Dubai Islamic Bank P.J.S.C. (DIB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Dubai Islamic Bank Q3 2023 Financial Results Earnings Call. Please note to all of those who are listening to us via the webcast link to kindly refresh their browser link in case of any intermittent audio issues. As a reminder, please ask your questions by submitting them via email to [email protected]. I will now hand over to your host, Janany Vamadeva from Arqaam Capital.

Thank you, Bailey. Good morning, everyone, and thank you for joining us today. This is Janany Vamadeva on behalf of Arqaam Capital. I'm pleased to welcome you to Dubai Islamic Bank's Q3 2023 Earnings Conference Call. I have with me here today from DIB management, Dr. Adnan Chilwan, the Group's Chief Executive Officer; John Macedo, the Chief Financial officer and Mr. Kashif Moosa, the Head of Investor Relations and Strategic Communications. Without any further delay, I'll now turn the call over to the Head of Investor Relations, Kashif Moosa. Kashif, over to you.

Thanks, Janany, and welcome, everyone, to the 9 months results webcast of Dubai Islamic Bank for 2023. The session is led by our group's Chief Executive officer, Dr. Adnan Chilwan, accompanied by John Macedo, the chief financial officer and myself. Request everyone to keep the questions coming through the e-mail provided, [email protected] and they will then be addressed at the end of the presentation. So with that, let's start. We will quickly move on to Slide 4. As you can see on the slide, Brent oil price value has been in the limelight over this period, lifting its price by almost 30% to close the quarter at just over USD 95 per barrel. And this has created a healthy resistance level for the region. And the near-term oil demand outlook is expected to remain supportive despite giving up some of its gains over the past few weeks. We have also seen that the U.S. Fed paused its rate hike trend during the September meeting despite the recent climb in oil and global food prices. And together with well above target inflation rate for U.S. and Europe. And despite U.S. GDP upward revision by the Fed, the elevated rate environment is expected to stay longer than anticipated, given adverse supply shocks from high energy prices and applying resistance to any sign of this inflation. Closer to home, IMF has revised its GDP growth for Middle East and Central Asia, ranging to 2% and 3.4% in 2023 respectively -- 2023 and 2024, respectively, citing higher non-oil growth for the MENA region at 3.3% and 3.5% over the same period, effectively underpinning the diverse economic activities within the region. Now we move on to Slide 5. Economies across the GCC are holding up well despite oil production cuts by OPEC plus primarily due to their diversified activities. This is exhibited, for example, to the region's latest -- to the region's largest economy, Saudi Arabia where its non-oil sector in second quarter 2023 grew at 5.2% year-on-year, beating estimates of 4.9%. Similarly, the UAE recorded non-oil trade of USD 337 billion in the first half growing by almost 14.5% compared to the same period last year. And therefore, it's pretty much on the government -- track for the government target, which is for a total value of USD 600 billion in 2023. Dubai's economy also hasn't lost steam either with major GDP contributors maintaining momentum. Overall, first half 2023 GDP is up by 3.2% year-on-year to AED 224 billion. Tourism numbers, major indicator remained strong, up 25% year-on-year to 8.5 million visitors in the first half of 2023. Additionally, Dubai recorded 63% rise in the issuance of residency visas in the first half 2023. And 52% rise in the number of golden visas issued for the same period, signifying how the liberal immigration reforms are being very effective. The real estate markets performance has remained solid as well so far in 2023, recording highest semiannual sales ever of AED 177 billion, which is exceeding the annual sales value recorded each year in Dubai from 2009 to 2021. So the demand has actually reached new peaks in Dubai's real estate market. With that, I will now hand over to Dr. Adnan Chilwan, Group Chief Executive to take you through the full financial results. Dr. Adnan, please.

Thank you, Kashif. Good afternoon, everyone. As always, I will run this session in a quick page turn format and then open the call for questions. Once that is done, I will use the allotted last 5 minutes of the call to summarize key messages. So on Slide 7, an overall compelling set of results across the bank around profitability and balance sheet metrics. Our balance sheet has crossed AED 300 billion, a key milestone, which is an outcome of executing our expansion strategy amidst competitive market and global challenges. DIB's core business, mainly financing and Sukuk investments is up by a steady 11.3% on a year-to-date basis. This exceeds our full year guidance and contributes to the total asset growth of 8.7%. Our gross new underwriting for all credits during the year equated to nearly AED 72 billion, and that is significantly up 69% year-on-year. Despite the normal repayments of close to around AED 35 billion and early settlements of around AED 10 billion. The net movement yielded a positive AED 27 billion in the portfolio. And this is up from AED 7.6 billion in the same comparable period last year. Zooming a little into financing -- the financing portfolio. And this is an area where all of you have been hounding me for a while. I'm happy to say that our new -- net new financing during 9 months of 2023 grew by around AED 13 billion. This is attributed to a fantastic performance during third quarter of 2023, where gross new underwriting grew fivefold year-on-year, coupled with significantly lower early settlements. And obviously, that has had a major positive impact on profitability, which has jumped 18% year-on-year to reach AED 4.8 billion. The cost-to-income ratio also has improved further by around 20 basis points year-on-year and it stands at around 26.5%, fair to say amongst the lowest in the market. In conclusion, a robust set of results showcasing a strong recovery across all metrics beating year-end guidance. Slide 8. Looking at balance sheet. Digging deeper into the performance, we delivered balance sheet growth of almost 9% year-to-date to reach AED 313 billion. I would like to draw your attention towards the bank's financing portfolio, which grew by 7% on a year-to-date basis and 5% on a quarter-on-quarter basis. And it stands at around AED 199 billion. The Sukuk portfolio has continued its advancement, and it is up by 27% year-to-date or 8% quarter-on-quarter. On the funding side of the balance sheet, deposits have also increased by 11% year-to-date, equally supported by our consumer business as well as our wholesale business. On a quarter-on-quarter basis, deposits were also strong at 5% up. The return ratios, return on assets and return on tangible equity have outperformed our year-end guidance, and we remain securely positioned vis-a-vis our commitment to shareholders. Other metrics like nonperforming financing, capital ratios also remained robust, but I'll explain this in greater details during the latter part of the presentation. Slide 9 showcases our income statement. And similar to the balance sheet, the P&L picture is also resilient. Total income has witnessed a 47% increase year-on-year. And it stands at AED 14.5 billion. The bank's net operating revenue is also up and is up by 12% year-on-year over the period to reach AED 8.5 billion. Net profit margin has registered 3.1%. And as you know, this exceeds our full year guidance. It's up by 20 basis points compared to 9 months of 2022. However, on a quarter-on-quarter basis, the net profit margin is almost flat as maintaining low-cost deposits in this unprecedented rate environment has been quite challenging for the bank. Slide 10 covers profitability and cost structure. In this slide, I would like to highlight the main contributors to our net operating income advancement. Firstly, the net funded income has increased by 11% year-on-year, while the nonfunded income came in even higher at 15% year-on-year. This rise is attributed to higher fees and commissions as well as income from investment properties, which is also in line with the regions, UAE as well as Dubai's soaring property rental market. Quarter 3 2023 nonfunded income was particularly supportive, and it has been up by 49% year-on-year. OpEx, on the other hand, was also up 11% year-on-year. And we should not be surprised by this because this is in line with the bank's strategic growth plans, which I have alluded to in various calls over the last 9 months or so. And this strategic growth plans also include enhancements in systems, resources as well as digital aspirations. Nevertheless, the cost-to-income ratio has remained robust at 26.5%, down by 20 basis points year-on-year, well within our guidance and potentially one of the best in the market. All of the above has led to a solid 18% year-on-year net profit growth in 9 months of 2023. Slide 11 is deployment of funds across all our key businesses. As I mentioned earlier, our assets have expanded by 8.7% year-to-date to nearly AED 313 billion. Majority of this is coming from disbursement in our financing and Sukuk investment portfolios. During 9 months of 2023, the new gross financing accounted to AED 53 billion, and this is just the financing amount, while Sukuk has increased to AED 72 billion -- Sukuk has increased to AED 19 billion, total of both the AED 72 billion gross underwriting that I mentioned at the beginning of the presentation. The real estate concentration has dropped further to below 18% of the total financing book, and this is in line with the guidance that we gave at the beginning of the year. Slide 12 looks at our Consumer business. This portfolio is up by 4% year-to-date to AED 54 billion and it constitutes around 27% of the bank's total financing. Within the consumer financing business, the product leaders have been auto finance as well as personal finance, followed by home finance as well. Across all products within the consumer bank, we booked gross new business to the tune of AED 16 billion during 9 months 2023 versus AED 13 million in 9 months of 2022. Now despite routine payments, of around AED13 billion, the consumer portfolio has exhibited positive growth for the year of almost close to AED 3 billion. Revenues within Consumer Bank are up by 24% and yields have expanded by 85 basis points to reach 6.7%, underpinning very strong profitability in the Consumer Bank. On a year-to-date basis, CASA deposits on the consumer side remains sticky, seemingly agnostic to the current rate environment and the total consumer deposits have increased by 11% year-to-date. Slide 13 looks at our Corporate banking business. The portfolio has increased by nearly 8.2% year-to-date to reach AED 145 billion. And looking at the colorful pie, it remains very well diversified. On a year-to-date basis, our growth in financing is primarily driven by industries such as services, automobile, financial institutions and various other sectors that make up to that growth. Gross new corporate financing for 9 months of 2023 has been bolstered to AED 37 billion, and this is up 85% year-on-year. And it's deployed across cross-border regional clients, private sector within the country as well as it's important to acknowledge that repayments and early settlements registered around AED 27 billion, leading to AED 10 billion growth in the portfolio over 9-month period. Within the Corporate Bank, the revenue trends continue to be an upward trajectory, given the floating nature of our corporate book, which has been -- which has captured most of the Fed rate hikes, reaching around AED 3.4 billion in revenues during the year, and that is up by, as you can see in the graph on the right of the page, 29% year-on-year. Our corporate CASA balances stood at AED 33 billion. Now these are down 7.8% year-to-date. However, they are up 3% quarter-on-quarter. But these clearly are a result of current accounts rotating into investment deposits. Nevertheless, on an overall basis, our corporate deposits have been going up, and they are up almost 10% year-to-date. Slide 14 highlights our Treasury business. a very important business for us. Our Treasury portfolio, primarily the fixed income book has expanded to AED 66 billion from AED 52 billion at the end of the year. And that's a growth of nearly 27% year-to-date. Almost 3/4 of our Sukuk portfolio is sovereign in nature. And about 90% of the remaining portfolio is also investment grade and above. So it's important to understand that kind of diversification and credit quality that we have within our Sukuk book of AED 66 billion. The yields on our fixed income book have expanded by 65 basis points year-on-year, and they stand at around 4.6% due to the incremental Sukuk investments being booked at higher coupons over the last 12 months. Yet the revenues were impacted, obviously, due to higher cost of funding and the fixed nature of the Sukuk investment book. But I will touch upon this and how this trend will reverse once the interest rate cycle starts to go down. Slide 15 has details on our asset quality. Our nonperforming financing ratio has decreased by 42 basis points and it stands at around 6.04% on a year-to-date basis. Cash provision coverage has continued its upward trajectory rising by around 600 basis points when compared to the end of 2022. The 9 months 2023 impairment charges have declined on a year-on-year basis by 3% and the quarter 3 charges have dropped by 10% year-on-year. Accordingly, our cost of risk is down by 13% -- by 13 basis points. to reach 71 basis points from 84 basis points in December 2022. Slide 16 has some detailed insights on our asset quality. And it's important to note that DIB's core nonperforming loans or nonperforming financing is pretty much stagnant with a slight uptick of around 1.2% on a year-to-date basis, flat on a quarter-on-quarter basis, and it stands at around AED 10.9 billion. And that's the core nonperforming financing of the bank. And I say that core because the other 2 parts of that pie refer to NMC and the POCI assets that we had purchased from Noor Bank. So recoveries from NMC and Noor POCI are ongoing, which resulted in a decline of 11% in the nonperformance finance accounts. Slide 17 has asset quality by stages. Important to note that Stage 2 coverage ratio has improved to 7.4%, recovering to year-end levels. and also 70 basis points up on a quarter-on-quarter basis. On the other hand, Stage 3 coverage accordingly has improved to 65.4% and that's up by around 420 basis points or 4.2% from full year 2022, and this is on the back of intensive efforts on recoveries. Slide 18 shows funding sources and liquidity. Liquidity of the bank continues to remain strong with LCR at around 166% year-to-date, allowing the bank to meet its short-term obligations. CASA now stands at AED 82 billion, accounting to 37% of the overall deposits. This is down by 5% year-to-date. Now we've continued to see migration into Wakala deposits or term deposits due to the current global rate scenario. And this can also be witnessed and is reflected through an increase in the Wakala accounts, which are up by 24% year-to-date, comprising a higher share i.e., 63% of the total deposits versus 56% of the deposits on year end 2022. Slide 19 is a capitalization overview. Capitalization levels remain robust with CET1 at 13.6%, and that's up 70 basis points year-to-date. And capital adequacy ratio stands at 18.1%, and that's up 50 basis points year-to-date, both well above the minimum regulatory requirements. Our total equity position now stands at AED 46 billion. Slide 20. Our digital strategy continues to support DIB's growth. On this slide, we are presenting the digital metrics pertaining to our consumer base, which is showing a very strong progress. On a monthly basis DIB adds approximately 12,000 accounts, of which 4,500 accounts are opened digitally. The profile of the digitally active customers, 80% of them are within the age group of 20 to 45. And these customers are from various nationalities within the UAE. We continue to witness upward trend in digital engagement within our registered user base and mobile transactions expanding double digits year-on-year. Our ambition towards this digital excellence is well on progress with the launch of ‘alt’, providing our customers with unparalleled banking experience throughout our digital channels. Slide 21. Moving on to our next slide. We would like to provide you with a quick update on our key priority areas towards the implementation of our 2030 ESG strategy, as we are on course to define the rest of our commitments. The update is that our sustainable asset portfolio continues its upward momentum. And this is primarily driven by Green Vehicles Financing and our Corporate Green Financing. We supported this by our EVolve campaign, and this is our electric and hybrid vehicles campaign, offering some of the best packages and propositions within the market. The upcoming COP28 8 is on top of our agenda as we continue to work together with the organizing COP28 team and the regulatory bodies in ensuring that DIB is at the forefront of UAE's climate agenda. I'm also pleased to share initiative that we recently launched, it's called One Tree for Everyone, which will help reduce the carbon footprint in the environment as we speak to continue to have a positive impact on the planet. As a part of this initiative, DIB will be planting a tree for every new customer effectively embedded within the business growth strategy of the bank. So every new customer that is onboarded within the bank, a tree will be planted for every new customer. Slide 23 shows how we have bettered our initial guidance as a result of strong financial performance, so if you look at the table towards the right of the page, you can see that across all the key metrics that we set for ourselves at the beginning of the year, we have bettered this guidance, and we are anticipating a very strong close to the remaining part of the year, across all these metrics, whether it is our financing growth, whether it is our cost-to-income ratio or our nonperforming financing maintaining the net profit margin, improving on the coverage. So all of these key metrics. And then the result of that on the profitability of the bank. So we are anticipating a very strong close to the year. But as of now, the first 9 months have been exceptional for the bank. We can now open the floor to take some questions. And as I've mentioned before, I will use the last 5 minutes of this hour to summarize some key messages.

Thank you, doctor. Ladies and gentlemen, we'll now open the floor to questions. Please keep sending them in through the portal, and we will try and endeavor to answer as many as possible during the remaining time.

Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please send them via [email protected]. Thank you for holding until we have our first question. As a reminder, to ask a question, please send them to [email protected]. Thank you.

Okay. So we start with the set of questions from Janany. I will not go into every single question in detail, but the first one is on the NIM and its drivers and its potential forecast 2024. The second is on potential growth areas, including whether GCC and other countries. The third is on the NPL story regarding, particularly on the NMC and how it is standing out for DIB. And the fourth is around the KPIs and details on the Turkey deal. I will pass to Dr. Adnan.

Thank you, Janany, for your questions. I'll try and take them one by one. Some color on NIM drivers as we can see compression in Q3. Now this is something that I've already explained on previous calls as well as on this call that definitely, we are in a very challenging environment because as interest rate environment continues to be high, and we are expecting higher for longer, this would mean necessarily that there will be pressure on CASA deposits to move into term deposits or Wakala deposits. And that is something that we have witnessed, even though we have grown our liability book, even we've grown our total deposits, you can see that there has been some movement from our current and savings account rotated into fixed deposits. And that clearly has put some pressure on our net interest margins. The strategy of the bank is always to mobilize low-cost deposits, and there is no change in that strategy. So we'll continue to try and bring in as many customers that add to the current and savings account, but we have seen that in the last couple of quarters, that remains to be challenging. On the asset side, though, we continue to benefit from the high rate environment, and our book is, as you know, predominantly floating in nature. And that allows us to reprice these assets, and we've done that because -- and that has been demonstrated and it has been validated through the uptick in all of our yields across all of our businesses. So if you see that the total yields on our consumer business, our corporate business and our treasury business have continued to go up because new bookings are happening at higher rates and the existing bookings wherever they are variable in nature -- existing portfolios, wherever they are variable in nature have been repriced. So asset side, no complaints they continue to make the most of a high interest rate environment. and higher we stay for a longer period that will benefit the bank. On the deposit side, we definitely have seen some challenges, but this is something that we have to take within our stride, and we will continue our efforts to make sure that our CASA is enhanced from the current 37% upwards because any enhancement in CASA is going to allow us to maintain these net interest margins or even better them. The color on net interest margin for the remaining part of 2023, I think even though we have spoken about these pressures, we continue to hold our net interest margin -- current net interest margin, which is at around 3.1%. And we are confident that we'll be able to close the year at this, if not higher. 2024, first half, I think it's known that we are not expecting any rate cuts in the first half of 2024 and that's why I alluded to saying a higher interest rate environment for longer and if that remains, then we would definitely see better income on our asset side and try to steer the challenges on our liability side in a positive direction. We don't expect any further migration from our current and savings account to our fixed deposit book because I think these are levels that we are comfortable with. But we will be definitely trying to enhance that CASA percentage in the last quarter, trying to come as close to 40% or even increasing because that clearly benefit us on the cost of funding side or cost of deposits. You asked about key sectors of growth in Q3. I mentioned them briefly, this is within the service sector. It's within the automobile sector. It's within educational sector. We've also seen some financing on the telecom side. So there is not one sector as such that is running away with the lion's share of our business, and we've always focused on sectors that are vibrant to the economy and that continue to add and make our pie more colorful. We are definitely seeing some demand from the regional geographies, particularly the Kingdom. And as a bank, we also have a strategy to see good credits if they can be tapped in the neighboring region Saudi, Oman, Bahrain, we would definitely diversify our financing book across the region. The recovery story related to NMC, you're specifically asking recent development, I think you are referring to the arbitration that is happening within the United Kingdom within London as you know, we are a part of that arbitration process. For us, there is no change in strategy. That strategy has been followed by the bank in the last couple of years. And you can actually see that strategy has paid rich dividends for the bank. It's a strategy that was followed because of the strong underwriting that the bank had done at the time of giving this financing facility, which might be different from some of the other players that had underwritten this financing. So for us, it was always based on our cash flows, which we continue to recover. And that's how we have brought our NMC exposure down, which sits on our balance sheet, and you can see on Slide 15 that NMC exposure today stands at around AED 1.2 billion. When we started this in 2020, it used to be around AED 2.1 billion. That shows you that the recoveries of around AED 900 million have been supported by this very strategy that I mentioned at the time of underwriting this facility. So for us, there is no change in strategy. We will definitely work along with the judicial process and the arbitration process to see how this stands out. And then depending on the decision, we will definitely take a call. Having said that, as you know, we carry adequate provision on our balance sheet that is associated with new medical center, and we are very comfortable with the coverage ratios on NMC, even though we continue to recover the receivables and bring the exposure down. KPIs, any color on our Turkey deal, still early for us to come up with the KPIs. As you know, we are in the last part of our approval process. There are a few approvals that are required to go ahead with our Turkey deal, we have secured majority of those approvals. Only one approval is remaining and the moment we do that, we are anticipating that to happen very soon. The moment we do that, we are going to officially launch this investment and then we will come back to the market and put some KPIs and then measure them accordingly quarter-on-quarter.

Ladies and gentlemen, I would like to remind you if you have any further questions, please send them via [email protected].

All right. So 3 questions from Shabbir from EFG. One is again on the expansion in NIM this quarter and what's the scope of them going forward. Also, the second one on the strong loan growth for this quarter, whether it's transitory working capital loss or strict term financing. And thirdly, again, on NMC and outside of outside of these 2, NMC and POCI, were there further inflows into the NPLs. Could you elaborate those please?

Shabbir thank you for the question. I've partly answered them when I took Janany's question, but I'll still very quickly talk about expansion of NIM in this quarter, assuming rates remain the same, you see scope for further increase. I have alluded to the challenges that we faced, right? So I think there are no complaints on the asset yields and the net interest income that we are making on the asset side of our balance sheet because of our variable nature of our portfolio, we are taking advantage of high rates. These rates will remain high for longer. So we will take that benefit. On the liability side, we have seen some challenge, even though on a quarter-on-quarter basis you are talking about some expansion. Of course, if we maintain the net interest margins where they are, I think that's a great achievement for us. And that's our first goal, if you may, until the end of this year. We want to make sure that we maintain 3.1%, if not higher. So I think in this high interest rate environments where there is pressure on current and savings account rotated into term deposits, that will always remain the challenge. We are trying to offset that by bringing in more current and savings account within the bank, thereby reducing the cost of funding on an overall basis. But we acknowledge that, that has been the challenge for us over the last couple of quarters. But in our opinion, that's a happy problem to have because as interest rates will start to go down, I think we will be one bank that would really benefit for that very reason because our current and savings account are not as much as some of our peers, which means we have more fixed deposits and Wakala deposits, which means that when rates would go down, we would reprice this portfolio and benefit from that, right? So I think it's a challenge for us. We've maintained and managed that challenge quite well, and we are just waiting for interest rate cycle to go down to benefit from this side of our balance sheet. You talk about very good loan growth that the bank has seen for this quarter, absolutely. And if you remember, Shabbir, this is something that I mentioned on my half yearly call, where I said that we are looking at a very strong Q3 pipeline. And I also mentioned about a strong Q4 pipeline. So I'm happy that, that has materialized for us. Q3 has materialized. I'm still optimistic about our strong Q4 pipeline. Is this lending transitory in working capital? Or is it sticky in nature in terms of term financing, predominantly term financing, which is very good because I think that is in line with our strategy of growing our book and the larger group is also going to benefit us when the rates will start to go down. So I think in your 2 questions, I've given you some color on our 2024 strategy on our asset side as well as on our liability side. And we -- of course, towards the end of the year, beginning of next year, we will throw more light on our strategy of how we are going to look at both sides of our balance sheet. But in summary, what we are anticipating is that when interest rates go down, we will benefit from this large asset book that we have created today. And we will also benefit from the large fixed deposit book, which is going to be repriced going forward. So ultimately, we will be on a very positive end of that equilibrium in 2024 when rates will start going down. [Technical Difficulty] Indicated that outside NMC and POCI, there have been inflows, very insignificant Shabbir, nothing to really talk about. I think if you look at it, it's been about close to around $40 or something like that -- $40 million. So very, very insignificant. That's why I said that our core nonperforming loans has been pretty much stable. Yes, there has been a very, very slight increase, and that's very insignificant in the bigger scheme of things. close to around $40 million, but not worth talking about.

Ladies and gentlemen, as a reminder, if you do have any further questions, please send them via [email protected].

Okay. So we've got few questions from Rahul from Citi. The first question is on the lending in the third quarter. Where is it coming from the GRE sector? And how should we look at GRE risk again for early repayment that has been over the last few periods? Second question, we've already spoken about NIM, so we won't go into that. This is on NIM. The third one is on the drivers of fee income and other income, investment property income, et cetera. And the fourth one is on the jump in staff cost in third quarter. So how is this trend going to look like?

Thank you, Rahul, as always, very good questions. Your first question, strong lending in GRE. I'd like to start by saying that it has been lending in GRE, but also across the private sector, also across our consumer book. So I think it's a mix of various businesses that have contributed to that growth. But on the corporate side, clearly, we have seen some GRE and some sovereign growth. How should we think of the risk of GRE early repayment? Look, this is something that we cannot predict, right? And that's why we call them extraordinary repayments because we don't anticipate any. At the time of giving these facilities, we have not anticipated that these would be repaid. So I think it's very difficult for me to give color, but if anything, we have seen that in the first 9 months, the kind of early settlements have slowed down when compared to the first 9 months of 2022. So I'm anticipating that all of 2023, the total early repayments would be lower than 2022. So I think that's a good sign, right? So if we continue the kind of strong underwriting that we've done, which I've mentioned, close to around AED 72 billion across all our businesses in the beginning of -- for the first 9 months. And to keep that momentum, I think we'll have a very good strong gross underwriting. And then if you take out the normal repayment and even the early repayments, we've seen a AED 27 billion growth in the first 9 months. This kind of extrapolate that also. I think we are looking at a very good end to the year. So I would want to probably leave that thought in your mind Rahul that in the first 9 months, we've seen extraordinary gross underwriting and lower early settlements. So if we continue with the same trend, I think we are looking at a good growth overall in our financing and in Sukuk book at the end of the year. In terms question 2 is on NIM, and I've already answered that when I responded to Janany and Shabbir. Question 3 talks about sequential jump in income from investment properties, are there any one-offs in Q3 fee income? You know, if you actually look at our investment in properties, that also includes our investment in -- income from investment in Deyaar. As you know, we do a line-by-line consolidation within our financial results. The real estate market is buoyant. Deyaar is having an exceptional year, and you can look at the first 9 months results of Deyaar. So they are anticipating a very good end to the year. So we will benefit from that. And also, as a part of our strategy to derisk our real estate book, whatever investments in real estate assets that we have on our book, we continue to kind of offload them wherever possible. It's a good time to derisk that. And whilst doing so, we have made some gains, but bigger scheme of things, if you look at the total income and the fee income of the bank, it's a transaction-driven, volume-driven play, the more volume we will underwrite the more fee income we make. And finally, the jump in staff costs in Q3. It's a result of the kind of investments that we are making in order to strengthen our bank. If you remember, our strategy talks about 2 fundamental pillars, grow the bank and strengthen the bank. I've spoken at length about growth and you are seeing the growth in the first 9 months, and we'll continue to do that. But also let's not take our eye away from strengthen the bank. It's extremely important to understand that, that's a very significant part of our strategy, it's to make sure that the bank is more robust than ever before. And by that, strengthening the bank, I mean invest in our infrastructure, invest in our compliance regime, in our risk systems, in our technology. And all of that also is necessitating that we have more manpower on the ground. We are investing in each of these areas by hiring people. So it's not only system enhancement and process enhancement, but also investment in people. So all of this will add to the costs. And this is something I alluded to at the beginning of the year. But I also mentioned at that time that as long as we deliver a strong cost-to-income ratio, we should be happy. And I think that's exactly what we've done. We make sure that our revenue goes up to support the sequential increase in our costs. But overall, our cost-to-income ratio remains one of the lowest in the market.

Ladies and gentlemen, there are lot of questions flowing through, actually. So I don't know whether we'll be able to take all of them in time, but we will try to do as many as possible within that time. So just stay with us. Thank you.

Ladies and gentlemen, I would like to remind you if you have any further questions, please send them via webcast@ dib.ae. Thank you.

All right. So we're back again. I'm sorry, we just have to run through some questions which are similar. So when we get to something new, we come back to you guys. So some questions from Edmond from Bloomberg. One is on the -- the first one has already been answered on CASA in Q-on-Q, so -- and cost of funding. So we will go to the competition is increasing given the tight market and UAE continues to deliver their strongest retail loan expansion. How do you see that impacting asset yield going forward? The second one is on the mortgage products. So -- and then there are a few other questions on -- if margin and rates -- if rates stay higher for longer in 2024, how do you see the trajectory on asset yield? The fourth is on the cost of risk trajectory, given the potential pressure on asset quality. And the five is expenses driven by higher staff costs.

Thank you, Edmond, for your questions. Quite a few questions over there. So I'll try and be as succinct as I can. You talk about competition within the retail space. Yes, absolutely I think all banks have done well in the first 9 months to grow their retail loans. So have we. And I think within our bank, our retail loans are predominantly expansion is driven by auto finance, our personal finance and our mortgages. And does this impact asset yield trajectory going into the next year? Of course, in the first 3 quarters, we've seen that because these retail loans, which are fixed rate in nature are being booked at higher rates, the yields in the retail business have expanded. And the more we book these rate loans now and continue to book them in a higher rate environment, they will have a positive impact on yields. So we are expecting, as you know, and we've also mentioned this that we are expecting a higher interest rate environment for longer at least if we break 2024 into 2 parts, the first part of 2024, from where we sit today, we know that there would be no rate cuts in the first half, which means that we are anticipating that the remaining 3 months of this year and the next 6 months of 2024, 9 months, the loan rate environment will continue to be higher for longer. And if that happens and we continue to book these retail loans that we are doing across these various products, we feel that, that would only enhance our retail yields and help in enhancing the net interest margins of the bank going forward. But of course, the challenge is on the liability side and how we can manage to make sure that we keep the cost of funding as low as we can. Of course, the easy answer to that is bring more current and savings accounts, which is what the bank tries to do, but we also have the challenge that these current and savings accounts get rotated into fixed deposits, and that's where the cost of funding go up -- goes up. We've managed this quite well until now. And hence, we have maintained our net interest margin guidance at 3.1% at least for this year. Guidance specifically on net interest margins for next year will be given at the beginning of 2024 on my first call, but I'm anticipating that we'll be able to kind of better that guidance into 2024 if we are going to see a higher rate environment for longer. You asked about our mortgage products. Our mortgage product is predominantly variable in nature. However, given that it's a high interest rate environment and interest rates are expected to go down in foreseeable future, most banks are coming up with these exotic products where they are giving a fixed rate mortgage for at least a few years, and then that gets converted into variable. Of course, if you are anticipating that interest rates are going to go down, then the banks would want to give a longer fixed rate period because you are booking those facilities today. For us, we also have a fixed rate kind of product, but that is fixed for anywhere between 1 to 3 years. It's a choice that the customer makes. But then post that 3-year period, it becomes variable. We do not have a longer fixed rate product where rates can be fixed for 5 years or 10 years for that matter. And I think that's just a reflection of how the market is working. Let's also understand that customers are aware that rates are anticipated to go down So even if banks would come up with a 5-year fixed rate loan or a 10-year fixed rate loan followed by a variable loan, I don't think so that will sell in the market today because people are anticipating interest rates to go down. Your further questions are around 2024 asset yields, we've already answered that. Cost of risk trajectory, given the potential pressure on asset quality. Well, I think if you look at our cost of risk, it's at around 71 basis points year-to-date. Even if you normalize it, we feel that we will end up the year at close to that level and nothing significantly higher. So this is already taking into account of interest rate hikes that we have seen over the last 18 months. So we have not seen any undue pressure on our corporate book or our retail book that would add to this cost of risk going up. So we are very confident that we can hold this asset quality if there is no further change in that. Expenses were driven by salaries. I guess this is sales related. Now I've already explained that this is a function of our investment into more manpower across our support functions because as a part of our strategy, we want to strengthen the bank. So investment in technology, compliance, risk and of course, the various support areas that manage to support our businesses. So it's more people related and the more people on the ground, the more salaries, some also inflationary changes in salaries, given where the inflation is within the country. So some adjustments to those salaries. And of course, some of this will also be sales related because as we do higher sales across retail, they are performance driven, so the more they sell, the more they get. So it's I think a mixed bag and a combination of all of that is an increase in staff costs. But like I mentioned on -- when I answered Rahul, I think that we have delivered a good cost -- strong cost-to-income ratio, and I think we should not take our sight away from that. There are many more questions, some of which are repeat in nature. But like I have mentioned earlier, the last 5 minutes will belong to me summarizing the call. And please, the questions that some of you have given us and we've not been able to answer, our Investor Relations team will try and take them offline. Some of you can get in touch with them directly. But the last 5 minutes is the summary. We've had a very strong set of headline numbers across all our key metrics. And I mentioned that across the various pages that I have turned. And we've beaten our year-end guidance across all the core KPIs. The quarter has shown strong -- how strong the franchise strategy on financing has been throughout the last few years, which was dropped only because of some early settlements and prepayments in the years gone by. With those now tapering off, the net growth is far more obvious with financing alone, up by 7% year-to-date, and our fixed income book up -- as well as our fixed income book. So overall, we've seen our assets go up by around 11.3%. We've also managed to win financing mandates in the wider region this quarter, optimally allocating our local liquidity, given the demand in the neighboring countries. And we mentioned not just the Kingdom, but also we will be focusing on our neighboring GCC region in Bahrain and in Oman. And also focus on the GREs and the quasi-GREs and sovereigns within the UAE as well as the private sector, of course, continuing our momentum in the consumer bank. So overall, we will continue to make sure that we close this year strong on our financing side, and we will continue to enhance our all pies in each of these sectors. We've seen strong expansion in our net interest margins despite rising cost of funds. This signifies the bank's ability to manage and generate liquidity at optimal levels. Capital ratios have further improved, provides a significant cushion between the minimum regulatory requirement, and that also supports our growth ambitions that we have. Our cost-to-income ratio continues to improve despite absolute costs going up in the 9 months, which we've already mentioned, and that was something that we were anticipating, but we've delivered on a very strong cost-to-income ratio. Our asset quality continues to improve with our nonperforming financing being stagnated and it stands at around 6% -- stagnated on an absolute term, but stands at around 6%. So that has come down. Our cash coverage continues to improve. Our digital channels continue to kick in. 40% of the new accounts that have been opened, I have mentioned, were opened through our digital channels. We opened roughly around 10,000 to 12,000 accounts a month. and 40% of that comes digitally. Having had significant experience through our rep office in Turkey, we made sure that we further that ambition, and we now entered the Turkish market. I've mentioned our digital license and our collaboration with Aydin Group to take over 25% of the T.O.M. Group of Companies. And as interest rates start to go down, we feel that we are better placed than our peers to take advantage of this. And that's probably my last message for this is that as we anticipate interest rates to go down in the latter part of 2024, we feel that we are better placed. And that is because of 3 main reasons. One, the high underwriting volumes that we have seen has allowed us to grow our portfolio, and this large base will contribute to our profit income when the rates will start to go down -- starts going down, why because the larger base will allow us to make more money than having a smaller base. Second, our fixed rate financing, and that is predominantly on our fixed income Sukuk book as well as our retail loans, personal loans, auto loans, credit cards, will allow us to lock higher rates today at the current prevailing interest rate environment. So the more we do that from now until when rates start going down, that will help us. And as we have a lower CASA balance than some of our competition, rate reductions will also benefit us more because having a lower CASA balance means that having a larger fixed deposit book and when rates start to go down, we will tend to benefit that from when compared to others because we will reprice all those large fixed deposit book. So I think that was the key messages that I wanted to leave with you. With that, we come to the end of this hour, happy to take questions offline, please feel free to get in touch with our Investor Relations team. But we are very optimistic of going into the quarter 4 with a strong pipeline and maintaining everything that we've been doing in the first 9 months and anticipating a very strong growth to the year. So until the next time we speak, thank you very much for listening in.

Thank you, doctor. Thanks, everybody. And once again, apologies for not being able to answer all the questions, but Waleed, Gunjan, Azul, Varuna and others, Viraal, please get in touch with us offline, and we will get -- we'll try and revert with all your answers as soon as we get to talk. Thank you again until next time. Bye-bye.

This concludes today's conference call. Thank you all for your participation.