Dubai Islamic Bank P.J.S.C. ($DIB)

Ladies and gentlemen, welcome to the Dubai Islamic Bank's First Quarter 2026 Financial Results Earnings Call. [Operator Instructions] I now hand over to your host, Janany Vamadeva from Arqaam Capital.

Thank you, Alex. Good morning, 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 DIB's Q1 2026 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 Naveen Rajanala, the Head of Investor Relations. Without any further delay, I'll now turn the call over to the Head of Investor Relations, Naveen, over to you.

Janany, thank you. Good afternoon, everyone, and welcome to DIB's First Quarter 2026 Results Webcast. This webcast shall be led by Dr. Adnan Chilwan, Group CEO of DIB; and Mr. John Macedo, CFO of DIB. And before we start the presentation, can I again remind everyone to send in your questions to [email protected], and we'll address as many questions as possible in the Q&A session post our presentation. With that, let's kick off today's presentation. So I'm going to jump off then to Slide 4. So let me start by briefly touching upon the operating environment in the UAE. Now since February 28, conditions in the UAE have remained stable with very limited disruption to economic activity. The authorities have maintained a proactive stance, closely monitoring supply chains and price stability, while ensuring clear and timely communication. Now this has helped sustain both business and consumer confidence. From an infrastructure point of view, critical services, including energy, health care, transport and telecommunications, continued operating normally. In addition, flexible work arrangements across sectors and well-established digital government platforms supported business continuity and operational efficiency. Now taken together, all these factors have contributed to a stable and predictable operating environment despite ongoing regional developments. Now moving on to the next slide. Now this resilience that I touched upon is also reflected in the recent sovereign rating action. Moody's has reaffirmed UAE's sovereign rating of Aa2 with stable outlook. The rating continues to be supported by high income levels, substantial fiscal buffers and ongoing diversification across non-oil sectors. But most importantly, the stable outlook already incorporates the current regional context. So underscoring confidence in the UAE's ability to manage during periods of stress. Moving on to the banking sector. Now from a banking system perspective, the UAE remains well positioned. Central Bank of UAE introduced a comprehensive financial system resilience package, and it covers various aspects, including liquidity, capital, monitoring policy and support to the broader economy. And these measures were designed to ensure that the banking system retains both its strength as well as flexibility, enabling banks to continue supporting economic activity as required. Now overall, the framework reinforces confidence in the stability, resilience and the growth outlook of the UAE banking sector. And then moving on to the DIB's response. So against this backdrop, DIB has remained fully operational throughout the period and forward. The bank systems, branches, contact centers have continued to function without disruption, supported by strong digital capabilities and robust business continuity frameworks. Customer activity across businesses and segments has remained healthy, reflecting continued confidence in the franchise. The bank's capital and liquidity position remains sound, and these will be covered in greater detail by our group CEO in the next section. And with that, I'll hand over to Dr. Adnan. Dr. Adnan, over to you.

Thank you, Naveen. Good afternoon, everyone, and thank you for dialing in. I will run the presentation in the standard page turn format and then open the call for Q&A., and then wrap the call with the next last 5 minutes to summarize and keep the focus on key messages that we would be judging upon throughout this hour. My first slide is Slide 9. Now before we turn to our financial performance for the quarter, it is useful to briefly step back and frame the results in the context of the environment in which they were delivered. Of course, Naveen has touched upon certain aspects of that. But please allow me to delve into greater detail. The economy, like we've said, continue to demonstrate resilience and stability. Of course, supported by strong fiscal fundamentals and a robust regulatory framework. The economic momentum remains broad-based, while confidence across households and corporates continues to be underpinned by a stable operating backdrop. Now from a banking sector perspective, the system remains well capitalized and highly liquid. Balance sheet across the sector are resilient and asset quality continues to be well supported even as financial conditions evolve. Now it is within this environment of economic resilience and sector stability that our quarter 1 performance should be viewed. With that context in mind, let me walk you through a summary of our financial performance for the quarter, predominantly structured around 5 key pillars of the bank's scorecard. Firstly, from a growth perspective, we continue to gain market share during the quarter. I say that because total assets increased to AED 420 billion while net financing and Sukuk Investments grew to AED 364 billion, representing a 3% increase year-to-date. Secondly, the operating performance remains strong, with operating revenues growing by 13% year-on-year, and they stand at AED 3.5 billion. This 12% year-on-year growth in operating profit reflects not just revenue momentum, but also benefits of our highly efficient operating model, where disciplined cost control continues to enhance operating profitability. Thirdly, asset quality continues to strengthen as we move forward quarter-on-quarter, reflecting disciplined underwriting and portfolio management. The nonperforming financing ratio has declined further and stands at 2.5%, improving by 14 basis points year-to-date. Fourthly, the capital buffer strengthened further during the quarter with CET1 ratio increasing to 12.6% and capital adequacy ratio rising to 15.8%, and both of them are up by around 30 basis points. Lastly, liquidity remained strong, supported by stable access to funding. The bank maintained a balanced liquidity position with an LCR ratio of 121% and an NSFR ratio of 106%, underscoring the strength of our funding structure. Overall, the quarter reflects disciplined growth, resilient profitability, a strong balance sheet underpinned by improving asset quality, robust capital buffers and balanced liquidity. If we move on to Slide 10, that looks at our income statement, here, you can see that operating revenues grew by 13% year-on-year to stand at AED 3.5 billion, supported by a 5% increase in funded income and a 30% increase in nonfunded income. The bank continued to demonstrate strong cost discipline maintaining a low cost-to-income ratio of 28.2%, even as we continued to invest in technology and infrastructure to support future growth. On the same slide, you can also see impairment charges have increased to AED 420 million during the quarter. Now this includes a prudent decision to add ECL overlay in light of the current operating environment. Excluding this overlay, the underlying quarterly impairment run rate remains broadly in line with historical levels. So it's important to understand that this AED 420 million that has been charged to the P&L for the quarter includes a prudent ECL overlay. Now despite this, the bank has delivered a net profit before tax of AED 2.1 billion, with pretax return on tangible equity maintained at a healthy 21%. Moving on to Slide 11, where we look at a detailed look at the revenues. Here, you can see that funded income has remained stable during the quarter, growing by 5% year-on-year to be at AED 2.3 billion, supported by balance sheet growth as can be seen in the top left chart. Margin pressure from a declining rate environment, and it's a declining rate environment thus far, was mitigated by a reduction in cost of funds, resulting in broadly stable profit margins as seen in the top right chart. Nonfunded income continued to be supported by healthy fees, commissions and FX income alongside contributions from properties and associates reinforcing the diversification of the bank's revenue base. On Slide 12, if I look at operating expenses in greater detail. The bank continues to be among the most efficient banks in the region with a cost-to-income ratio of 28.2%. You can see the consistency of this efficiency in the top left chart where the cost-to-income ratio has stayed in the 28% area over the past 5 quarters. From a cost perspective, our focus remains firmly on discipline and scalability. This allows us to absorb ongoing investments in people, technology and digital infrastructure while keeping absolute cost growth tightly controlled. This disciplined approach to cost management continues to enhance operating leverage and reinforces the strength of our earnings profile, as seen in the 12% year-on-year growth in the bank's operating profit. Slide 13 looks at our balance sheet. What's encouraging is that even against a more challenging backdrop, we saw continued balance sheet growth reflecting the healthy underlying momentum across our key businesses. Net financing assets expanded by 3% year-to-date, and they stand at AED 271 billion, supported by more than AED 24 billion of gross new financing during the first quarter of 2026, and that comes across both our consumer as well as our wholesale businesses. The Sukuk Investments portfolio also continued to grow increasing by 3% year-to-date, and it stands at AED 93 billion, supported by over AED 5 billion of new Sukuk Investments during the quarter. Of course, it's a reflection of the capital markets. And since the first 2 months, we've seen some muted activity in the primary market within the capital market space. Overall, the net financing Sukuk Investments reached to AED 364 billion, reflecting disciplined balance sheet growth and continued business momentum. Slide 14 looks at our asset base. This slide gives a good sense of how the balance sheet is evolving on the asset side. When we look at financing, we saw strong growth with net financing assets up by 22% year-on-year and 3% year-to-date, while our Sukuk portfolio also continued to grow steadily, up by 11% year-on-year and 3% year-to-date. Importantly, this growth remains well diversified. Consumer financing makes up around 31% of the book. And our corporate exposures are spread across sectors with no concentration risks emerging from the portfolio. This balance and diversification across sectors and customer segments continue to support earnings resilience and help maintain the bank's asset quality as the balance sheet grows. Slide 15 looks at asset quality. We saw continued improvement across the key metrics during quarter 1 of 2026, and this is also the continuation that we have witnessed throughout 2025. The nonperforming financing ratio reduced further from year-end levels to 2.5% at the end of quarter 1, reflecting disciplined underwriting standards and the ongoing improvement in portfolio quality. Cost of risk for the quarter stood at 45 basis points, and I've already alluded to this. This includes a prudent ECL overlay taken proactively given the current operating environment. Excluding this overlay, impairment charges remain broadly in line with our normal quarterly run rate. The coverage levels also remained a clear strength. Cash coverage ratio strengthened further to 122%, improving by 200 basis points year-to-date, providing a strong buffer as the balance sheet continues to grow. Slide 16 looks at portfolio staging. Continuing the positive trend in the bank's asset quality, DIB's portfolio mix also continued to improve with Stage 1 exposure proportion increasing, while Stage 2 and Stage 3 exposure proportions declining further. Stage 1 exposures now account for 94.3% of the portfolio, while Stage 2 and Stage 3 combined are down to only 5.7% of the portfolio. ECL provision coverage continues to be stable. Now all these things taken together, these trends reinforce the strength and resilience of the bank's asset quality profile. Slide 17 looks at liquidity, but we remain in a strong balance position. Deposits have grown by 22% year-on-year to stand at AED 322 billion. During the first quarter of 2026, our CASA balances are up by 6% year-to-date, reflecting strong customer confidence and engagement. Customer deposits make up 77% of our funding base, which gives us a very stable and well-diversified platform. Liquidity ratios, like I've mentioned before, remain comfortable above regulatory requirements with the LCR ratio standing at 121% and NSFR ratio standing at 106%. Slide 18, our capital position strengthened further during the quarter, and this is driven by strong internal capital generation, which is clearly visible in the top 2 charts on this slide. Both the CET1 ratio and the CAR ratio have increased by around 30 basis points year-to-date. This leaves us in a very strong position with healthy capital buffers that support future growth throughout the year while also providing resilience and flexibility in the current operating environment. We move on very quickly to look at our businesses. On Slide 20 is our consumer banking franchise. The business continued to show momentum in Q1 2026, and we carry forward the momentum that we have seen in the entire 2025. So that we've also witnessed in the first quarter of 2026. This has supported steady asset growth, resilient margins and a continued buildup of high-quality liabilities or deposits. The revenues for the quarter reached around AED 1.1 billion, driven by healthy growth in funded income and stable fee income, reflecting disciplined pricing and consistent asset yields. On the asset side within consumer banking, the consumer financing portfolio grew by 6% year-to-date to stand at AED 83 billion, supported by strong origination momentum with gross new financing of around AED 11 billion during the quarter. And that has been the trend that I'll also cover in some of our other businesses with the momentum of gross underwriting has been very strong in the first quarter of 2026. Growth remains well diversified across our core products within the consumer bank with whole finance, personal finance, auto finance and cars all contributing as shown in the top right chart. On funding, the consumer deposits increased to AED 106 billion, with further strengthening in CASA balances, supporting a more efficient funding mix and continued optimization of our cost of funds. This was also supported by our continued franchise expansion with more than 77,000 new customers onboarded during the quarter, taking our total customer base within the UAE to stand at 1.7 million customers. Slide 21 looks at our corporate banking business. Looking at our local as well as cross-border corporate business, momentum has remained steady and well balanced throughout this quarter. Again, we are carrying the momentum that we saw in the last 2 quarters of 2025, and that has also been witnessed in the first quarter of 2026. Net financing assets increased by 2% year-to-date to stand at AED 188 billion, supported by over AED 13 billion of new financing, reflecting continued engagement with our corporate clients. Importantly, growth continues to be well spread across key sectors with no concentration risks emerging. Now within our corporate business, the revenue performance was particularly strong with a 23% year-on-year increase to stand at AED 904 million, supported by stable yields and good traction across funded and nonfunded income. From a funding perspective, corporate deposits rose to AED 213 billion with CASA balances up by 6% year-to-date to stand at AED 58 billion, supporting a stable and efficient funding profile. A quick look at our last business, which is Treasury. Here, the business has delivered a stable performance during the quarter. The Sukuk Investments portfolio grew by 3% year-to-date to stand at AED 93 billion, supported by continued investment activity, including more than AED 5 billion of new Sukuk Investments during the first quarter of 2026. This has predominantly been in the first 2 months of the year. The portfolio remains largely invested in high-quality government and financial institution papers, reflecting our conservative and disciplined investment approach. On the revenue side, treasury revenues increased by 5% year-on-year to stand at AED 645 million, with yields remaining healthy at around 4.7%, supporting overall income resilience. Quickly moving on to our digital aspirations on Slide 23. Our digital adoption continues to be a key enabler of growth and efficiency across the bank. Digital registered users have increased by 16% year-on-year to approximately 1.77 million customers with 98% of our customer base now using digital channels and over 97% of the transactions processed digitally. So pretty much our entire customer base has been onboarded across our digital channels. Digital channels have also played a central role in customer acquisition with 84% of our new customers onboarded digitally during the quarter. So the 77,000 customers that I alluded to in the first quarter of 2026, close to around 84% of those have been onboarded digitally. So that's a good sign of digital strategy working across the various quarters that we've seen throughout the last year. We continue to enhance customer experience through automation and platform expansion, including the digitalization of 46 branch services and which now serves close to around 330,000 customers. These initiatives reflect our continued investment in scalable digital infrastructure as well as data-driven capabilities. Slide 24 is the sustainability. Given where we are in the year, we felt it would be more useful to step back and highlight our broader sustainability progress rather than focus on incremental quarterly movement. Our propel sustainable finance has reached approximately AED 19.5 billion, representing over 100% year-on-year growth, while DIB continued to play a leading role in the sustainable Sukuk market through both specification as well as balance sheet participation. Alongside financing, we continue to make progress across environmental efficiency, social inclusion including improvements in energy efficiency, training, diversity and ESG ratings. Now these outcomes reinforce sustainability as an integral part of how the bank operates and how we position ourselves for a longer-term value creation. Slide 26 looks at our guidance vis-a-vis the first quarter results. So on this slide, you can look at 7 key metrics, and we have given this guidance to the market at the beginning of the year, and we are measuring ourselves against this guidance on -- at the end of this quarter. And you can see that across all but one metric, which is very close to the year-end guidance, we are on track to meet the full year guidance, be it the net financing and Sukuk growth, the net profit margin, cost-to-income ratio, nonperforming financing, total coverage or, for that matter, return on tangible equity or, last but not least, return on assets. So when we look at all the metrics and the performance of the bank in the first quarter, it's only fair to highlight that the bank has done well across all its metrics, and we carry a good momentum from the first quarter into the remaining part of the year as well. I pause here, and we'll skim to some questions that we can see on screen, and we'll come back after a momentary pause to answer all your questions.

Alex, you can take over the slides.

[Operator Instructions]

We'll start with the questions from Rahul, Citibank. The first question he's asking is on the details of the overlays as a part of cost of risk. He's asking us on quantification of the overlay and if there are any further expected overlays in the next few quarters. Next is on the direct exposure to hospitality, aviation and hotel industry and any indirect exposure to employees in the industry. The third question is on the interest rate assumption on -- for the NIM guidance. How many rate cuts? And if interest rates do not go down, is it fair to expect upside risk. I'll hand over to our group CEO to answer.

Thank you. Thank you, Naveen. Wonderful questions from Rahul. Thank you, Rahul. And that just sets context. And when we've been skimming through questions, we realized that most of our colleagues today on the call have a similar query. So it allows me to probably just address all of those queries at once. Overlay as a part of cost of risk in Q1 2026. Now I've already mentioned that our cost of risk for the quarter stood at around 45 basis points, which included a prudent ECL overlay taken proactively, let me say, given the current operating environment. Now if I have to quantify that, it is close to about AED 186 million. That's the amount of overlay that we've taken. And I think your leading question is, do you also expect to take further overlays in the next few quarters? Of course, you would appreciate that when you want to plan and overlay, you look at -- you extrapolate that for the entire 12 months. So we have a decent idea of -- should the situation not improve, and we see the macroeconomic indicators are changing to the worst. And thus, the weightages that every bank should be accounting for. And by weightages, I mean the base case, the optimistic case as well as the pessimistic weightages. Should those wightages change, then there would be a number that would be charged to the P&L on an annualized basis. What we've done is we've taken a portion of that and front-loaded it. So will there be any more ECL overlays? Of course, there would be if the situation does not improve. And definitely, there will be more ECL overlays that would be charged for each quarter. Having said that, also, let's understand that should the situation improve, then the ECL overlay would be then coming back within the P&L. So for this quarter, we've taken circa close to around AED 200 million. And that's why the cost of risk for the quarter stands at around 45 basis points. But if you actually strip that ECL prudent overlay out, then we are at normalized cost of risk levels that you've seen in the last so many quarters. Your second question was around direct exposure to hospitality, aviation and hotels. On Slide 21, within the pack, we have broken down our exposure by sectors. You can see that aviation, which is a very strong sector for us constitutes about 8% of our book. Again, this is a sector that has done well in the past, very resilient sector. And even through the geopolitical crisis, we have seen that this has been unaffected, and that's predominantly because each of these names on our book are strong, has strong balance sheet, has adequate cash flows and we have seen no change in the repayment profile. So the aviation sector as of now is not actually challenged and hence, their repayment profile with us has not been recast. The hospitality sector, which is going through a momentary challenge, for us, that exposure is very insignificant. It is less than 1% of our total balance sheet or total exposure on our financing side. So -- and even that sector has -- we have not seen our clients in that sector approach the bank for any recasting of repayment schedule. So we are definitely monitoring these sectors and we continue to do so. But as of now, I can assure you that, one, the hospitality sector is very insignificant for us and the aviation sector, we have seen no early warning signs. Your third question is around interest rate assumptions for our NIM guidance. Our NIM guidance for the year, at the beginning of the year was at around 2.5%. We had looked at 2 interest rate cuts. The first quarter has already gone by. We've got 3 quarters to go by. You are talking about expected upside risk. Too early for us to comment on that. As you will appreciate, let's look at how the Fed reacts in this quarter. If there is an interest rate hike, there is a Fed meeting and that has -- probably the consensus is that the rates might be held. So if that happens, then we have to wait for the next Fed, and that would be towards the end of quarter 2. So let's just wait for the first half and if we have to revise our NIM guidance, we do so. But as of now, we are holding on to our NIM guidance of 2.5%, and we see that we can manage that by, one, maintaining our asset yields and the pickup rate as well as repricing our cost of deposits downwards. We've done that well. We've enhanced our CASA mix. We have let go of some expensive deposits. You can see that reflected in our LCR ratio also, right? So all of those point towards us managing our cost of funding. So let's just wait for a couple of Fed meetings, which would take us probably towards the end of quarter 2 assets.

[Operator Instructions]

Then we move on to questions from Janany, Arqaam Capital. She has laid out 5 questions. The first one is to give color on April trends in terms of lending and deposits deferral request. The second is on the quantification of overlay, which doctor has already addressed. The third question is on the strong growth momentum in Retail segment and what's driving that. The fourth question is on the margin guidance of 2.3% versus 2.5% in Q1. Again, doctor has answered that in the previous question. And lastly, color on nonpayment of AT1 coupon in this quarter.

Thank you, Janany. I think I'll take the last question because that's very easy to answer. It's not nonpayment of the Tier 1 coupon. Actually, Janany, the coupon is not due. It is only due in the next quarter. So it's not a nonpayment of any coupon in this quarter. Anyway, so that just clarifies that question. Your first question on color of April trends and have we seen so far in terms of lending demand, deferral request. So basically, like every quarter I mentioned about the next quarters and the strong pipeline that we have in each of these quarters. So Q2 for us looks strong in terms of pipeline, and that is across all our key business segments. You have touched upon the retail segment, and I will give you some color on that. But when we look at our -- all our businesses, be it the consumer bank, be it the corporate bank, we have a very strong pipeline, and we will continue to do so, whilst underwriting credit prudently because as you would appreciate, liquidity is extremely important at this stage. Q1 has ended well for DIB, both across our asset book buildup as well as our live mobilization exercises. So I think we've done that well. I see Q2 to be no different. There are levers in our hand that we can always maneuver to fasten the pace if required or to also slow down should there be any economic headwinds. Right now, we have a very strong pipeline across our key businesses, and we are very confident that if this economic backdrop continues to improve, then definitely we got the required ammunition to end Q2 also on a very strong note. When we talk about the retail segment and it has gained momentum, you can also see that if you look at the last 3 or 4 quarters of the year gone by, retail banking has continued to grow from strength to strength, and that's just in line with the strategy that we have put for ourselves across our consumer franchise. We realize that we have to diversify our risk across our balance sheet and consumer banking always allows you to do that. The risk is spread across a large number of customers. The consumer franchise also consumes lesser capital, it gives us better yields. Our cost of funding on our consumer banking franchise is good. So all those things put together, we had articulated a very focused consumer banking strategy for 2025. And that is the same strategy that we are building upon for 2026 also. Where is this consumer banking growth coming from? Now when you look at, for example, the liability side of our book, more payroll accounts coming in, more new-to-bank customers being onboarded both digitally as well as across our network. We are looking at our wealth management segment actually doing very well. So that's on the liability side of our consumer banking franchise. On the asset side, the same projects that we've been speaking about, right? We are market leaders when it comes to home finance and auto finance. We do very well across our personal finance products also. Our cards products require a little bit more focus. So we continue to do what exactly we have planned for ourselves in 2025, and we are carrying that momentum even in 2026. And first quarter of 2026, we have seen some very good results across our retail banking franchise. I've already covered the margin guidance and -- which is for the year stands at 2.3%. Now this, you would appreciate and recall includes 2 rate cuts that we had anticipated when we gave the guidance to the market. I mentioned that briefly on the previous question that was asked by Rahul that should the interest rate environment change and if there are interest rate hikes, then we will have to readjust our margins accordingly. But for now, we are holding this margin guidance at around 2.3%. And we will probably look at this maybe closer to the end of Q2 2026.

[Operator Instructions]

We have a question from Chiro Ghosh, SICO Bank. A couple of his questions are already answered, so we will cover. The first question is what is included in the other income in this quarter? And has the items remain same as last quarter? Why were they high then, too?

Yes. Thank you, Chiro. I think a few of your colleagues have posed this question, and I think it's important that I just give color. You see across many quarters consistently, this is an item that already has a few additions and deletions. So for example, what would we include in other income. Some of our investments, when they do well, that would necessitate a reclassification. In this quarter, particularly, we had a very legacy written-off financing, and there was a recovery against that. So that has been added in this line. So there is no consistent items that you will see from quarter-to-quarter. There are some new things that happened during the quarter. But historically, you will see that we are pretty much consistent in terms of AED 300 million, AED 350-odd million that we keep seeing in this line. Again, there is nothing that is out of the ordinary like for this quarter. A portion of that other income is coming from some recoveries that was for written-off account. And because the account was written off, you'll appreciate that the only line that, that recovery can be made is in other income. And then, of course, a smaller amount of an investment that we had on our books for a very long time, we reclassified that, and hence, the P&L has benefited from that reclassification. But hopefully, this would give color to similar questions that some of your other colleagues have asked. But let's also focus on when you look at the absolute amount of this other income line, it is not significant when compared to our fee income or our income from subsidiaries and associates or our income from our core banking businesses, which is more significant and that continues to grow quarter-on-quarter in the right direction.

The next question that we're looking at is from [ Fatema, ] SICO Bank. Her first question is, the loan growth was solid with higher exposure to utilities and FIs, and her question is to give a little bit of color on the lending strategy going forward.

Thank you, [ Fatema, ] for your question. I think we have witnessed good growth within the first quarter of 2026, and that is also at the back of the momentum that we saw in Q3 2025 and in Q4 2025. You would appreciate, [ Fatema, ] that we have to build a strong pipeline. So whatever we see translating to numbers in a particular quarter is as a result and combination of the efforts that we put in the prior quarters. So towards the end of 2025, we have built a strong momentum and a strong pipeline for the first quarter. And that pipeline is strong enough for us to also see some names materializing in Q2 of 2026. So that gives you some color on our lending strategy. Our lending strategy is no different from what I had mentioned in the past. We are going to focus on our user banking franchise as well as our corporate banking franchise. And when I think corporate banking franchise, you will see a mix of local corporates within the UAE as well as some of our regional names cross-border. And within that corporate franchise, we would look at typically utilities, financial institutions, energy, automotive business, partly aviation, telecom, health care education. So a lot of that pie is colorful. And of course, on the consumer banking side, we will look at each of our products, be it home finance business, personal finance business. And some of these businesses can be cyclical. The auto finance business in Q1 can be a little less than in Q2. The personal finance business in Q2 can be a little more than Q1 and so on. So I think our strategy is long term, and that long-term strategy is articulated at the beginning of period. And in 2026, if you recollect the first call that I had while discussing the 2025 results, we chopped out a very clear strategy for 2026. And I'm happy to say that Q1 is just the result of those efforts that we have put in the last couple of quarters, and we will continue to do so even in the next 3 quarters of 2026. We probably have time for one more question, Naveen. And if you can just skim through the questions, skim through the questions and then let's try and take some unique ones, and then I want the last 5 minutes of the hour to summarize the call.

Next question is coming from [ Murad Ansari, GTN. ] A lot of his questions have been answered. I'll pose two of the questions that are outstanding. eleven is current deposit growth was strong in Q1. Was that retail or corporate driven? His next question is, there has been a decline in Stage 2 and Stage 3 loans and he wants an explanation on the drivers of this movement.

Thank you, Murad, for your question, and they are different. So I think it gives us an opportunity to answer them. The reported growth, like you rightly pointed out, has been strong. Happy to see that the deposit growth has come from both our retail franchise as well as our corporate franchise. Retail franchise because I mentioned that we have also managed to onboard new customers, they come with liability mix and they become long-term customers for us. So they add to our retail liabilities, also take the existing retail customers that we have, and you will appreciate that we have a very, very captive base of about 1.7 million customers. We've seen that in the last quarter, they have increased their balances with the bank. The bank also -- the consumer banking team has focused campaigns that are driving the liability growth across the consumer banking franchise. So definitely, the retail banking book on the liability side has grown. Our corporate banking teams have also worked very hard to mobilize new to bank customers and also enhance the existing liability base that we have with their existing corporate customers. So we have penetrated deeper into our corporate relationships. We have seen that in the liabilities, both on the retail side and the corporate side, our CASA mix has improved. So we have managed to bring in operating accounts on the corporate side, payroll account on the retail side. So all in all, I think we had a strong deposit growth in the first quarter, and we are confident that we can also demonstrate that in the subsequent quarters. Your last question is on asset quality. I mean the decline in Stage 2 and Stage 3 loans are correctly observed by you. The drivers are quite simple. We've always posted of our strong asset quality. It's not only reflected in the nonperforming loans, which are at the lows of 2.5%. We started the year at 2.65%. So there have been about 15 basis points of reduction in our nonperforming loans, and they stand at 2.5%. And against those nonperforming loans also very quickly, it's important to understand the coverage ratios. They stand healthy at 122% when we look at cash coverage, and more than 160% when we look at total collateral coverage. But importantly, Stage 2 and Stage 3 have declined because on Stage 3, we see some recovery. So that has reduced the numerator. On Stage 2, we have seen repayments as well as movement from Stage 2 to Stage 1. So all in all, I think we are very happy with our asset quality, and we feel that we will end the year with very strong asset quality. Like I mentioned, it brings us to the end of this call. We have 5 minutes. And I quickly want to recap this call because it's extremely important for me to use the last 5 minutes judiciously to summarize and keep the focus of this call on 5 key messages. One is that our core business engine continues to grow in line with the strategy. This is a strategy that we've articulated in the last few years, but more importantly at the beginning of this year. So the growth is in line with that strategy across all our business segments, while maintaining profitability and quality. So I think we have not compromised profitability and we've not compromise quality. And both of these numbers can be validated in the form of our portfolio increasing, the quality of the portfolio increasing, the asset quality being very strong, nonperforming financing coming down and also revenues going up in the right direction. Secondly, the strong growth for the year or the strong start for the year can be validated through new underwriting across all our businesses, which has reached around AED 29 billion, and this is higher when compared to the first quarter of 2025. And this results in the net portfolio increase of around AED 11 billion. So when you look at our core business engine continuing to perform, which I have mentioned in the first call -- sorry, in the first point, the second point focuses on the gross underwriting and the new underwriting across all our business segments. So that shows you that we've had a very good start to the first quarter. Thirdly, this has resulted in a 14% year-on-year increase in gross revenues and a 12% year-on-year increase in the operating profit. So not just that we are capturing market share and growing our balance sheet across all our business segments, across all our sectors and making the pie colorful and bringing in good new-to-bank customers across our consumer franchise or across our corporate franchise, not just that, it is also resulting in very good underwriting, and that all adds up to the double-digit year-on-year increase in gross revenues as well as operating profits. Asset quality then continues to be robust with nonperforming financing ratio standing at the lowest at 2.5%, and the additional prudence that we have demonstrated by the ECL overlay, which I have now quantified to AED 186 million in quarter 1 is to only manage economic headwinds, if any. And then the last point is that we are now on track to carry this positive momentum into the second quarter of 2025. And all of this is in line with the metrics that we had guided to the market at the beginning of 2026. This brings me to the end of the hour. Happy to take more questions offline. Our Investor Relations team will give you more color, if required. And more importantly, will also clarify to some of you who have raised the questions on the nonpayment of our Tier 1 coupon, which I said that the only Tier 1 perpetual that is outstanding, the coupon for that is due in second quarter. I think what you probably are relating to because you have, in the last 5 years, seen us making a coupon payment, but that was for an instrument that we've already called in November 2025. So that does not stand outstanding. So probably maybe there's an oversight in -- from some of our colleagues who feel that there was a coupon payment that has not been made, but that coupon payment was for an instrument that has been called in November 2025. So that is not outstanding anymore. The only instrument that is outstanding today is -- the coupon payment for that is due in the second quarter. With that, I come to the end of the call. The teams can be reached. And if there is anything that requires my attention, I'll be more than happy to get on the call with you or might meet you in one of the non-deal road shows that we probably have planned for the remaining part of the year. Thank you, and God bless.

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