National Bank of Bahrain B.S.C. (NBB) Earnings Call Transcript & Summary

[Foreign Language] Good afternoon, NBB Group shareholders and stakeholders, and welcome to our investors meeting that is going to demonstrate our financial and nonfinancial results and accomplishments for the second quarter of the year 2026 and the first half of the year itself. We are delighted to conduct this meeting after we had recently published the group's financial results in addition to the required documents that were uploaded to the bank in bank and Bahrain Bourse's websites and representing NBB Group in this meeting as speakers are the group Chief Executive Officer, Mr. Usman Ahmed, the Group Chief Financial Officer, Mr. Mohsin Rahim; the Group Chief Strategy and Sustainability Officer, Zaina Zayani. My name is Hisham Alfateh, Chief Corporate Communications Officer. I will be the meeting's moderator, and I would like to make the following points before we start. This meeting will be conducted in English language. The presentation of this meeting will be published on [indiscernible] website on our website. All questions are welcome down require the question section or chart and the same also with all the comments that are definitely most woken but they will also be a client to be written. Without further ado, we will now start the Investors Meeting with NBB's Group Chief Executive Officer, Mr. Usman Ahmed. Sir the floor is yours.

Thank you, Hisham. Good afternoon. A very warm welcome to all our shareholders for the second quarter 2026 Investor presentation and update. As we are entering into the last phase of our 3-year strategy cycle, we thought it would be very opportune to give you an update and a recap of how we have performed so far against our 3 years digital objectives. So starting with the vision that we refreshed when we entered into this 3-year strategy cycle, energy lives by contributing to economic development. I must emphasize that this part of our vision has largely remained unchanged over the decades. We have always been focused on ensuring that we are contributing to economic development and doing so by engaging lives of both the institutional as well as the noninstitutional clients that we deal with. But I think the more important part here is that we have updated our focus on seamless financial solutions and sustainable outcomes, perhaps through the acceleration that we've had on the investment in [ technogophy ] over the decades. So I think this part has very much been our focus over the last 3 years as well, on ensuring that we are truly delivering sustainable outcomes as well as technology-based financial solutions that enhance the relationship with the connection that we've enjoyed with our customers over the decades. When we look at our growth over the last 3 years, it has largely been evenly distributed across our 5 key growth pillars. What those are, are essentially our focus on individual customers, primarily in Bahrain, through our retail strategic accounts, at private banking franchises. These provide seamless banking as well as wealth management solutions to our individual clients. Here, we deal with practically all segments of society starting from the consumer segment to the as affluent as well as high net worth and our Bahrain net worth segments. In this particular segment, we've seen some key highlights I'll share with you of growth being that our focus has been on very much a CASA growth. And CASA growth is not just a product-based strategy. It's really a relationship-led strategy where we are focusing on being more relevant to our customers on a day-to-day basis. And the outcome of that is growth in our operating account balances from this segment. We are the mortgage provider of choice in the kingdom. Our mortgage market share today stands at 18%. The CASA growth that I referred to earlier on stands at 78% on a year-over-year basis. And our structured deposits revenue, which is essentially through our best management platform that was launched about 1.5 years ago, has grown by 65% over the last 1 year. I think moving on to the second pillar of growth. When we look at our corporate banking business, and here, I'm specifically referring to our Bahrain-based corporate banking business, we've seen a year-over-year loan growth of 28%, deposit growth of 7% with an overall business loans market share of 12% in -- as of the second quarter. Very importantly, our overseas franchises, Saudi Arabia, Kingdom of Saudi Arabia and UAE continue to be the drivers of accelerated growth. We are rapidly scaling in both of these markets. As you can see in Saudi Arabia, our commission income has grown by 84% on a year-over-year basis. Our loan growth has been 60%, and that's resulted in an overall operating income growth of 9%. In the UAE business, our deposits have grown by 39%, our loans have grown by 13%, and our net income is up 40% on a year-over-year basis. All of this has not just been delivered in -- on a sort of sporadic quarter-over-quarter basis. It's actually reflecting fundamental growth in our overseas businesses as the investments that we made in technology continue to start to deal eccentric results. I think this probably also answer some of the questions and very insightful question, I must say that we received from our shareholders ahead of the call. As you can see, the deposit growth is fairly evenly balanced, different business clients across different client segments. And that is also the case for BISP, our flagship Islamic banking business and subsidiary where we've seen corporate deposit growth of 24% and overall normalized net income growth of 88% in our core business, when we exclude the one-off large gain that we had from the sale of the investment property reported last year. Overall net financing income growth in BISP has also been double-digit at 10%. The ability to deliver this kind of growth across all 5 pillars and strategic priority areas for NBB as being the common foundation that we built on strengthened risk appliance, controls and governance as well as the best-in-class talent that we have employed and that we have nurtured over the years. We are extremely proud of our team members across all centers were increasingly executing with purpose, with pace, with clarity and most importantly, with an innovation mindset. I think what we've really shown here is some highlights that demonstrate how we are advancing against our strategic objectives as well as our overall long-term vision. Looking ahead, we are very much focused on accelerating our share of wallet growth, continuing to improve our client experience end-to-end. We are on the path of continuous improvement in this respect, in particular, reinforcing profitability and net interest margin resilience and sharpening commercial intensity. So I think before I move on from this slide, what I really wanted to emphasize is that the results that we've seen that we've announced for the second quarter of 2026 are record results. There are results that demonstrate that our strategy is working. It's actually the highest second quarter in history for NBB. It reflects a 16% growth on a year-over-year basis. But it's not 1 quarter's effort. It's really a sustained effort over the period that I've given you the overview for over the last 3 years, in particular. And our efforts are not to be growing in any particular product or any particular geography just for the sake of delivering better financial results. Our efforts are truly directed at building a sustainable franchise in all the key 5 areas of growth that I mentioned so that the financial results are just essentially an outcome of truly having enhanced connection and relationship with our customers, which are, of course, demonstrating that they are increasingly moving towards NBB as the growth rates that you should see here are largely faster than the growth of the individual market and the segments that we power. I think moving on to the next slide, NBB being a true national champion institution in the Kingdom of Bahrain as an overall track record on growth and [indiscernible] growth and deposits. That is, again, both impressive in terms of the growth that we've registered that deposits being 9% compounded [indiscernible] growth rate since 2023 and deposits -- sorry, growth being at 8%. But the important thing here is that this is also balanced growth. It's not on 1 side of the balance sheet. It allows our balance sheet to be resilient. It allows us to fund ourselves through the deposits that we are able to generate. And I think that is a very important element of why our vessel port for distribution strategy is so important and so resilient at the same time. You see that we have the last branch network in the Kingdom. We have the largest A network in the Kingdom, but at the same time, we are continuing to invest in technology and digitally-driven transactions are growing at far faster based in the overall growth of the market. I'll demonstrate that now in each of the business areas that we have emphasized earlier on in my opening slide. So if you go to the next slide and we look at some of the key drivers on the retail, strategic accounts, private banking and wealth management business, you can see that our growth momentum here is substantially driven by our stock at the pillar on the right-hand side, the growth that we're seeing in our digital banking transactions. Our digital loan portfolio growth is 185% on a year-over-year basis. Our digital loan account growth is 122% and our ad transacting customers have gone up by 21%. I already mentioned the emphasis on CASA growth and our [ taraprice ] account is our flagship saving product for individuals. But beyond that, I think it's important to also look at how our transaction volumes are growing on the credit card business. Our card customers, active card customers have grown by 19% on a year-over-year basis, but they are not just more active. They're also spending more in terms of their transactions that they're doing in terms of the spend per card. So what that means is that our card customers are using us more frequently as well as using us for more significant purchases than what we saw last year. Equally, on the mortgage side, we remain very strong and well positioned. Our overall accounts have grown by 17% on the mortgage side, our portfolio is growing by 12%. And of course, we continue to see very strong proof of concept on our wealth management business where in addition to the revenue growth that was mentioned earlier, we've also seen a 37% increase in active customers and a 70% increase in our digital T-bill accounts. I think on the corporate banking side, similarly taking a quick snapshot and if you move to the next slide, you will see that here across all key areas of corporate banking and transaction banking, we are seeing very strong growth in our key business drivers. And these growth numbers indicate that we are becoming more and more relevant to our corporate customers on a day-to-day basis. We are more and more integrated with their treasury operations with their working capital financing, with their working capital management. So we're involved in collections. We've involved in payments. We are involved in helping them to do trade finance as well as, of course, meet the funding requirements both for the short and medium term. I think the business drivers here are fairly self-explanatory, so I won't cover them individually, but we're happy to answer any questions on these at the end of the presentation. Moving on to the next slide. Here, we take a bit of a further look into the UAE and the KSA franchises as well as into our [ San ] banking business. So in the UAE, we launched our SME value proposition. This is a liability-centric business. And we've seen, again, a very strong opening of that business over the last, I would say, 1 year, CASA growth is up 200% deposit growth overall is 84%, and we recorded a 29% increase in relationships that we've onboarded. We expect to accelerate this as we move ahead, because we have now built in the systems that are able to handle the higher customer volumes on the corporate and nonretail side in the UAE. In the Kingdom of Saudi Arabia, our trade roads are up over 100% on a year-over-year basis, driven by strong growth in our LC business as well as in our guarantees business. I think this is important because it allows us to be more relevant again on a day-to-day basis to keep corporate clients in Saudi. It also gives us an angle to develop our markets business, our FX business, in particular, when we involve with for financing and imports for our clients in Saudi Arabia. We also got live with our online banking, corporate online banking platform in South Arabia. It's essentially the same platform that we have already launched in UAE and Bahrain, and that will allow us to really have a very strong value proposition to connect all 3 markets for our customers. Similarly on BisB, I think across retail as well as business banking, very strong uptake in underlying volumes and this describes for both segments on a digital banking basis. And our transaction banking business, again, which is now a group role and group function from NBB, allowing us to transfer success, transfer technology transfer experience to BisB is also seeing very strong growth with deposits up 20% on a year-over-year basis. Moving on -- I think what I described to you as it or notice, we take in the Best Retail Bank award in Bahrain by Euromoney this year. This was reconfirmed independency by also winning the Best Retail Bank award we [ Menabanking ] this year. And of course, we recognize for our efforts on sustainability by the selected as the Best Bank for Sustainable Finance in Bahrain by the Global Finance [indiscernible]. And we've been specifically recognized for our debt financial institutions syndicated loan -- we did actually last year, but it was officially signed at the beginning of this year and that was actually recognized as syndicated loan deal of the year by Global Banking and mortgage. So with that, I will pass it over to my colleague, Mohsin, the Group CFO, to give us further details on the first half results.

Thank you, Usman, and good afternoon, everyone. As our CEO mentioned that this is the highest second quarter profit that we have reported for NBB of $22.5 million as deattributed and $23.1 million as the consolidated profit. I would like to highlight that NBB as a group has maintained a dividend ratio of 10% as the interim dividend. And our growth, as you have seen in our previous slides, in terms of the drivers, in terms of the numbers that I will be talking about is on the back of growth in our core business, right? And this is all organic growth that we are experiencing. It does not have any inorganic related acquisition-related growth, et cetera. And the last but not least, our fundamentals remain strong because of our prudent risk management approach. So if you look at Slide 9, I would like to mention a few things. Number 1 is, we experienced a strong demand from our customers across retail, corporate, overseas branches, and we grew 6% versus December 2025, when when I look at the balance sheet aspect of the loans and advances and liability growth was 2%, but the customer deposits were up 12%, and balance sheet growth overall is about 2%. With respect to our second bullet, 10% higher normalized attributable profit, you can see the BHD 39 million to BHD 43.1 million shown on Slide 11. The group core business remains resilient, and we had 13% NII growth on a year-over-year basis. And the normalized other income was down 7% is because of the timing of the treasury gains that we have in the -- in our financials. If you look at our normalized operating income, we are up 7%. With respect to the credit quality, our cost of risk remains in the 30 bps range. As I have mentioned in the previous call that we see around 30 to 40 bps is our normal cost of risk. With respect to our ratio we maintained at a similar level as Q1, including nonperforming poke, which was at 3.6%. So we had a slight improvement of 3.5% on a first half basis. And our coverage ratio is up from Q1 to 88.5%, which is a good indicator of how we are managing our Stage 3 coverages. With respect to other key ratio, cost-to-income ratio, we have invested even, as I mentioned previously, in modernizing the bank and this infrastructure as well as when we look at new products and expansion of our overseas advances, our target is to maintain somewhere around 55% cost-to-income ratio or slightly below that. And we would strive towards that. And it is not a surprise when we look at our low mid-50s as part of the cost-to-income ratio. Our CAA remains and healthy's very strong. And that means we are managing and ensuring that we are fully utilizing our balance sheet. We're maintaining about 20%, 20.5% back in December, 19.8% in first half. And the NIM has also been very stable. In fact, in Q2 alone, our NIM is 2.7% for the first half is about 2.6%. All in all, you can see this sums it up very, very well where -- what we are focusing on and how we are driving our balance sheet from a structural standpoint. We go to the next page. From a financial snapshot perspective, as you can see, the main -- on the left-hand side, the Q2 attributable net profit is up 16%. And this is being driven primarily by 3 areas. Number 1 is the NII growth. Number 2 is the profit on foreign exchange to the bank earns. And last but not least, the treasury gains that we have in the second quarter. With respect to the first half, we are down 9%, 47.5 to 43.1. As you may see a note below that we had a one-off gain in 2025 in the third quarter, which was fairly substantial. And after normalizing for that, we are up 10%. And to BHD 43.1 million on an attributable net profit for the first half on a normalized basis. Similarly, if you look at the operating income, it commensurates with the net profit due to attributable net profit, up 17%. And again, on a reported basis, we are down 3% that is, again, related to the one-off adjustment or the one-off income that we have booked. On a normalized basis, it is high to single digit, which is about 7% and this is the overall view from what we have reported on our Q2 financials versus on a first half normalized basis, how does it look. Moving along to the next slide. If you look at the Bahrain's National [indiscernible] from a total asset standpoint as well as the capital ratios, liabilities and the mix that we are seeing is 33% of the total asset shift that we are seeing from 2002 -- '22 to first half 2026. Obviously, this has grown because we are showing a strong growth on the liability side on the chart below, which is above 38% or almost 38%. So this is a good mix. If you look at it from a structural standpoint that you have the liabilities or the deposits of the borrowing capability and fund the asset growth in a responsible manner. And this also shows -- if you look at the liabilities, from December 2025 to now, the overall deposits overall market within Bahrain has gone up by about BHD 1 billion as well. So NBB being the largest and the biggest bank, obviously, we will attract a portion of debt to our balance sheet. CED on and [indiscernible] strong. This shows that we are about 20%. And this is, again, a very efficient use of our balance sheet. Below, you are seeing a good quarter of almost 77% of our liabilities are driven by customer deposits, almost BHD 4.5 billion out of BHD 5.8 billion. And the rest is obviously you maximize by doing -- by going through the repo process as well as making sure your borrowings remain strong to fund and ensuring the ratios are well within our regulatory requirements. Next page, please. On the balance sheet credit side, you are seeing about a 7% asset growth, which is, again, a strong review of our balance sheet since first half 2025, in first half '26, we are also showing at the bottom what are the movements that took place within the asset side as well as the liability aspect. If you look at the asset side, we are making sure our customer loans are managed within from a risk appetite framework. We do not wish to stretch our balance sheet too much in this stress environment. However, when you look at the movement on the liability side, you will see we have reduced our interbank borrowings as well as our repos, given the fact that the channels that we have now adopted digital channel operating accounts -- accounts deposits coming in from nonbanking financial institutions, retail clients, the strategic clients our customer deposits have gone up, which helps us in reducing our dependency on the interbank as well as on other facilities. So this gives you a good picture on how we are looking at the movement of the assets versus liability. And on the top, we are just showing the key line items on the balance sheet with respect to overall assets. as well as the liabilities and the equity. Next please. On this slide, we are showing from growth standpoint. This is on a consolidated basis, which means that this is not an attributable view. Net profit for the period is BHD 23.1 million. Again, I just want to repeat. This is the highest second quarter profit that NBB has reported. And from a Q1 versus Q2 net profit growth standpoint, we are showing how much we are adding as part of our determination and the previous communication over the last 1 year, the focus on our net interest income. This is not only driven by the deposits only, but it is a combination of how we manage our risk, interest rate risk management framework, how we are looking to manage the gaps, how we are looking to improve our asset yield as well as the deposits aspect fundamentally help us on the BHD 5 million. We are not stopping here from a debt interest contribution as we are targeting to grow our core business fundamentally higher given the strong benefit or the tailwind we are seeing across the board. So having said that, if you look at the -- on a normalized basis, some of the growth areas. Net interest income is up BHD 38.5 million and other income is down because of the treasury-related gains we are experiencing lower. Our expenses obviously have gone up on a year-over-year basis. There is inflation, which is playing the role in the strategic expenses that are the merger-related expenses, we are taking up on us as well as some of the other areas that we have, some of the improved -- some of the loans or some of the provisions that we have taken in managing the overall business framework. Next page. This is just a repeat of what I said. This gives the attendees a flavor of how we are taking a trajectory from a net interest income standpoint, all the way to the operating profit of BHD 22.5 million. As you can see on the left-hand side, our growth is almost 20% on the net interest income. So you see the Q2 2025, 33.7, going up to 40.3. Similarly, our other income is up from 12.3 to 13.6 and operating profit is healthy 31%. So strong results, a strong quarter, and at the same time, we are making sure we have adequate provisions for the names that we are we may see some challenge coming ahead. Next page. First half, similarly, we are just providing a view on a reported basis, how it looks like However, as I mentioned that from -- if we take out the onetimers that we have in 2025, we are showing a 10% growth versus a 9 percentage. Next, page. Operating income trend remains very strong, 17% if you see it from Q2 2025 to BHD 53.9 million versus BHD 46 million normalized operating income growth, as you can see from BHD 196.4 million to BHD 102.8 million. Our margins remain very well into the level that we expect in the first half, our net interest margin is 2.6%. However, I just wanted to mention that as -- on a stand-alone basis for Q2 is 2.7%. So all in all, we are maintaining our trajectory of 2.7% and higher for the rest of the year. Operating expenses 8%. Again, as I mentioned, this is not a surprise, given the fact that we are working to modernize the bank infrastructure, offering new products improving our customer support models as well as resiliency that we have to build in the event of a challenging environment. These are some of the -- which not a surprise, but we just wanted to make sure that we maintain our operating income growth being better than the operating expense growth. So here are some of the key drivers, what trajectory looks like from a 53.2 from a first half normalized basis up to 56.4. And it is within the real on the old basis for the first half of about close to BHD 3 million increase, which is not very substantial. Normalized cost-to-income ratio is about 54.6% in the first half ,56% in the first quarter. Our -- as I had mentioned, our approach and focus is to maintain somewhere around 55% cost-to-income ratio. On a normalized basis, as you can see, it is below 55% target. We are managing and ensuring our operating expenses remain well under control. However, the depreciation and amortization continues to be a driver for our expense growth, but it is definitely a driver of our previous year's expanding. And as we grow the bank in a responsible manner. Next, page. Liquidity trends, LCR, NSFR, et cetera, all remains very healthy. We can -- as you can see, within this slide, the LCR is dropping from 415 to 344 is primarily driven by the growth in the loans and advances which was funded through the reallocation of our Bahrain government bonds. So you will see that, but it remains we have 324% -- or 3.24% higher than what we absolutely requires from an LCR maintaining perspective of 100% from a regulatory perspective. NSFR is BHD 139.3 million. Obviously, there is a jump in the NSFR as there are some questions came up from some of our shareholders, it is obviously driven by the deposits that we have experienced within the bank across the retail, strategic corporate overseas branches, specific accounts related to Tara, which is performing very well. And all these items sort of contribute towards the NSFR calculation. High-quality liquid assets are also about BHD 2 billion. As you can see, as I've mentioned earlier, this is just some reallocation and some of the adjustments driven by the placements that we have the debt securities as well as the other government paper that we anticipate that we have on our books. [indiscernible] loans and drop in money market borrowing reduced the CBB placement. And that's what is essentially the impact. On the cost of risk on the impairment asset side, if you look here on the slide, as you can see, we have had managed to improve our impairment and the asset quality. What we -- as part of our BAU measures, right, we continue to have prudent risk management framework which also ensure, which always ensures that the bank ends enough buffers who absorb any shocks without any severely impacting the shareholder returns. And that approach that we have taken and the changes that are embedded in our model runs and the risk buffer that we have covers more than sufficiently the shocks that come through from a time-to-time basis. That being said, we continue to have sufficient and adequate coverage ratios. And as you can see below the 3.5% NPL ratio of 3.5% and Stage 3, including collateral coverage ratios of 88.5%. So this is a slight improvement versus Q1, and we will continue to report and come back to the shareholders as well as to the analysts where we stand on our ratios. Risk-weighted assets. As you can see here on the left-hand side, we have -- we are providing a breakdown between operational market risk and credit risk. There's the change in the market risk is mainly attributed due to some of the changes in the type of risk that we have taken and which reduces or increases the vintage on the RWA side -- not significantly. If you look at it from an overall standpoint of BHD 2.7 billion of our risk-weighted assets. Total capital is obviously remains very strong. We have the dividend payout as well as some impact associated with the fair value changes of the debt that we have on the balance sheet, which has an impact not only at NBB bit level, but across all banks in the sector. Capital ratios, as I have mentioned, CET1 ratio as well as the other ratios remain strong. You can see some of the things that we are showing here on how we have built up and nicely to provide a view to our shareholders what waterfall looks like on how we are reporting the numbers. So this is a good depiction and a very strong disclosure of our insights compared to the previous slides that you have seen in Q1 and before, this gives the level of comfort on the elements that our management framework, especially on the -- our capital, our risk, our coverages as well as our got engine drivers. Next slide, please. So here is the RWA return. As you can see, we are improving the RWA return on RWA, 3.2%. Our earnings per share is 10. Return on equity remains very strong, 15.6, and it is as we try to ensured that our trajectory remains around 15% from a -- standpoint. ROA remains healthy at 1.4 levels. And as we grow our balance sheet, we will be able to do in and ensure that we have the quality assets coming on to our balance sheet. So all in all, we feel very confident that ratio management it remains a top priority for the bank and its management. On a year-to-date basis, you can see the stock performance. We have included this slide at the bottom, it shows what -- how much capital or the dividends that we have paid out a strong dividend payout. You can see the ratios. Our dividend yield is 6.4%, which is a very, very strong, given the environment, our market cap, our overall standpoint, our shareholdings as well as the closing price as of June 30. So we are trajectoring and our trajectory is very strong. We continue to, as we have mentioned, managed the dividend payouts and bringing value to our shareholders. Last 90 days market performance, again, this is a combination of how we have experienced over the last 6 months, which also included some distress coming in due to the geopolitical tension. But overall, I think we are doing very well given the framework of creating indexes work is the NBB share prices. That's all from my side. Happy to take any questions after Hisham.

Thank you very much. I think I will go to you, our group strategy and Sustainability Officer, Zaina Zayani. You can give us the summary of. I know you have a 1 slide let's quite a meaty slide over there. So please, the floor is yours.

Thank you. So good afternoon, everyone. I'm very happy today to share with you the key highlights on our ESG showing the progress in our sustainability journey. As we look at our sustainable finance portfolio, social housing program value has increased by 17% year-on-year, and our total sustainable finance, what we have grown by 20% year-on-year. zooming in onto the environmental KPIs, our current waste recycling ratio stands at 11%. We have managed to reduce our scope to it by 16% to that the intensity and that told us and Scope 2 emissions have reduced by 10%. In terms of Scope 1, open intensity BOE has reduced by 45% and total Scope 1 emissions have been reduced by 41%. And that's mainly because of the introduction of our [indiscernible] compared to last year, which we had the new records. Our total energy consumption has reduced by 8% and our total waste produced have reduced by 22%, while the total waste produced per employee have reduced by 27%. The main driver of the significant decrease in this quarter is because of some of the work from arrangements resulting from the geopolitical situation in the quarter. Moving on to the social aspect. We have 65% of our employees have attended as -- the awareness program. And we have averaged 18 training hours per employee. Our volunteering hours have totaled about 1,193 hours. And our donations and contributions stood at BHD 1.7 million as of Q2 2026. In terms of our diversity and inclusion KPIs, we have increased the power number of peers of determination to 9 people in quarter 2. And we stood at 38% representation of women in the workforce, 29% of the representation of women in the middle management. and 12% representation of women in senior management. That resulted in achieving different trackings in Bloomberg and LSEG, we stood at the first among the banking services sector and Bahrain Blumberg and the second across all sectors of Bahrain by [indiscernible] buffering we rank at the top 33% among the banking services sector in MENA and at the top 10% globally on financial services [indiscernible]. And that's for our it KPIs for quarter.

Thank you. Thank you very much, Zaina. -- won before I start the questions -- the financial questions. Since we're in the world of optic, and I don't miss attendee asked the question about the update on the BBK [indiscernible]. So you can enlist after which we can jump into the questions.

So I think we've been updating on a monthly basis on the buying or on the merger. So where things stand is that we are still in negotiations amongst both parties. As was reported earlier, due diligence was completed on a respoke basis. And we are not at a stage where a final agreement has been reached on the exchange ratio. But talks are ongoing and discussions are continuing, and we shall be content to report further updates on that as a focus.

Thank you, Usman. I'll say the first 3 questions I will provide to us by Mr. [indiscernible] you very much for the questions. I'll ask them to even medical. So a question about what is about ECL, MDsandalone versus BisB. So the group ECL was 82.4 million, while the ISP alone reported 83.7 million. Does this imply that NED stand-alone recorded an ECI release? And if so, what do -- can I answer the first question? We'll jump to the second question.

As I have just mentioned, right. When we look at our risk management framework, whether it's NBB or BisB stand-alone basis. And as we are mentioning all the time that in the previous quarters that we continue to manage and ensure there is absolute prudent risk management framework is adopted at both levels. And bank has the ability or is in a position to absorb any severely simpler shocks and not having to impact our shareholders. Even the approach we have taken, these changes are embedded in our model on when you look at the specific numbers. And we have, as previously stated, risk buffers took over any shocks or any impact. That being said, we continue to have adequate coverage. We have sufficient provisions, and we will continue to maintain at the time of stress whether it is the BisB at the level.

The second question is related to Q2 -- sorry, the second question and to EC prudence versus the loan growth. So NBB Group assigned a higher weighting to the downside scenario, why loans and advances continue to grow. Why has this not translated into a higher provisioning in the P&L? And what is offsetting the expected EC.

I think I just covered is the same response that I have just given.

Okay. And the last question is related to the BHD 400 million deposit growth and a -- so what is the source and composition of the BHD 400 million increase in customer deposits based on the NSFR disclosure past over 300 million relates to retail and SME deposits. Is this correct? And how stable are these deposits?

As our CEO just mentioned, where we are seeing a trend in the deposit growth, right? So allow me to expand on that retail liabilities have been benefited from the current geopolitical development, right? Growth was supported by lower spending, reduced travel activity as well as lower loan payment due to the deferral of the loans. Having said that, we have invested, as you can see in our investment or the growth in expenses on our digital capabilities. That is helping us significantly. We have operating account strategy across our corporate platform. And last but not least, the Tara account that we have mentioned in the beginning, is attracting a lot of -- from a customer standpoint, they are seeing value. And these are some of the areas. Besides our strategic accounts as well as the retail platform. So all engines, including our overseas branches are performing well. And we are seeing not just 1 but a combination sectors helping us grow our deposit pace.

Fantastic. A final question from [indiscernible] I'll transfer the question to yourself. So congratulations on a good set of results, a strong quarter, which has come as a beat to our estimates. I have a couple of questions, if you may. So question number one, I may have missed it, but would you clarify the 2026 is the last year of the 3-year cycle and would management be sharing the next cycles KPIs in the upcoming calls.

Yes, it is the last year of the 3-year cycle, and we will be doing our management strategy of site in towards the end of September, after which we will be engaging during the last quarter with the Board for a detailed board strategy of site section. And once the -- these strategic priorities are agreed and approved at the award level, which I expect to be against by the end of the year. We'd be happy to reshare the key priorities and obviously keeping everyone updated on progress against the priorities and the KPIs [indiscernible].

And the next question is, could you elaborate on fee decline? What has resulted in that, especially that we see quite a job in LCs, which typically should earn the buyer fees and what would be a fair run rate of fee income growth.

So as I mentioned that the -- given the impact on the retail spending side, right? So this is an attributed specifically across the BisB as well as NBB we have lower spending, and you will see some impact on the fee side, but in the same token, you will see improvement on the liability side from a balance sheet standpoint. So culmination of that is the impact in our fee income, which is not very significant. And we -- and some of the things that we had anticipated in the first half based on our second half and first half performance of last year, there may be delays due to the geopolitic inflections or distributing our corporate store which we hope to cover in the second half of...

I think generally, there's been less deal activity on the corporate finance side because of the situation. Correct. And that has had some impact on a year-over-year basis on the fee income in the Corporate Finance business. But as I mentioned earlier, the underlying core drivers of our corporate banking and retail banking business and transaction volumes, great financial volumes, as we noted, there on. So corporate finance fees is generating more up as well by nature. So we had something last year from a year-over-year basis, it would be a relatively significant portion that is missing because of the situation and the market environment. But again, we are -- we've got a robust pipeline, and we do hope that we can catch up on this for the rest of the year.

Our shareholders as in a single car. 2 questions from [indiscernible]. He says he executive management, I want to be -- I want to table the follow-up 2 questions for discussion. Please find them structured below for clarity. So question number 1 is about Q2 net interest income, NII increase. So there's a statement and then there is a question. So the statement is NII increased significantly in Q2 2026 versus Q1, alongside approximately BHD 400 million in deposit growth. the question that relates to that statement from Mr. Ramat is what factors drove the NII increase? And to what extent was it related to these deposits? Are these balances low cost as sustainable or temporary.

Number 1 is with respect to NII improvement, this is 1 of our key areas of focus and I keep saying that we have been mentioning it in our previous call, what we are mentioning here. So number one, there is better quality data and visibility, which is helping us managing the interest rate gaps, right? And better than from previous years from an IR standpoint, which reduces the NII volatility. That's number one. Number two, we are executing different balance sheet strategies, there's lower spread pricing on short-term deposits, right, which helps us in reducing on cost. And we are also reviewing the deposit pricing curves across all currencies, right, in the market with -- based on the policy rate that we anticipate. So IRSs and cross-currency swaps to close the interest rate caps. We are managing and we are executing those as appropriate. And last but not least is we are also looking at balance sheet reallocation, holding back growth on low spread products versus where we want to enhance and increase the NII. So this is not just a onetime event that you were seeing. It is coming in since the last year. And as I've said, if you look at historically, our trajectory on the NII. That remains our focus. Does it mean should we stop here? Probably not. We will continue to look and attract deposits, right? Make sure that we have bank has enough liquidity to meet the customer demand and support the Bahrain as key National Bank of Bahrain and continue to do a strong focus and have a strong focus on balance sheet management, really simple.