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

Ladies and gentlemen, welcome to the Dubai Islamic Bank Full Year 2024 Financial Results Earnings Call. [Operator Instructions] I'd now like to hand over to your host, Janany Vamadeva from Arqaam Capital. Miss, please go ahead.

Thank you, [ Taj ]. Good morning, good afternoon, everyone, and thank you for joining us today. This is Janany Vamadeva. And on behalf of Arqaam Capital, I'm pleased to welcome you to Dubai Islamic Bank Full Year 2024 Earnings Conference Call. I have with me here today from DIB management, Dr. Adnan Chilwan, the Group Chief Executive Officer; John Macedo, the Chief Financial Officer; and 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.

Thank you, Janany, and welcome, everyone, to the Dubai Islamic Bank's Full Year 2024 Results Webcast. This session is led by our group CEO, Dr. Adnan Chilwan; accompanied by John Macedo, the Chief Financial Officer; and myself. [Operator Instructions] So with that, we will start. Let's move on to Slide 4. The global economy, as you can see, is projected to remain resilient despite the significant challenges with inflation expected -- as inflation is expected to ease further from 5.4% in 2024 to 3.8% in 2025 and 3% in 2026. Growth prospects vary across the region. As projected, global GDP growth is forecasted to be at 3.3% this year, 2025, that is, and marginally up 10 basis points year-on-year from 2024's expected 3.2%. In the Middle East and Central Asia, growth is expected to pick up, mostly driven by the extension of OPEC+ reduction. And the GCC region, on the other hand, continues to demonstrate resilience with growth in credit facilities, rising PMIs with data coming out suggesting that non-oil sector is forecasted to have a robust momentum this year as well. We move now on to the 5th slide here. The UAE, as you can see, continues to show strong economic growth. It recorded a real GDP growth of 3.6% year-on-year in the first half of 2024. And the non-oil economy accounted for its historically high circa 75% of the GDP in the second quarter, a testament also to the fact -- to the ongoing diversification efforts and the growth of newly established non-oil sectors. Growth obviously also is supported by hydrocarbon sector, which is forecasted to pick up significantly by more than 7% in 2025, as you can see on the upper left chart. Growth forecast continues to be driven by key sectors such as tourism, transportation and financial and insurance services. During 2024 only, international overnight visitors in Dubai grew by about 9% versus 2023 to reach nearly 19 million during the year. Inflation in GCC remained low and stable despite ongoing reach in the geopolitical tensions, while the UAE specific conditions have become even more stable as evidenced by the growing revenue streams, including the introduction of the corporate tax. Banks in UAE continue to benefit from strong domestic economy, leading to improved asset quality metrics and lower credit losses and healthy profitability during 2024. And finally, Dubai continues to record its highest increase in population last year as well since 2018, actually, as the Emirates population grew by over 169,000 in 2024 to reach over 3.8 million according to the Dubai Statistics Center. So with this quick preamble, I will now hand over to Dr. Adnan Chilwan, Group Chief Executive Officer, to take you through the full financial results for the year. Dr. Adnan, please.

Thank you, Kashif. Good afternoon, ladies and gentlemen. I will run this presentation in the normal format, as always, which would be a page turn, followed by question and answers. Finally, as always, the last 5 minutes of the hour would be used to summarize the call and give you some key messages. I start with Slide 7, which looks at the highlights for the year 2024. The region has remained resilient during the year with economic activity steady across the GCC region. In the UAE -- the UAE remains to be regional destination for business investment as well as tourism. And within 2024, we saw a lot of domestic activities taking place, including sectors such as tourism. And in addition to that, strong and rising trading volumes within the UAE financial markets. The positive economic environment, together with DIB's robust strategy to align to UAE's expansion agenda have propelled the bank to another remarkable set of results. We have surpassed all our guidance metrics, as you can see, for 2024, which included a robust 10% growth within our core business as well as our balance sheet. P&L growth has been exceptional as the bank has crossed AED 23 billion in total income as well as AED 9 billion in pretax profits. I will definitely delve more into the P&L within the subsequent slides. The bank's exceptional performance during the year has been attributed to our continued investment in our resources and technology and growing our books within the UAE as well as the wider region, such as the GCC and in particularly, the Kingdom. Slide 8 looks at our balance sheet. Digging deeper into this performance, we have delivered a balance sheet growth of almost 10%, and we've ended the year at AED 435 billion -- AED 345 billion. Solid growth is supported by underwriting, which was more than AED 100 billion in gross new financing as well as sukuk investment. This has been a record year by far, depicting a strong 16% year-on-year growth compared to AED 88 billion in '23. Our net financing book has grown by almost 7% year-on-year to reach AED 212 billion, whilst our sukuk portfolio has seen a robust growth of more than 20% year-on-year, and that book stands at around AED 82 billion. On the funding side, our deposits have also seen an increase of almost 12% year-on-year. This has been supported by both consumer as well as corporate accounts. We've also seen a rise in our current and savings accounts, and they stand at close to around AED 95 billion. We've continued to see significant improvements in asset quality with our nonperforming financing ratio standing at 4%, which is lower than 140 basis points year-on-year. Slide 9 looks at our income statement. The P&L story for us has been exceptional in 2024. We've seen significant improvements across. Total income has risen by 16% year-on-year, and it has reached AED 23 billion. And when you look at it on a quarter-on-quarter basis, that has been an increase of 11% sequentially. Net operating revenues have risen by 10% year-on-year to reach AED 13 billion, and that has been 24% sequentially quarter-on-quarter. On the impairment side, we've seen significant drop in impairments to end at AED 407 million from AED 1.4 billion in 2023. And this is, of course, net of all the recoveries, which we will talk about on subsequent slides. This has resulted, obviously, in our pretax profit crossing AED 9 billion, a resounding growth of almost 27% year-on-year, which is a remarkable feat amidst the operating environment. Our cost-to-income ratio stands at around 26.7% and our net profit margins are normalized at 3%. You'll probably pick up 3.2% from the financials, but we'll speak about that in greater detail subsequently. If we look at this slide, particularly the year-on-year as well as the quarter-on-quarter growth numbers and percentages, we can definitely see that the bank is in a very strong and stable position, and we've sustained the growth momentum of the P&L over 2024. Slide 10 talks about the profitability and the cost structure. In this slide, I would like to highlight the main contributors to our net operating revenue. Net funded income, as you can see, has come in strong during the last quarter, contributing to the overall growth of the P&L. This is attributed to strong fees and commissions, income from our associates, as well as other income. The steady rise in our OpEx of 8% year-on-year is attributed to our continued investments in our resources and technology. Now this is something I have alluded to in the past. We continue to aggressively invest across our technology platforms, which includes modernization of core infrastructure as well as transforming our core banking systems. There is also a robust pipeline for our bank-wide AI transformation as the bank looks into adopting AI capabilities to strengthen the business and customer journeys as well as experiences. And this is something that we would continue seeing across 2025, going into 2026 as well. Our ongoing investments in our workplace and talent as we continue to promote professional development across all levels has been relentless in pursuit of our vision as well as our mission. All of the above has led to a solid 27% year-on-year increase in group's net profit, and we've closed the year with AED 9 billion. Slide 11 looks at our deployment of funds. You will see that the bank has witnessed strong growth across all its key businesses. And this can be seen in the upper right chart, where our corporate book has grown by 4%, stands at AED 149 billion. The consumer book has grown by 13%, stands at AED 63 billion. our sukuk book has grown by about 21% year-on-year, and that stands at AED 82 billion. All of these are net financing numbers. Our growth within 2024 has been outperforming our guidance. Our guidance at the beginning of the year was 5%. We've ended the year with 10%, and this is the growth across our consolidated investment as well as financing book. This growth, like I've mentioned, was supported by an impressive gross new underwriting during the year to the tune of more than AED 100 billion, primarily driven by wholesale to the tune of AED 53 billion and our consumer business to the tune of around AED 27 billion. That said, our net financing book on its own has grown by 7% year-on-year to reach AED 212 billion, and our sukuk book has grown by around 21% to stand at around AED 82 billion. In subsequent slides, we look at our individual businesses. On Slide 12, we look at our consumer banking business. The portfolio has grown by 13% year-on-year to reach AED 63 billion, up from AED 56 billion in 2023. All our anchor products across the consumer banking business have contributed to this growth. Consumer deposits continue to see a steady increase, albeit a little slowly than what we would like. We've seen a steady increase now to reach at AED 90 billion, with CASA remaining stable at AED 47 billion. During the year, the consumer business was also focused on branch enhancement to drive superior customer experience. Slide 13 looks at our corporate banking business. This portfolio now stands at AED 149 billion, which is up by around 4%. The portfolio continues to be very well diversified with growth across key sectors such as automotive, manufacturing, utilities, government, health care, education and many other colors that form a part of our pie chart. Our corporate deposits have grown strongly by 19% year-on-year to stand at AED 157 billion. Growth was primarily driven by our corporate savings accounts, and this has grown by around 62% year-on-year to reach AED 34 billion. Revenues in the Corporate Bank continue its upward trajectory, and they stand at around AED 3.4 billion, up by 17% year-on-year, and these are driven by a strong growth in fees and commission. Moving on to Slide 14, which looks at our treasury business. Our treasury business continues to grow from strength to strength. The portfolio now stands at AED 82 billion, which is up by 21% year-on-year. And the bank continues to grow this portfolio because it wants to take advantage of the opportunities that are available within the current rate environment. Revenue trends continue to be very strong. These have risen by 24% year-on-year, and they stand at around AED 2.5 billion, and I'm talking about treasury revenues here. And yields continue to be healthy within the treasury book and stand at 4.99%. Slide 15 looks at our asset quality. The bank's asset quality continues to improve significantly. We ended the year with nonperforming financing ratio at 4%. This is an improvement of 140 basis points year-on-year, and we've beaten our own guidance. And these levels have been the lowest since the global pandemic. Importantly, resolution of previous large corporate legacy cases and reaching a settlement within a few of them during the year has attributed towards strong improvement in the nonperforming financing ratio. This also has had a positive impact on our P&L, which I'm sure you've gathered, and we can discuss that in the Q&A session. As a result, our cash coverage continues its upward trajectory. It stands at around 97%, which is an increase of around 700 basis points compared to the end of 2023. Total coverage, which is also very important for us to track, stands at around 138%, and this is up from 121% at the end of 2023. Now cost of risk seems to be very low at 14 bps, and this is down from 57 bps at the end of 2023. But of course, this takes into account the settlements and the recoveries that have happened. So clearly, this cannot be seen as a normalized cost of risk. We've always alluded to a normalized cost of risk for the bank to be around 60, 70 basis points. And if you strip out the early settlements and the recoveries that have happened, you will pretty much end up with the levels that we've always spoken about. On Slide 16, we look at asset quality by stages. Continuing with more details, you can see a breakdown composition of the stages by Stage 1, Stage 2 and Stage 3. As you can see, Stage 2 and Stage 3 are decreasing, which clearly shows the improvement that we are witnessing within our asset quality. Our nonperforming has declined by more than AED 2.3 billion in absolute amounts. That amount now stands at AED 9.1 billion, which used to be AED 11.5 billion in 2023. Now this is a decline of more than 20% year-on-year. Our coverage levels across our stages remain healthy. But when you specifically look at Stage 3, the absolute amounts of Stage 3 have gone down, like I've alluded to, and the coverage has gone up and it stands at around 79% on a cash cover basis. Slide 17 looks at our funding sources and liquidity. Liquidity of the bank has continued to remain intact. LCR ratio stands at around 159%. Deposits continue to grow strongly. We've seen a 12% year-on-year increase and the deposit book stands at around AED 249 billion. On a quarter-on-quarter basis also, deposits have increased by 5%, and they were at AED 237 billion at the end of the third quarter in 2024. So a healthy increase in our liquidity base. The bank also continued its strategy to attract current and savings account, low-cost deposit accounts, which now stand at around AED 95 billion, which is up by around 15% year-on-year. And when you look at our balance sheet mix or our deposit mix, our current and savings account comprise of 38% of our total deposits. When I turn the page to Slide 18, we look at our capitalization levels. Our capital ratios remain strong with the total capital base now standing at around AED 47 billion, and this has risen by 10% year-on-year. These capital levels, where you can see capital adequacy level is up by 100 basis points, which is at 18.3%. Our common equity Tier 1 ratio stands at around 13.2%, which is up by 40 basis points. These capital levels are taking into account the dividend distribution that the bank is recommending to the general assembly. We have recommended a dividend of AED 0.45 per share, and that represents a total dividend payout close to around 50% of the net profit. So these capital ratios are net of those dividend payouts. Moving on to Slide 19, where we look at our digital strategy and our digital ambitions continue to support our growth. Our aspirations have been growing from strength to strength in this area. And this is in line with the UAE's own ambitions of advancing towards a more digital economy. We internally continue to modernize our core infrastructure. We've just cut over into a new core banking system in the second half of 2024. That is now stable and allowing us to make sure that every initiative that we have in this space has better speed to market. It also has an impact on our customer experience across all platforms. So I think we've been fortunate that we've done this cutover in the second half of 2024, and now this is behind us, and we are operating in a very stable and resilient environment. Obviously, within this digital space, we have ongoing collaborations with leading technology partners, and that allows us to leverage cutting-edge digital technologies. These continued investments have resulted into what I can say, more operational efficiencies as well as enabled us to streamline our operations. And as we move into 2025, we will continue to make investments in our digital plans as well as, wherever possible, bring AI-led solutions within our infrastructure. Slide 20 looks at sustainability. It's the ESG slide. We continue to make strong progress within our ESG ambitions. The year saw the bank issue its third sustainable sukuk. And now our sustainable issuances totaled to around $2.75 billion. We've also made a commitment that all our future issuances will be sustainable in nature. And in order to support that commitment, we have in place a strategic framework as well as a sustainable finance framework that will only grow from strength to strength as we go forward. We have also participated in more than $20 billion of ESG and sustainable sukuks that have been issued till date, of which AED 6.2 billion were only in 2024. So clearly, our commitments in the ESG space remain strong and in line with the UAE's climate ambitions to make the bank a stronger and more sustainable financial institution. On Slide 22, before I open the floor for Q&A, we look at the guidance, and I had mentioned this on our last call in 2024 that as customary, the first call of the year will always not only look at the year gone by, but we will also set guidance for the next 12 months, which is what we are doing here on Slide 22. And as you would appreciate, the way we set guidance for any 12 months is by looking at the traction that we have witnessed in our businesses in the preceding 12 months. And having seen very strong quarters in Q3 and Q4 of 2024, we are very positively putting our foot forward in 2025. And I start by talking about our growth ambitions. The guidance for that is 15% for the year. And we put that guidance because we see a very strong pipeline. We are more comfortable in terms of what we have been witnessing in the last quarter, and we are just carrying that tailwind behind us and trying to make sure that 2025 turns out to be yet another good year for us in terms of our growth ambitions. Asset quality will continue to take center stage even in 2025. You can see that the nonperforming finance guidance is set at 3.5%. Now this will be a combination of, obviously, the balance sheet and the base denominator growing, as well as certain recoveries that we anticipate where certain accounts will regularize. So overall, we are hopeful that we will end up at 3.5%. Return on assets would be roughly at the same level, slightly down at 2.4%. This clearly takes into account the pricing pressures that we are facing, because competition in the market is hot. We've seen that in Q3. We see that in Q4. That would have an impact on our ROAs. Net profit margin, we want to keep it steady at 3%, which is the full year net profit margin that we have closed the year at in 2024 at 3%. Probably when you look at the financials, and I'm sure some of you might have this question, you're probably picking up a net profit margin of 3.2%, but that has a slight one-off in the GFI income, which is on the back of the settlement and the recoveries that we've had. And we will definitely probably address that in a question. But in summary, our net profit margin should be read as 3%, and that's the normalized net profit margin. And we want to make sure that we also remain at those levels in 2025. Our total coverage will improve to 140%, and this is total coverage, cash and collateral, but I can also tell you that we have plans to make sure that the cash coverage also continues to improve. It stands at 97% today, but we are anticipating that, that would be at 100% and above. Our cost-to-income ratio, given that income will be strong and we manage costs pretty well, our cost-to-income ratio will stand at around 26% as guidance for 2025. And lastly, just a similar story on return, as I've given you on return on assets, our return on tangible equity also will remain at a similar level, but should settle down at 21%. That said, I've come to the end of my page turn. I'll pause here. We'll start taking questions for the next 20, 25 minutes or so. And post that, we will end the call with a summary of some key messages in the last 5 minutes.

Thank you, Dr. Adnan Chilwan. Ladies and gentlemen, we will now pause for a bit and review the questions, and we'll try and respond to as many as possible. Obviously, if there's any repetitions, we will not go through those. So just bear with us. Thank you.

[Operator Instructions]

Thanks again. We've got the first question from Shabbir from EFG. The first question is on outlook for asset growth. Is it assuming any kind of GRE repayment already? And do you expect the trend of GRE repayments to continue or ease? The second question is on the fact that despite a good year of earnings, the EPS was flat. What were the factors in the dividend decision? And lastly, were there any one-offs in net financing and investment income for quarter 4?

Thank you, Shabbir, for your questions. I can start by saying that I've seen the coverage that EFG has done on the financial earnings. And I think you have articulated that very well within your research. So not many questions coming from your side this time. But the 3 that you asked, one, outlook for asset growth, which is set at 15%, and does it assume any GRE repayments. This is net loan growth, if I may. So it includes the gross underwriting as well as all repayments that you can factor. Of course, we cannot anticipate any prepayments in there, but we can only be hopeful that those will be lower than the previous year. And I think we are optimistic that in 2025, given the strategy the bank has in order to make sure that it retains a part of its portfolio and make sure that it does not attrite like in the years gone by, we are very confident that we will be looking at a 15% growth net of all repayments, whether they are GRE or corporate or sovereign in nature. Your second question, despite a good year for earnings, you have kept dividend per share flat. What factors have shaped this dividend decision? Well, we always look at dividends in a very balanced manner. We just answered your first question, which was on our loan growth or our growth outlook. And you can see that we are anticipating to grow higher than 2024, which means that we've got to have adequate capital. We have announced a dividend per share of AED 0.45. But when you look at that from a dividend payout ratio, that's about 50% of our profit. So we've been consistent over the last few years in making sure that 50% of our profits are paid out. So the dividend payout ratio is 50%. And that's exactly what we've done. We've looked at it in a very balanced manner, and we have recommended this to the general assembly for approval. Was there any one-off in the net financing and investment income? Thank you for asking this question. I had alluded to this in my presentation as well. I think there are a few similar questions, so I'll try and answer this right now. We have recorded net profit margins of about 3%, right, NIMs or NPMs as we call them at 3%, but when you look at this from a financial statement perspective, you will probably end up calculating this to be at around 3.1%, 3.2%. This increase is on account of the settlements that have happened on our portfolio, which have led to recoveries. And this has impacted 2 lines within our P&L. One is the provisioning and impairment lines, and that provisioning and impairment line, and you see the recovery have flown in and we've made lesser provisions. So net of that recovery, the impairment stands very negligible and the cost of risk looks to be at 14 basis points. And the second impact of that recovery and settlement has been on our GFI line, where a small portion of that recovery has enhanced the GFI, because this was profit in suspense, which has now been released. So I think when you add up the 2 together, this is the total recovery that has happened. And one part of that recovery goes into the impairment and provisioning line and the second part of that recovery has gone to the GFS line. But out of prudence, when we have reported our guidance or we reported our actuals, you see we have kept our NPMs at 3% and not at 3.2%, which is what the financial statement would throw. So what should one expect going forward? One should expect that in terms of guidance, we want to be at the same levels, which is our normalized levels of 3% and not those levels of 3.2%, which you are picking up from the financial statement. So thank you for this question. This allowed us to articulate what has happened, and it gives everybody a clearer picture.

[Operator Instructions]

So we've got a question from Rahul from Citi. First question, Rahul, has already been answered. So we're going to go to your second question, which is you mentioned 15% guidance for loan and sukuk growth in 2025. Can you give us an idea will this be more sukuk-led or financing led, or equally driven for both sectors? And the third question from you is, can you give us an idea on the amount of write-backs that you're still expecting after a very strong period in second half 2024?

Rahul, thank you for your question. As Kashif mentioned, the first one, which was related to NIMs, and if there are any one-offs, has already been answered when I've answered Shabbir. The second question is around our loan guidance, and you specifically asked whether this would be led by sukuks or financing. I think we are very opportunistic. And depending on the strong pipeline we have in our wholesale bank, we are confident that we will be able to meet this guidance. Again, if you look at 2024, we've done well on our corporate lending side as well as on our sukuk side. but you don't see that reflect in our corporate book because of the early repayment. So I think as a strategy, we focus on all our businesses equally. We don't want to say that this will be led by sukuk or led by financing, but obviously, when you close your year and when you look at your pie charts, it might seem that we were only focusing on sukuk, but the response to that is no, we've also done a lot of wholesale banking and consumer banking, but the corporate book does not reflect that in the ending portfolio because of these repayments that we have witnessed in 2024. And I'm talking about repayments to the tune of AED 24 billion, because when you look at the gross underwriting of AED 102 billion across all our businesses and the normal repayments of around AED 51 billion, you then have to strip out the AED 24 billion of the early settlements, which were unaccounted for at the beginning of the year. And we then ended up with a net portfolio growth of about AED 27 billion, which is the 10% or 10.1% growth year-on-year. So overall, I'm trying to not only answer your question, but maybe subsequent questions that might be of similar nature, is we've always looked at growing all our businesses. Our strategy is very meticulous and it is cascaded down to all our businesses. So when I tell you that we would want to grow our loan book by 15%, it is a sum of part. And there is a part that is related to consumer banking. There's a part that is related to the corporate banking. There's a part that is also related to our cross-border book, which is what we park within our investment banking area. And of course, a part of that is also related to growth in our fixed income book. So I think it's the sum of parts. And we want to grow our overall loan growth by 15%. And I was picking it up in one of the research or analysis that has come out that we are anticipating to grow faster than the market. But in reality, DIB has always done that in terms of gross underwriting, if you see in the last 5, 6 years. Only in the last couple of years, that does not reflect correctly on our book, because we've seen some unusual early settlements. But if you strip those early settlements out and you look at gross underwriting, I think we are just continuing the momentum to see 2024, a gross underwriting of AED 102 billion, highest ever in the last decade or so for DIB. And if you just add back the early settlements that have happened, hypothetically speaking, if you add them back, you will reach to a 15% year-on-year number. So I think overall, what we are trying to allude to is that we are not trying to grow faster than the market or faster than the economy, we are just trying to keep up the pace with how we've been growing our balance sheet over the last decade or so. And we continue to do that in terms of gross underwriting. And then obviously, when there are early settlements that are contained, they would not dent and go off our portfolio, and you will see that reflect on our overall balance sheet. But overall, I think all our businesses are contributing to this loan growth that we have seen in 2024, and all our businesses will continue to contribute towards the loan growth guidance for 2025 as well. Your last question is on write-backs. Are we still expecting them? We've seen a very good recovery pattern for some of our key legacy accounts over the last 24-odd months, right? And I think this has been in the making. I've been alluding to this in the past. We were always being prudent from an asset quality perspective. We continued making provisions. We made sure that coverage ratios are very good on some of these accounts that we can very safely say that our prudence has paid back for us. And that is what we've seen in 2023 to some extent, but in 2024 to a large extent, which now means that the book that we hold in our nonperforming loans, numerator, that pretty much does not have a lot of recoveries that we can anticipate. There will still be a few every now and then, but not to the extent that we've seen in 2023, with the settlement of one account in 2023, as well as in 2024, these large accounts. And that's a good story, because one should look at asset quality in the right context. It also shows you the strong underwriting capabilities that we've had in the last few years. Some of these legacy accounts that we have now written back to our P&L have been there on our book for a very, very long time. And I think we have weathered that storm well. But we are now going into 2025 with the guidance that we have given in terms of ROEs and ROAs. I can tell you this is coming from core P&L. It's coming from your core book rather than enhancements through recoveries, which, of course, are also appreciated and welcome, because this is something that we had set aside in the years gone by. So we are only taking benefit of our prudence and our cautious approach. And that is why 2024 has been an exceptional year for us. So I think overall, in context, we've seen a good 2024, and we anticipate 2025 will also be equally strong.

[Operator Instructions]

So we've got some questions from Olga. Olga, the first and the fifth are answered. There are about 5 questions there. So we would run through the second, third and fourth. The second question relates to, can you please quantify the one-offs in cost of funds for the fourth quarter as our numbers in cost of funds went down by 32 bps in fourth quarter versus 9 months despite the strong growth in term deposits in fourth quarter. Third question is, were there any one-offs in fees? And if not, what was driving the fee income expansion in fourth quarter? And lastly, we noticed loan growth was driven by international operations in comparison to domestic operations. So what were the reasons for that?

Thank you for your question. When we look at the one-offs in cost of funds in fourth quarter, and you are specifically mentioning going down by 32 basis points. I think we have to look at this in context. If you recollect, I have always been saying and articulating this within our strategy that when interest rates start to go down, DIB will tend to benefit given that when we look at the mix of our liability book, 32% is in the form of current and savings accounts and -- 38% is in the form of current and savings accounts and 62% is in the form of fixed deposits or what we call term deposits, time deposits, wakalas. So as the rates have gone down in the fourth quarter specifically, some of the maturing deposits have been rolled over. And I say rolled over because you see our total deposits have not shrunk. They continue to be at the level, in fact, they've increased, right? So our deposits have been rolled over at lower rates than what they were before, and there is still a lot of ammunition in that tank as we go forward. We've also acquired and mobilized new deposits at lower rates than what they were sitting on our book. So that's point number two. Thirdly, we have also enhanced our current and savings accounts. So while you look at the total -- the percentages being 38% and not moving a lot, if you look at the absolute amounts, those have grown. Of course, those savings accounts come in at lower than fixed deposit costs. When you put all that together, this is a trend that I had alluded to in our previous calls. I said that as interest rates would start to go down, you will see DIB benefiting. Now of course, as we stand here today on the crossroad of where this interest rate cycle is, if interest rates go down, and we know they will go down, it's a matter of whether it's 1 or 2 rate cuts going forward, we will continue to benefit. And that would reflect in our cost of fund going forward. So I think this is something that you have only picked up Q4, but I want you to look at it in the broader context, something that we had mentioned, something that we have taken into account within our overall liability mix as well as our overall cost of funding strategy. Were there any one-offs in fees? I think we should again divide our fees into 2 components, right? Recurring fees, which is a reflection of our overall loan origination, overall business activity that we do, ancillary business, income from our services. So that is what we call our regular income. And then a small part of that overall line that you in total income also relates to the advantages of a very strong real estate market. So we've taken advantages by exiting certain assets that we had, and we made gains on that. And this is not something that has only happened in Q4. We've also articulated this has been a part of our strategy in 2024. And last but not least, let's also not forget, we've got these subsidiaries and associates, right, where they also contribute to our fee income, and those have come in strong as well, because the macroeconomic environment is great. So just like we are doing good business, everybody else is also doing good business. So all of that put together. So I wouldn't just use a broad brush statement on that saying that there are one-offs or those one-offs in fees are significant. There are one-offs, but we are very confident that on our recurring fee income business, we are pretty much safe for 2025. And then you also asked a question on loan growth, which was driven by international operations, whilst domestic financing went down. I think, again, we need to take a step back. Sometimes numbers don't give you the accurate story, right? I've mentioned to you AED 102 billion of gross underwriting. Now that is not coming from international operations. And by international operations, I think you're not referring to our international presence in different geographies, you're referring to our cross-border book, which is a part of our wholesale book, right? It sits in our investment banking business. But in the broader scheme of things, when we say wholesale book, it means corporate bank, investment bank as well as our treasury book. So when we look at our wholesale banking book or our cross-border book, that has grown. But so has our corporate domestic banking book grown also in 2024. Now you don't see that reflected in the loans. It's because of these repayments that we have witnessed, not just in 2024 and 2023. And that's why I've spent some time in answering a few questions that are similar in nature to kind of give context to people around our fee income, around our net interest margin as well as around our loan growth, because our loan growth is a composite of many businesses and all these businesses, and I think we saw that on one of the slides where we saw the bar graphs across all our businesses were going up, and that was on Slide 11, where we saw all our businesses go up net of all repayments. So it's not only coming from our cross-border book, but also from our domestic book within the UAE.

[Operator Instructions]

So a few questions now from Janany. We will take a couple of questions from you, Janany. As there are many other questions that have come up, so we'll hopefully answer your other ones as well. The first question is on GRE loans, they grew in quarter 4. Can we take this trend to continue into 2025 and support higher growth guidance? And key sectors that you expect to drive growth? And finally, again, on the payout, and what was the reason behind the current EPS payout?

Thank you, Janany. Your question 1 and 2 have already been answered. If there are any follow-ups on that, you can please reach out. But on question 3, I'm trying to summarize as many questions as I can to give an answer that would probably also respond to the other queries. GRE loans grew in Q4. Can we take this trend to continue in 2025? I think the one trend that you should take from DIB in 2025 is loan growth across all our key businesses. I don't want to single out the GRE, because by GRE, in this case, you may not only mean GRE in the domestic within the UAE, but also GREs within our cross-border books, which is what has happened in Q4. But then if you go back in Q3 and Q2, we've seen strong growth within our domestic book in the UAE, right? So if you look at a full -- you don't look at just 1 quarter, but you look at what has happened in the whole of 2024, that's a trend that we are taking forward in 2025. Of course, the direction of travel is great. Q4, we've seen some great numbers, pretty much predominantly on the cross-border side. And on the cross-border side, it has been predominantly sovereign and GRE. But when you look at what happened in Q1, what happened in Q2 and what happened in Q3, you can see that our gross underwriting on the corporate bank also increased, and that was all domestic within the UAE, and also increased in the cross-border book. Let's also not forget what we do on the consumer banking side, because that portfolio has grown by double digits. So that also gives us comfort. It allows us to diversify our risk and our portfolio buildup. So our loan book continues to be very robust now. And when we put all our businesses together, by that, I mean our consumer banking business, our corporate banking business, our investment banking business/our cross-border book and our treasury/fixed income book, you can definitely take this trend that you will see more of the same. It will be a mix of sovereign, quasi sovereign, GRE, large corporates, SME as well as individuals across 2025. Your question on payout decline in 2024. I think the way you're calculating this is you're calculating it on net profit, because, obviously, net profit is AED 9 billion. And when you look at the payout is of AED 3.2 billion, you're working it out on AED 9 billion. You need to work it out on adjusted profit, which looks at net profit after tax, after AT1 coupons, after zakat. So when you look at that and you take that as the denominator, you can see that our dividend payout ratio is almost the same, right, which is very close to 50%. I think if my memory serves me right, it was 50.6% in 2024, and it's close to about 49% in -- 50.6% in 2023 and about close to 49% in 2024.

[Operator Instructions]

We've got a few questions from Chiro from SICO. We will take just the last question, Chiro, as the others have already more or less been answered. So the last one is, it is quite evident that you are focusing primarily on public sector loans. Would it have any adverse effect on your NIMs?

Chiro, thank you for your question. It also allows me to cover some broad brush on what we focus on. Allow me to say that we don't focus on public sector loans only, right? I have, at length, explained our outlook for the year and where is that contribution going to come from? It's going to come from all businesses, right? If you look at how our consumer banking business has grown, that is diversified across individuals as well as a bit of SME and what we call business banking. Then you look at our fixed income book, that is growing. That is also contributing to our growth of 10% this year, but it will also contribute to our guidance of 15% next year. That's pretty much the kind of issuances that we see, sovereigns, quasi sovereigns, certain corporates, and the likes of those names. But when you then look at the way our corporate book grows, both domestically as well as cross-border, it's not only about public sector, right? There are a lot of private sector loans. So for example, when you look at what happened in Q2 within the UAE, we led the largest syndicate for a private sector education provider. That was a landmark transaction in itself, and that was not public sector. We've done similar transactions in the past as well. So for us, our loan growth is across all our businesses, not just public sector. We do a lot of private sector as well. We do a lot of middle markets. We focus on our consumer book also. So I think whilst we have focused on public sector GRE, quasi GRE, sovereigns, quasi sovereigns, even in 2024, you see we've maintained our net interest margin. I think the net interest margin is a function of what businesses we focus on, what sectors within those businesses we focus on, and then how we also manage the other side of our balance sheet, which is our liability book. So I think it needs to be looked at in proper context. And one should be happy that despite the challenges that we faced within the operating environment, and when I say challenges, there's nothing but I talk about competition, we have maintained our net interest margin, and that's exactly what we will do going forward. Ladies and gentlemen, allow me to kind of summarize this call by using the next few minutes to give you key messages. I know since the results have been better than expectations, we see a lot of questions that are pouring in. That's why I've spent time on answering certain key aspects of the questions, because it gives people an understanding of that. It may not just only answer your specific question, but it gives you a context of the larger strategy for the bank. And hence, we are reaching towards the end of this call. But let me very quickly summarize what I've been saying and articulating in the last 1 hour or so. Needless to say, we've witnessed a fantastic 2024. And I think this has been one of the best years for Dubai Islamic Bank in terms of 3 aspects. One in terms of balance sheet growth. Of course, we've seen this kind of balance sheet growth in the past as well for DIB. But this is slightly different because this balance sheet growth is supported by exceptional gross underwriting that we've seen, higher than any of the years gone by, AED 102 billion of gross underwriting. Why do I keep emphasizing gross underwriting on some of my calls, recent calls as well, is because if we continue maintaining this momentum quarter-on-quarter, year-on-year, and then if we arrest the early repayments that we've witnessed in the last couple of years, the net result would be the net growth, which would be higher than -- obviously, some of you have mentioned that, higher than competition, but definitely better than what DIB has done in the last couple of years, right? And that is exactly what we are anticipating for 2025. There is a lot of tailwind behind us in terms of pipeline. We want to continue translating that pipeline into business, which is what we've done in Q2, in Q3 and in Q4 of 2024, and that's exactly what we are anticipating to do in 2025. So the first aspect of this wonderful 2024 has been growth across our key businesses. Our balance sheet is more robust. It is very well diversified, and we've seen record numbers in terms of gross underwriting. And we are only taking that tailwind behind us. We are taking that into 2025. And hence, we are optimistic on our 2025 guidance in terms of growth. The second good thing that we have seen in our 2024 results have been the strength of our P&L. Of course, our prudence has paid us. It has enhanced a couple of lines. But even if you keep that aside, our strong growth and our strong portfolio and our diversification of our portfolio across our businesses, because we don't only focus on, let's say, public sector loans, we also focus on private sector financing, we also focus on consumer banking, we also focus on our fixed income book, because it takes advantage of the high interest rate environment. So we are locking this for the long term. So when we put all of that together, our gross funded income or our net interest income over the long run continues to be seen as robust. We've seen that in 2024, and we'll continue to do that. Adding to that P&L growth, one key contributor will be our fee income. Our fee income business, we've seen good traction. It's a reflection of our -- it's a function of our gross underwriting, our loan origination, but also our ancillary business that we are seeing. And that only adds to our P&L. Of course, the other components of the P&L would be our normalized cost of risk, and that has been pretty steady, as well as our operational expenses. And you can see that we have probably one of the best cost-to-income ratios within the country. So all of that put together, there are no surprises in there, and it's a good story in terms of P&L. And obviously, the third aspect of 2024 has been asset quality. That said, whatever remains within our NPL is now something that is manageable. We've come down to the 400 basis point level of 4%. It's a book -- the remaining book is well covered in terms of cash as well as security coverage. So I think we've done wonderfully well in the asset quality. All of these things put together, we have witnessed a very strong 2024. Now as we go forward, our pipeline remains healthy. It will only add to the momentum that we've witnessed this far. Our key efficiency ratios in 2024 have exceeded expectations, and we have also given guidance for 2025, and one might say that this is in line with the expectation. So in summary, I end this call by saying that the bank has done exceptionally well across all metrics. And it is only expected for us to keep up this momentum in 2025. Of course, we'll get an opportunity to meet some of you face-to-face when we do our roadshows, deal or non-deal. But we'll continue this pattern and this rhythm, and we'll continue doing these webcasts every quarter. And hopefully, we will meet up or have a chat at least virtually. And you can only see that the bank continues to grow from strength to strength. 2024 has ended well for us, and we expect 2025 by putting our best foot forward. By that, thank you for listening in. If there is anything else that you can think of or there are questions, please get in touch with our IR team, and I'll be more than happy to answer anything that comes forward subsequently.

Thank you, doctor. And thanks, everyone, again for joining us on this call. All the questions that are unanswered, we'll try and get in touch with you. And as doctor mentioned, you can obviously get in touch with us for any other new questions. We look forward to seeing you again on the next webcast. Have a great year. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect your lines.