -- we'll moderate our time deposit -- what's referred - the medication that I'm taking. We'll moderate our growth in fixed deposits or attractive fixed deposits and the pricing in terms of the invectiveness of it and so on. So we just have to keep balancing things as we progress. But it has to be -- if we grow deposits, it has to be matched with the growth in the loan book as well.

But one of the reasons where am I coming from is because we are seeing a potential consolidation and a potential reduction in the cost of funds for the competition and that leaves the competition to be room for being very aggressive. And Bank Muscat -- and other banks, not only Bank Muscat, other banks probably might have to get ahead of the competition. So have you thought about the scenario and how are you planning to tackle this? So I'm seeing the competition, the consolidated ones could get accuracy in the demand space and we have limited space for CASA growth. So what are your views of that?

But consolidation is not a single event. Yes, the competition has been quite aggressive throughout these years. It has never stopped. Consolidation is just one factor. And I don't think it's the event that's going to be making competition even more fierce and so on. This competition has always been quite strong in the retail space and we continue to have to evolve and develop new products and develop services. And at the end of the day, it's going to be the game of who can do it better. We have been doing this for the last many years as far as Bank Muscat. So I mean, like I said, at the end of the day, it goes back to the fundamentals and you have the right fundamentals in place and you keep building on our strategy and make sure that you continue to invest in the right resources and the right capital and the right technology and so on, that's how we fed off competition. But just having a -- because of consolidation, and this would -- today, there's this consolidation. Tomorrow, maybe there is another consolidation. So it's not something that putting me in a situation where I'm coming from a comfort zone. We were always active. We were always competitive and we will continue to be competitive. So we reached 1:53 PM. Since I don't see any more questions, I think I will conclude the session by thanking all the participants. Thank you very much for being with us today, and wishing you all the best, and have a nice weekend. Thank you very much. Take care.