Doha Bank Q.P.S.C. ($DHBK)

Good afternoon, everyone. This is Elena Sanchez from EFG Hermes, and I would like to welcome you all to Doha Bank's Q1 2026 Results Call. Thank you very much for joining us today. We have with us in the call, the executive team of Doha Bank. And I would like to hand over the call now to Abdul Rahman bin Fahad. Please go ahead.

Yes. Hello everyone. Today, just I will start the introduction and the team here will continue the meeting. This situation a little bit, I think, a difficult period for all GCC country -- and I think in the bank we manage, and we definitely did a great job, our liquidity as well. We'll go later on. I think our CFO will explain more on that. But we have a couple of change this period. The positive part was the share. It's become 1 of the trend or the best share in the banking sector, I think for the last 2 years. We maintain a stable bank, as we promised from day 1. The profit was -- the growth was last 2 years between 7% to 10%, which is also that something that always promised our investors. We have changed a lot all the chiefs are doing very well job for the last 2 years. Today, we have new shareholders. They just joined us last week. So I do have my own board. We have heme transformation. I think everyone were aware about it. A lot of change has been happened, especially in digital part, our app and the business model as well as public sector public sector, our focus was on the private banking. We delivered there. The exposure in government sector has been increased from QAR 700 or QAR 800 million today, we are QAR 10 billion plus, which also Aman can take you through that. We will maintain the same strategy, and we do have Hematransformation for the next 3 years. to continue the full project. So Home transformation was Part 1, we delivered. And I think the current Board and investors are also the customer, they are happy from the result. Now of course, the 2 heme transformation in the future will be the NPL focusing on how to fix it. We did also our part and ternary to reduce it from Aman, can you give me the numbers.

It from 7.4% to now 6.4%.

And I think this is the biggest exercise we will have with the transformation part and transformation Part 3 will be also the changing the core banking which is also something very important for the bank, and we are working very -- we are hiring also qualified people in this part to sure that we have in future in digital. Also, era, I think it's part of this all will be together to ensure also we have less employee and to reduce that cost. And I think now I'll give the room to also Aman to continue the cost.

Thank you, Seth, and good afternoon, everyone. I will take you through the financial performance of the bank for the first quarter of 2026. Starting with the balance sheet. Our total assets grew by around 5.1% year-on-year and around 0.9% year-to-date. We witnessed a loan growth of around 14% year-on-year and around 4.1% year-to-date. From the investment portfolio side, it remains robust and -- but there was certain attrition in the portfolio of around -- the guidance for loan growth for the current year, we are maintaining our guidance at 5%. We have been cautious as we deal with the legacy assets and possibly negotiating favorable terms for the bank for the existing and the new relationships. At the same time, being radio of the current economic situation and the geopolitical environment, along with the limited availability of liquidity. The customer deposits were higher per 4.8% year-on-year. but marginally decreased year-to-date by around 1.9%. The strategy was basically to reduce the higher deposits with the higher cost with the more affordable borrowings -- our LDR slightly elevated 1% or 2% slightly higher than the regulatory maximum. The capital ratios remain stable. Our CET1 and total card stood at around 12.06% and 17.6%, respectively. Given the expected asset growth and current equity structure remaining the same. Our guidance for current year is to be around 17% to 17.5%. Moving on to the income statement. The bank achieved a profit after tax of QAR 234 million. which shows a decrease from last year of around 6.8%. However, profit before Pillar 2 tax was increased by around 3.7% and profit before tax was above last year by 3.5%. The guidance for the ROE for the current year is after tax is to be around 6.7% to 7%. The net interest income as compared to last quarter of the same year, was down by around 4.4%. However, on quarter-on-quarter as compared to Q4 of 2025, the net interest income went up by around 9.7%. The NIM for the current period is around 1.7%, slightly lower than last year, NIM of 1.72%. We maintain our NIM guidance for the current year of around 1.75% plus minus 10 basis points. Given the current economic situation and the expectations, we are not anticipating any further rate cut during the current year. However, if there is a 25 basis point rate cut it would have -- it would reduce our net interest income by around QAR 2 million for 2026. The operating income grew by around 3.9% year-on-year and 11.7% quarter-on-quarter. The man cost-to-income ratio improved to 37.4% versus 40.33% as of year-end. Bank's the guidance for the current year cost-to-income ratio, we maintain our same guidance between 39% to 40% given the transformation as CEO was explaining, continues, and there will be reinvestment of certain costs in the coming period. Net impairment on the loan was around QAR 251 million as compared to QAR 29 million for the same quarter last year, an increase of around 10%. Our cost of risk guidance for the current year is now revised 110 to 125 basis points. Given that we have taken certain overlays as can be seen as per our financial statement disclosures, where we have increased the downside risk of expected credit losses from 15% to 20%. The NPLs, as GTO was earlier expanding improved to around 6.4% on the back mainly at the back of loan growth. We are maintaining our NPL guidance for the current year between 6% to 6.1%. Having said that, we are currently assessing our loan portfolio, and we will revert with an updated guidance, if there is any -- the specific specific provision coverage remained quite robust at around 77.5% as compared to 76.4% as of the end of last year. And we are maintaining our guidance coverage -- specific provision guidance coverage to be around 80% for the year-end. Now we open the floor to question and answers. I'll hand it over back to you, Elina.

Thank you very much for the presentation. We move to the Q&A. [Operator Instructions] We'll take the first 1 from Chiro Go. Please go ahead.

This is Chirag Ghosh from Sikoron. Two quick questions from my side. First is on the trading income. The trading income was particularly strong in this quarter. Can you give some more clarity, some more color on it, how sustainable would that be? Or were there some kind of one-off elements, which might not come in the subsequent quarter? That's one. Second is, again, congratulations on the asset quality side. I know that has been your area of focus. I mean both Stage 2, Stage 3 has shown improvement rather the cost risk has still remained elevated. So you want to get some more color what is the ground reality? How is the contracting real estate and the hospitality sector, are you seeing any potential defaults happening in there. The reason I'm trying to get a sense is because the cost of rates has still remained high. So if you can give some color on these 2 questions here. These are my questions.

So let me take the first question regarding the trading profit that we booked in the first quarter. I think it was very opportunistic for us to realize that most of our book naturally remains in the HQLA side. So we have a lot of exposure on the Qatar sovereign. The spreads on Qatar sovereign actually tightened to around sub-25, which created opportunity for us to be able to take some capital gains on long-dated cut bonds. We were able to actually time the market very, very well in terms of being able to sell some of these taking benefit of the tightest credit spread and book the profit. So this is purely determined by the market volatility in terms of giving us an opportunity whenever the credit spreads were tighten to a level where we think there is potential capital gains, we will keep on taking them throughout the year. Currently though, because of the crisis, the spreads have widened -- that gives us an opportunity actually to redeploy the cash. So if you see a slight decrease in our portfolio, that is because of the trading that we were able to do. And we will keep on looking at booking these gains whenever the opportunity arises.

Thilo, I'll take the second part of the question regarding the cost of risk remain elevated. As I was earlier explaining in the call that we are being cautious when it comes to building our coverages for both Stage 1, 2 and 3 -- and it is evident on the fact that we have also remodeled our ECL by increasing the downside risk from 15% to 20% and by reducing the base scenario from 70 to 65. So that explains elevated, I would say elevated cost of risk for the quarter. Along with that, we have also built some provisions for stage in order for it to remain a robust coverage when it comes to both these 2 stages. I think further, our CRO can add some color to the impact etc.

See, in terms of the impacted sectors, like you said, real estate trading contracting, obviously, they are facing some issues with regards to the recent conflict, but we are closely monitoring the portfolio. And as and when we see the situation being distressed, we will take the appropriate milers. Secondly, the Central Bank has also taken cognizance of this fact and given certain relief measures for the affected sectors. So we remain cautious, and we are closing 1 to the situation.

Okay. Okay. That's all from my side.

We'll take the next question from Daniel.

This is Dan from Virgin. Am I audible? Wonderful. Two questions for me. The first 1 is in your first quarter results presentation, I can see that your share of GRE loans as a percentage of total book went from, I think, 8% to almost 10%. The only sector we've seen really meaningful Q-on-Q expansion. Could you shed some context on what kind of Jerry exposures. These loans have and whether we should expect this trend to continue in the subsequent quarters where most of the lending growth will come from Jerry's?

Okay. So -- this is the 1 question -- that's the first question. Okay. Then in respect to the GR exposure, that is a definitive and a strategic move, which the bank has decided to improve and increase towards this sector. And this is in line with our strategy to reduce exposure in certain sectors and increase. So our strategy is to going forward also increase the GI exposure. -- and build a sustainable get numerator book for the bank.

You're saying is Tier Yes, these are 100% yes, this actual from the government. So it's a fully public sector, have more room maybe than the other banks today. I think the reason of that doBank early before 2 years, they were not having this access Today, we're doing aggressively working with the public sector. And we are focusing on that, not giving the not doing the grow in hotels or others contracting. We are very selective. We know the clients here whose successive plants to continue with or otherwise, we always reject this craft. We can focus on this sector, especially with the public.

Do you have a maximum target as a percentage of your total loan book that you're willing to allocate to juries by year-end or by the end of your strategy?

Bank is expecting to achieve a 20% in the long run -- in the long run, Yes.

But for this year, then I'll tell you the growth as you already highlighted, our GRE exposure in 2024 was close to 6%, increased to 8.8% at 2025. Now touching 10% for the near term, for the current year, we are targeting anything between 10% to 14%. But again, as asaexplained that in the longer term, we will be able to continue in the next 3 to 5 years to bring it close to around 20 percentages.

That's very helpful. My second question is on the buyback program that you guys had announced earlier. Does the current crisis mean that the buy buyback program and all buyback initiatives have been put on hold.

Yes, I'll be very honest. This is not only the side internally. We've been from the previous board to the new Board there is a gap in the mid as well as the regulators wait until later, then we will accept this, not don't do it right, do it in the right time. we are okay with it. I think very soon, we will hear this news from us.

Thank you very much. We'll take the next question now from Andy Braden.

So yes, just following up on the last one, just the loan mix and I guess really just given that mix change, no impact on NIM. Can you just talk through the kind of the NIM dynamics as the mix of the book changes, please?

Okay. Andy, the NIM part, as you would have seen, there has been a dip as compared to last year, but we have been very selective, first of all, when it comes to selecting the asset quality. At the same time, -- we have now formed internal committees when it comes to the pricing itself. So not all the GE loans are booked. We are selective in the pricing part as well, there has been a lot of focus from all the internal teams to make sure that, that particular aspect of the loan part is also covered. So Hence, we don't foresee any major dip in them. And hence, the guidance also given for the year is close to 1.75% plus/minus 10 basis points. I hope I answered your question.

Yes. Okay.And then just maybe a bit on -- was there any -- what was the level of like repayments? So the loan growth is 5%. You've already done 4.7 million -- can you just talk about are there sort of repayment pressure there? Or you're just worried about how the year pans out, given so much uncertainty.

See, repayments, we already have factored for it. I think the pressure would be more from the liquidity side of things because today, as we speak, we have a very healthy pipeline from all our business teams. It's just a matter of timing, the drawdowns given the current scenario where the liquidity is limited. And in the first quarter -- end of first quarter, we could not go and go to the market because of the current geopolitical situation. I think that particular part is more relevant. But when it comes to the pipeline itself, I think that is there. So just the proper and the optimal utilization of the liquidity, maybe Dr. Fava, if you want to add something to it?

Sure. I think we have been managing the liquidity very well given the crisis situation because we came into this crisis with subsequent buffers that we had built over the last 2 years. Now I think it will be critical to see if the situation starts to improve, then as mentioned by the CFO, there's a healthy pipeline for us to fund -- but if we do see a pressure on liquidity, then we might need to basically stagger this pipeline as well. So I think we are clearly monitoring the situation closely in terms of the impact of the current prices -- and accordingly, we'll decide in terms of the growth quarter-by-quarter from the asset side to be able to support it through liquidity. One key aspect, as I mentioned, is access to capital markets. So the funding plan had a significant part of that. And we've recently actually gotten board an AGM approval and increased our program from QAR 3.5 billion to QAR 4.25 billion. So we are looking forward to capital markets being open and for us to come into the market and issue to support the healthy asset growth.

Okay. Just out of interest, the capital markets were closed to you or the pricing was just a little bit unfavorable.

So we have actually no public issuance has come from GCC. So that's sort of a bit of the hold across GCC given the scenario. But we have been active in the private placement market. So we have issued QAR 100 million. We have done a small tab. So we have ability to do smaller tickets still without going with a public deal. We had a maturity in March nationally, which we needed to sort of go to the market and repay, but we have done it through our own liquidity measure. And we are hoping that we will get a window soon to come out to the market. From a pricing perspective, in about 15 to 20 basis points, I think, of spread widening across most of the credits in copper. But from a private placement and TAP, we haven't seen a significant pressure on pricing.

Right. Yes. Okay. Yes, I was going to say there is private issuance happening. Okay. Okay. And then just on the loan deposit ratio, obviously, as you say you're above the regulatory maximum. You have been there before. Can you just remind us what the rules and regs on this are? Is there a time frame to get it back? Or is it a negotiation? Just please remind us of that, please.

Yes. So I think most of it is a factor of because, as you know, in Qatar, your LDR does have the longer-term syndications your EMTN all included above 3 years in several sort of ratio part. So with our QAR 500 million maturity and a syndication maturity, that does impact this ratio. -- once we are able to go to the capital market with the syndication and EMTN, we'll be back to the level that we were -- that we ended the year, as you see, we ended the year sub-95%, -- so part of it is that. Part of it is replacing some of the deposits nonresident deposits with other interbank funds due to the crisis. So that puts a bit of pressure on that. But it's very manageable, as you can see. And even year-to-date, we are seeing sort of being very close to that 100 level. It's just a matter of us being able to be able to access the capital markets again for us to come back to the same level. So nothing has changed much apart from the change in terms of some of the maturities that we have seen, which we have not replaced In capital market share.

Yes. Great. Sorry. And then 1 final 1 for me. sorry, no 2, sorry. I didn't quite catch the NIM sensitivity. If there's a 25 basis point cut, although you don't expect any cuts, if there is a 25 bps cut -- what does it do to net interest income? I didn't quite cater what you said.

The net interest income will reduce by around QAR 2 million for the year.

Okay. And then sorry, just 1 final clarification. The cost of risk, this is net, right, QAR 110 million to QAR 125 million. So you did QAR 180 million net.

That is correct.

We will take a follow-up question from Danilo.

Just a quick follow-up to the previous question on deposits. Can you comment on what percentage of your deposit base is now -- now comes from resident deposits? And how much you're looking to reduce it by year-end?

Sure. So actually, on the last update that we gave investors, this was clearly mentioned as part of the strategy to start reducing dependency on nonresident deposits. We were at 14% -- now we are sub-10% on that. We plan to continue to maintain that. And that actually helped us because we did not have a lot of exodus during the crisis because there was less dependency on the nonresident deposits. So we are trying to maintain that sub 10%, and that is just to diversify it out to make sure that we do have excess to nonresident deposits in case there is internal pressure on resident deposits. But the guidance would be to keep it at below 10%.

Clear. Helpful. Just a quick follow-up from me. We hear that the Central Bank of the UAE is in talks with the Federal Reserve for a dollar swap. Do you anticipate that the Qatar Central Bank will have to pursue similar measures? Or is the dollar liquidity in Qatar still reasonable?

Yes, it's very stable. And 2 or 3 of the QCB initiatives that they took were to provide us with actually the internal sopline. So we do have excess through QCB to be able to swap dollar care. Along with that, they have actually put in liquidity through GRE deposits in the system. So there are plenty of -- it's the other way around. There's actually plenty of dollar liquidity in the system right now, and there is a bit of shortage on the caterer side. So ample support is being provided by on the dollar liquidity, and we do not foresee given the amount of reserves that they have, I think they're in very good shape to be able to provide that liquidity, if needed, and we don't foresee any such measures from them.

Also, I can add 1 part. The sense of the crisis started, we were like internally thinking what to do with this liquidity to logs we're going to face any challenge. -- but as well a week later after the crusher the stop, I received call from the gatherer and from the Central Bank to maintain and to give all the liquidity for our clients without having any problem and this is the message that we received that we have enough liquidity. And if clients need anything, please give them -- provide them the needs. So this is a good sign here.

We have received some questions in the chat on taxes. As the 2025 results were not restated for the tax are the Pillar 2 taxes included in December 2025. And also, what is the effective tax rate so that we can assume for '26?

Okay. The answer is yes, because the guidance came during Q4 of 2025. So we ended up accruing Texas at that point in time. If you calculate the effective tax rate on our income statement, it would come close to 10.2% to 10.5% in that range. But we all know that the global mine tax percentage is 15% -- but effectively, it comes around that in our income statement. And we have already accrued for it in Q1 as can be seen on our results for the quarter.

All right. Thank you. Another question that we received. Any update on customers requesting difference of loan payments.

Yes. As per the QCB directive, we have received instructions to review and assess customers requesting deferment for the affected sectors. So the guidance is to assess the customer based on the current market situation and exclude the customers who were facing any special financial difficulty before the crisis. So we are cautiously monitoring and reviewing the development requests provided to the bank for approval.

All right. Thank you very much. On fee income, we received a question asking if Fee income was weak this quarter compared to previous quarters despite solid loan growth. Has there been any regulatory changes related to fees? Or is it driven by other reasons?

See, our fee income originally planned for the quarter was slightly higher. But as earlier explained, there were some limits to draw downs given the liquidity situation. But having said that, we will continue building on the fee income back because that is an area that we always internally discuss and this is what we target to have fee income base of more than 15% of the operating income, and we are well on track for that.

[Operator Instructions] Question on taxes. -- why did the income tax for Pillar 2 outside of Qatar increased? Can you give some clarity?

See that we have international locations, which are also subject to global minimum tax. -- that was not there last year. Same reason as we further our international locations have faced the same predicament.

To follow the forward -- we get that Today, we don't offer still-- bar with us. Okay. I just wanted also to give an update on retail and also on the digital front for the bank. As has mentioned, -- the bank is embarking on a big transformation relating also to digital transformation. We are able to do have mentioned last time to beef up our bits penetration into various areas, including corporate, wholesale, retail, we were able -- because of the digital transformation and the mobile first strategy to onboard and offshore many -- much activity from branches to the mobile lab, Currently, we have been seeing an increase in mobile active users by 20%, and we have more than 44% increase in subscriptions. We have diesel onboarding, billings, payments and statement production, et cetera, than through mobile banking. And as you have seen, we were able to reduce the number of branches in retail by 40%, as I've mentioned before, from '21, we're down to 13%. There is a plan to reduce this even further by year-end, and we want to go below 10%, which is what we want to focus on a focus on our customers, we are the other last segments. So we can have some selected locations where we can cater for these upscale clients because the business we can get from this class in terms of fees and credit growth and deposits is more -- give us more potential -- so we've also were very critical that during this crisis, the bank has been able to be up and running, and we were able to enhance our resilience and we have been able to cater for all our clients' needs without any issue in terms of systems and in cybersecurity issues, we didn't face anything like that. Because the bank posture has been upgraded significantly in the past 2 years, and this is part of the investment we make in our systems, cybersecurity and protection, and we were able to cater without any disruption. You'll notice that in other countries in the region in UAE, there were issues relating to data centers. disruption, which impacted their channels and create, of course, customer disruption. And Kate, we will face that, especially of Bank. We are proud to say that we also concluded our active data center set up, which is very, very efficient and it's between Oregon Vodafone. And on the digital front, we are also working with Oreo. We have a great partnership with already the largest telecom company in the country, 1 of the largest in the region in promoting our machine learning and bids footprint. We're going to set up a digital factory with them, and we want to have use cases on AI, aside, which is very important. And in the end of the year, we are going also to have a chat boating used in our call center. This will have efficiencies and also less cost as an also mentioned, cost containment is very critical. The cost to income, the efficiency ratio of helping reduced from 39% to 37% in retail. We have seen a big reduction in direct cost more than 11%. This is due to the closure of branches, as I have said before, plus also other renegotiation that we are doing in terms of offerings we are providing to clients, but we do it smartly and with less cost. So in retail, we have seen much recognition also coming from various global publications. We recently also were awarded by Euromoney as the best entail Bank in Tata. And also, we are going to be included in the upcoming list that the Euromone has put together of the fastest-growing banks in the retail boxes. So this is a very big acknowledgment of what we have done, based on the numbers, fee income, net interest income increased and reduction of cost, which is part of our strategy. So that's in a nutshell what we have done in terms of...

I can add also a part of what we did on a private banking, we create our platform. So we, today, as Doha Bank, we are the first bank we do have the platform so we can invest directly to the with the investors outside without going to the third party as UBS or different banks. This is something new for DohaBank and for our product banking. That's why we saw a huge growth in our private working. As well part of our international vision to exit, and we announced that we will exit India. We are working on it right now with the regulator over there. going also adding 1 more thing. The Ratos was 17. Today, we are 7 plus we are going to have a Board meeting by May. And in the next Board meeting, we are going to close another 4 or 5 up office. So this is also something good from 17 will be a total 3 up offers. And this will be also for a year to do our own assessment, either we have our branches over there or also we will be closed this office. Anymore international update do you have.

Sure. So I think you have summarized it very well, Sef. I think in terms of our overall FI relationships, we have significantly increased both from a perspective of creating assets and also generating liquidity. We have added about 20 counterparties. Since then. from a perspective of key geographies who have been a key contributor for us through our rep office in terms of helping us with liquidity, mainly from Asia. We have seen a lot of these inquiries and relationships actually help us during this time of crisis to stabilize that liquidity as well. So hopefully, we will continue working with International Banking Group very closely. -- to implement the strategy that has mentioned.

Final cost, I think also the material will be adding about the digital.

Yes. Thank you -- as I said before, digital is a critical component of our matrimation. And part of digital, you need to have a very solid core banking system. So as a man also, our CFO, has mentioned, -- we are going to reinvest part of the savings we have come up with in actually setting up and implementing a very state-of-the-art core banking system. This exercise is going to start this year. And we anticipate that by end of this journey, the bank will be able to really exceed all the other competitors in terms of products, efficiencies that we'll be able to capture by implementing step of the core banking system and also eliminating and reducing costs because this gives us a unique opportunity to restructure our processes is going to be a further business transformation. It's not only a technical upgrade or system upgrade or a system implementation. But this will help us redesign all processes reduce in efficiencies. And of course, this will have a direct impact of less cost, better customer quality experience, which is something that the market will appreciate and will be able to give us momentum on new products, upscaling our product suite and also our services and customer experience. So -- this is a big journey than the big investment that we are now actually embarking on starting in the next few weeks after the Board that Shikha mentioned, will take here and will give us the relevant approval. So this is a very significant milestone for the bank. that we are optimistic will give us long-term prosperity future and also growth.

So our strategy, I mean, transformation was approved and we will have the final approval by the board. So they have a couple of comments that they want to add to put the bank in more better situation. I think that -- the good things about the new board with the current world as they are allowed to collect the bank, and they are aligned with this strategy. They want us to deliver. This is something that myself and the team here working on it, and we want to deliver. Thank you.

Thank you very much for the update. We have received a couple of questions in the chart. Can you comment about the dividend payout expectation?

We received another question.

Yes. If that's okay, time-wise.

About the dividend expectation. So last year, we paid around 15% of dividend. So of course, the baseline is there. There is no further expectation of this increase, but that is something that will be determined. Of course, when the year-end profit comes, that will be decided accordingly.

There's a couple of questions there. Do you want to address them from back.

Okay. I can see there is 1 question on the precautionary loan loss provision. Yes. I mean this is something that I was talking on the call earlier. We have made certain adjustments to our ECL model where when we have decreased our base case by 5% and added 5% to the extreme case which has triggered actually extra provisions. Hence, the increased cost of risk and hence, the increased cost of risk guidance for the year as well. And the second question is what trigger in Clean is known in Q1. I think that was already answered during the call. Majority of it was relating to GRE-related exposures. And hence, you can see the shift and overall GE as a percentage of loan book being close to 10%. Why was flex not restated in Q1, the simple answer to that question is that it takes it an accounting estimate -- and for accounting estimate, the treatment is prospective, not retrospective. And there was no revision to -- and that is something that was discussed between QCB, the banks and the auditors.

I know with that, if the market doesn't mind, we'll end the Q1 call. And if there's any follow-ups, please reach out to me, and I'll get them the information they require.

So thank you very much for the call and the update and talk to you soon. Have a good day. Thank you.

Thank you.

Thank you.