National Bank of Oman SAOG (NBOB) Earnings Call Transcript & Summary

Good afternoon, everyone, and Ramadan Kareem, welcome to NBO's Interactive session. This is Aisha Al Moosa, Investor Relations Officer. In today's session, we would like to discuss our financial results for the year ended 2025. Before we start, let me introduce you to our esteemed management. We have Mr. Abdullah Al Hinai, our Chief Executive Officer; Mr. Giridhar Varadachari, our Chief Financial Officer; along with senior members from finance. And I will hand it over now to our CEO to walk you through the presentation. Mr. Abdullah, over to you.

Good afternoon, everyone, and Ramadan Kareem. Thank you very much for this opportunity for us to present the financial performance for National Bank of Oman as of 31st December 2025. Just before I start, I just want to disclose that these numbers are as disclosed by the bank in January, and these are subject to Central Bank of Oman approval and shareholders' approvals, which will come in due course. I'll start my presentation with key messages and priorities. If we can go to Slide #4. These are certain key messages that I would like to impart and leave with you. It summarizes National Bank of Oman. Basically, a very strong franchise started in 1973, so over 50 years of presence in Oman, where we witnessed the development that has happened in the country. We are the first locally incorporated bank with very long-term relationship with prominent local businesses, government entities and individuals. The management, we started building a very strong and new management since end of 2020, and we continue to build up on this management. And each one of us come with a wealth of experience, be it in local market or international markets. We've completed our 5-year strategy successfully, and that ended on 31st of December of 2025. Last year, towards the fourth quarter of last year, we presented a new strategy to the Board. We've received their Board endorsement and approval and I'll be presenting synopsis of this new strategy, which will take us from 2026 up to end of 2028. Another key message is a strong and stable shareholding base with Commercial Bank of Qatar owning approximately 35% and the late Sheikh Suhail Bahwan holding about 15% with certain government entities, business houses and individual investors owning approximately 50% of the bank. We've been investing significantly in technology to offer efficient customer experience across different businesses, be it retail, corporate as well as investment banking. We continue to deploy these investment program, and we're going to talk about it as part of our new strategy. From a macroeconomic picture, Oman has managed its finances very prudently over the past 4 years. We've seen rating agencies upgrading Oman's rating levels to investment grades after a span of more than 10 years. Subsequent to that, NBO was also upgraded to investment grade backed by a very strong financial and fiscal position and a clear strategic plan by the country that will take us to 2040. There's a very strong -- we believe there's a very strong pipeline of potential business opportunity that will help us continue to maintain our growth with adequate or manageable level of risks in the market. Next slide, this slide is on Oman economic overview. I'll not take you through each and every item on this. Key messaging from this is, again, the public debt has come under a manageable level with all the efforts of the government in managing and bringing down the debt level, where we were close to 70% in 2020 has declined to about 1/3 of GDP as very recently. As a result of that and higher oil prices that trended to be above $60 a barrel, the rating agencies have upgraded Oman to investment grade, as I mentioned earlier. On the sociological perspective, we've been talking about this. The government has come up with a very strong and robust social security umbrella where it covered in addition to the old pension schemes that was running in the country. They've expanded that and included a number of additional benefits, which includes maternity insurance, disability for elder person, coverage or support for children below the age of 18 as well as senior citizens above the age of 60. And we believe that there are a number of new programs that might be launched in the near future. On the technological side, the regulators have already announced the open banking regulation as well as the digital banking regulation. NBO has been on the forefront and has already launched this API in a launch that happened a couple of weeks ago. On the market side, there are a number of regulations, not least is the establishment of Oman International Financial Center. We believe that is part of government's initiative to diversify the national economy and strengthen Oman's position in the global financial arena. Innovation and technology continues to be a center element of the government vision and government approach and a number of program has been launched in regards of innovation, be it in fintech or other areas of innovation. On the environmental, another area of focus for the government. Just yesterday, we had a large seminar sponsored by the banking sector and under the auspicious of the Central Bank of Oman on climate financing and environmental and green financing. Next slide, again, this is a summary of Oman's economic situation. Again, I'll not go through much of this slide. On the Oman banking sector, again, the Omani banking sector, in summary, again, continues to be well positioned, well capitalized -- profitability has improved post COVID and post 2021 with strong metrics that you can see below there. And again, we'll benchmark NBO against the industry averages. Next, this is a slide on what I mentioned in terms of the different aspect of sustainability that the government has embarked on. As you can see, a number of different entities, a number of -- many of initiatives, be it from the Ministry of Finance, be it as part of the Vision of 2040 as well as a number of circulars that Central Bank of Oman had issued since 2024 and National Bank of Oman and the rest of the banking sector are aligned to this and are in compliance to these new regulations. I'm shifting gears to National Bank of Oman. I'll take this slide in a little bit of more details. Basically, National Bank of Oman, as I mentioned, is the first locally incorporated bank. We started operating in 1973. We've reached a total of $14.5 billion end of 2025. We are one of the top 3 banks from a total asset base in the country. Our operation spans Oman, and we have 2 branch presence in the UAE, while Egypt is in the final stages of closure. Our segments of operation is retail, wholesale, particular corporate banking and investment banking with International Banking Limited to United Arab Bank -- sorry, United Arab Emirates, plus a window called Muzn that offers an Islamic financing. Our market share was approximately 12.7% from total loans and about 12.3% of deposit. Some of the key financials and comparison over the last 4 years are presented there. But Giri, our CFO, will take us through a detailed slide, which has more details on these numbers. Like I mentioned, the shareholding pattern, Commercial Bank of Oman -- sorry, Commercial Bank of Qatar has about 34.9%, while the late Sheikh Suhail Bahwan is slightly less than 14.75% and 50% of the shares is distributed among different types of investors, be it government entities, local corporates as well as retail and individual investors. Next slide, please. This is a slide basically where I'm going to talk about our new 3-year strategy. We call it prime strategy for 2026 to 2028. Our strategy is to leverage on our success in the last 5 years. The last 5 years had been a period of time where we've seen National Bank of Oman performing extremely well year-on-year, even though the operating environment has been quite challenging and quite difficult. We believe and we are very optimistic that the future of the markets that we are operating are very positive, and this strategy is basically -- has been designed, and we are planning to execute to capture a good portion of the growth that the market is offering us. On the first element or the first pillar of our strategy is profitability and sustainable growth. Again, it's a very similar approach that we've adopted in the last 5 years. Our growth is focused on ensuring that we continue building on the profitability and sustaining that profitability. We don't chase size for size's sake only. It has to be a profitable growth that does not add to the risk profile of the organization. Our focus will be on green funding, ensuring that we continue to manage our costs and ensure that ROEs are continuously enhanced year-on-year. This can only be built through designing a model that is very relationship-centric. We are -- we've built a strong relationship, again, in the past with many segments of the market, be it government, be it corporate sector or be it the retail and individuals. Our plans is to continue to strengthen our presence by offering the right product, ensuring that we build up loyalty with our customer base, enhancing our cross-sell approach. Innovation, and again, this is not very different from what we've mentioned or presented in the past. National Bank of Oman has been in the forefront, and we continue looking at building and investing in our technology to ensure that we continue to be the market leader in terms of innovative products and agility. Case in point, like I mentioned earlier, the launch of the API elements, and we were the first bank to actually launch that under the open banking regulatory environment. Market-ready capability. This cannot happen without developing and upskilling our talent to ensure that we continue maintaining our position and close any capability gaps that are there. Ecosystem and tech enablement. Again, like I mentioned, this is very intertwined with innovation and the culture of innovation that we want to instill in the organization. We don't believe that National Bank of Oman can do everything to everyone. But we are also a strong believer that we can partner with the right partners and offer the right product for our customer or potential customers in the local market. I hand over to Giri to present the financial performance.

Thank you, [ Abu Shah ]. [Foreign Language] and good afternoon to everybody on the call. The first slide that I'm talking about talks about the highlights of 2025. I'm conscious that you all have seen the results that were out in the market from 14th of January onwards, and then the detailed financials came out at the end of January. So we are already at the end of February, some highlights here. Firstly, for 2025 -- so $182.4 million is a record number for us. It's 11.3% increase year-on-year. Our gross loans and advances at $11.2 billion, which grew by 5.8%. Net interest income reflected a growth of 2.9%, reflecting the challenging market conditions on NIMs, both in terms of yields on assets as well as the cost of funds. The net impairment for 2025 was $37.7 million compared to $36.7 million. I have a slide to talk about the asset quality. The total assets itself was at $14.5 billion, as we talked about earlier, it was up 6.7% year-on-year. And very pleased that we completed the issuance of additional AT1 of $450 million in November 2025 at a coupon of 6.625%. And our capital adequacy ratio as a result of this issuance stood at 20.4% as at 31st December. And one of the stated objectives for us is to grow the fee income contribution as a percentage of income that was achieved and fee income growth year-on-year was at 21.2%. The total fee income itself reached $110 million -- sorry, $133.9 million from $110.5 million the previous year. Some more details coming up in each of these areas. First, let's look at the P&L. P&L composition is given here, both in terms of net interest income, operating income, staff costs and other operating expenses and the profitability metrics are given on the top right-hand side. I've talked about net interest income going up 2.9%. Again, this reflects the increased challenges in the market in terms of managing both the NIMs as a result of yields as well as the cost of funds. Our cost/income ratio, as some of you who followed us over the 5-year period, when we started the journey of transforming under [ Abu Shah's ] leadership and the new management team. We started with a cost-income ratio north of 55%. We finished the year at 40.6%, down from 41.6%. We are second best in the industry. Then you look at the return metrics, obviously, all of this have improved, whether it be return on average assets or return on average equity, all of this has improved. Clearly, ROE come off a little bit because of the additional AT1 that we took in, in the last month of the -- or last quarter of the year. But other than that, you see improvement in all of these metrics. And the impairment there you see on the right-hand side, it's net impairment. So it's impacted through both the provisions that we make as well as the recoveries, which has been a key focus area, and we have been doing well on the recovery line. So that's a very quick highlight of the P&L. And then you look at the operating cost, as I said, we continue to invest on the cost line, both in terms of our staff, 3 areas take up our investment. One is the staff where we invest in training, learning and development and also upskilling the organization. Two is the brand in terms of the branches and the premises that we require. Last but not least is the technology. We never take shortcuts in terms of the investments. And we've had this conversation when we both -- when the CEO and I started our journey in terms of our cost management approach. We said that we don't manage the bank by the quarter. We have a clearly defined strategy over a 5-year period, and we are executing on that strategy. We completed the first 5 years, and the CEO talked about the strategy that we are going to adopt or we have adopted since 1st of January this year. So we continue to invest. The summary of this slide is we continue to grow the top line. We delivered positive jaws for the 20th quarter -- for 28th consecutive quarter. We improved cost-income ratio. We improved our return metrics. That's a summary of this slide. Let me go to the next slide, talk about something that's very close to our heart, which is the asset quality. We set out to you ourselves that we will continue to be prudent in terms of our provisioning levels, and that's what we've achieved here. This slide gives you a couple of things -- more than a couple of things. Firstly, it gives you the breakdown of the gross loans by different stages. It gives us a composition of the loans, the sectoral breakdowns, gives you the provision coverage ratio and also by stages gives you the provisions that we hold. Bottom line or a key call out from this slide is that we continue to grow the book, continue to gain market share in our preferred segments within the risk appetite that's approved by the Board, point number one. So the portfolio is diversified. Clearly, on the pie chart below gives you the diversification in the portfolio. Third point, we continually build up provisions for loans and overall provision coverage ratio was at 94.8%. NPL ratio has marginally improved to 4.5%. When we started again up above 5%. We said the stated objective was to bring this -- manage this ratio below 5%. And then Stage 2, Stage 3, you can see the coverage percentage breakdown of the book as well as the coverage we have. Once again, a very important pillar, this was of our strategy in terms of making sure that the asset quality was robust. I move on to something that's very close to my heart personally. We've talked about our balance sheet being a fortress balance sheet. We told you that we will manage the balance sheet in terms of capital and liquidity and the asset quality and then the profitability follows. That's exactly what happened to us during the last 5 years. You look at the stable funding ratio, whether it be 130% liquidity, asset coverage ratio, again, well maintained. Capitalization inflated in December because of the AT1 issuance in November of $450 million. Then we've done that and well capitalized. We're well capitalized. We are liquid with a CET1 ratio of 11.7%, which is well above the regulatory minimum of 9.5%. And then you see the liquid asset composition below, well with a good position there. The piece that before I open up for questions, I want to talk about the funding mix. Clearly, we have a very robust process in the bank to manage liquidity and the capital. We've covered this before, but for those of you who joined us for the first time, the CEO and I meet up with the businesses at least 2 times a week to go through, one, the prices at which we are lending or the rates at which we are lending, the prices at which we are offering for our deposits or the rates we offer on our deposits. Then we look at the sources of funding to manage the CASA ratio. While we'd like to have the CASA ratio above 50%, we talked to you maybe -- I don't remember a couple of years ago about the pricing at which we get the current and call accounts. It's not just the nature of the deposit, but the rate at which we get that also is important. So we look at this on a regular basis and manage this very carefully. If, for example, it means that we let go of some of the more pricier call accounts, so be it. But we are very disciplined in our approach to funding and liquidity. And therefore, that reflects on the profitability. In summary, we had a very strong 2025. The profit numbers were the highest for this organization. We've improved on our return metrics. Cost-income ratio, et cetera, have improved. We have a clearly defined strategy going forward, which the CEO covered for the next 3 years. And we are well executing that at pace during the first couple of months of this year. There are further details in the appendices on the balance sheet, the composition of the balance sheet, et cetera. We'll be more than happy to go through the details should that be required. But at this stage, let's open up for some questions and then come back in. Thank you.

We will now open the floor for Q&A. [Operator Instructions]. Manna Thomas, please go ahead.

Congrats on a good set of numbers. I just have a question regarding the loan-to-deposit ratio. It was very high in the last 2 years. So versus the loans grew by 5.7%, but the deposits declined. So I just want to understand what this decline? Is it letting go expensive time deposit? Or was there a shift in the underlying CASA base?

Yes. I'll start there. Yes. I mean, like Giri had mentioned, we review this virtually weekly, if not more than once a week. We track these metrics very closely. So one of the elements that we are very wary, we don't want to overpay on any type of deposits. So we are careful. But also, we need to ensure that we have robust levels of liquidity. Based on Basel requirements, there are a number of different ratios that we track rather than just simply the loan-to-deposit ratio. They are the NSFR and LCR, and Giri can give a little more detail...

Manna, good to hear from you. Let's look at the other components of the lending ratio. The lending ratio itself, you're correct, was 107.94% loan-to-deposit ratio. Loan-to-deposit ratio was 107.94%, up from just under 100% in the previous year. But if you look at the other metrics that we use under Basel IV liquidity management, where their LCR, NSFR, we are well over the Basel and in a very comfortable position. The Central Bank here uses lending ratio as a metric and not the loan-to-deposit ratio as such. Lending ratio per se, we finished at 82.8% compared to 84% in the previous year, very liquid. You were right when you said where you letting go of expensive CASA, absolutely correct. If you look at the balance sheet up to 30th September then, our year-on-year deposits grew about 2% up to 30th September. Then in the last quarter, obviously, as liquidity gets tighter, we are very disciplined. One of the things that defines our execution is the discipline at which we grow the book. That discipline meant that we'd had to let go of some deposits. But as you can see, overall, we're very comfortable. Hope I have answered your question.

Manna, also, there's a little bit of something special in the Omani banking sector. We do have quite a large dollar book and the Omani banking sector are not natural generators of dollar deposits. So to fund that, we tend to tap either relationship banks or do a capital market transaction globally. This is not unique to NBO. This is across the Omani banking sector. And thus, the regulator here does not look at the loan deposit as a matrix. But like Giri mentioned, the lending ratio as a matrix, which includes elements of net borrowing that we do outside of the Omani Rial currency.

Just one more question is that when I look at the cost of risk for the full year was 0.3%. Is this -- can we expect the same for this year as well?

Again, from our perspective, like I mentioned -- sorry, I'll take you back first in terms of our earlier strategy. We mentioned that we were focused on high-caliber, high-quality names in the market for a number of reasons. We were ensuring that we have a robust financial performance over the past 5 years as well as risk levels in the market was a bit heightened for our appetite. We believe that the situation has changed in the local market. We believe that there are good opportunities in the market. There are also regulatory requirements in terms of certain mandatory sectors. The regulation came in sometime last year. As a result and because of movement, we don't believe it's a permanent element, but because of maybe movement in ECL, et cetera, we could see at a point of time, potentially cost of risk going up, but it's not to an alarming level.

I think Shaoor from Vision Capital.

Congratulations on a great set of numbers. I have a couple of questions, starting with, as you mentioned in the presentation that because of the decline in interest rates, you have seen a contraction in NIMs overall because the yield on your advances and investments have come down. How do you see this number going forward? As you mentioned that you guys are now sort of restructuring your deposit base, managing it so as to cut the high-cost deposits going forward, obviously, we expect the interest rates to go down further. How would it impact the net interest margins for NBO?

So if you look at the quarterly performance of National Bank of Oman over the past maybe 6 quarters, you'd see that progressively, our NIMs has improved quarter-on-quarter, although those were not enough to show a year-on-year improvement. But if we look at especially the last quarter -- or sorry, the last 2 quarters of 2025, you would have seen that our NIMs have substantially improved. I believe that we would see a similar trend. Our visibility is really in the next 2 quarters. We don't know what will happen to global rates. Like you said, the consensus around the world is potential for rate cuts, but timing is also a question, but there are also some noise around potential rate hikes as well. So we are keeping track of the situation. It's a very dynamic situation. But for National Bank of Oman, we believe that at least for the next 2 quarters, we could see NIM improvements.

Just to add to what Abdullah said, our ability to give forward-looking guidance is limited, as all of you know in the call. But having said that, I think as the CEO covered, this is our bread and butter. So we work through this day in, day out. And as you see from trend lines, we've improved the cost of funds over this period that he highlighted. The ability to maneuver about 20% of our book is in U.S. dollar. And that obviously, if the benchmark comes down or moves upward, then we are impacted. That one. The Omani rial interest rates and then the deposit rates have not come down as rapidly as the loan yields have come off. That's our challenge as a leadership team to manage and which is what we're executing on, and you see from these results, please. That's all I wanted to add.

From actions, we are taking leadership position in terms of ensuring that every marginal rial that comes in through our deposit gathering mechanism, be it retail or the wholesale side, is basically coming at a lower price. We are setting new standards in terms of pricing on deposits. So we believe that the market is receptive. So we are a bit confident on that on the actions that we are taking.

Hopefully, we've given you color and answered your question.

Yes. Perfect. It's great. My next question is regarding your capital adequacy. With the recent Tier 1 issuance, obviously, you have mentioned that your total capital has increased to over -- north of 20%, which is very healthy. Your CET margin is a little thinner, relatively speaking. But you guys -- it's safe to say that NBO is now capitalized in a better way. My question is on your payout policy. We have seen a consistent payout ratio this year as well, which is close to 25% of your reported earnings. Should we be expecting a change in this policy in the near future? Or do you think that the current payout ratio is consistent and the funds are more or better to be deployed somewhere else?

So I think we need to just be careful in terms of the capital adequacy there because the $300 million AT1 that we raised in 2021 is coming for a first call in March of this year. So in the span of 6 weeks, basically or less than 6 weeks. So we believe that probably post that, the capital adequacy will come slightly down to around the mark of 17.5%. So this is a temporary phenomenon. The reason for that is we raised the $450 million in the last quarter of last year rather around the October, November time period. And we saw an opportune time for pricing and for liquidity in the global markets, and we decided on raising the money then. So this is a temporary phenomenon and the capital adequacy will come around the 17.5%, potentially around the April -- post April period. On the dividend and the CET1, these are intertwined discussions. We've reset the payout ratio of NBO. Historically, NBO has had a higher distribution policy. And the reason there is that we really wanted to naturally and organically grow our CET1 ratio with an ROE that are high single digit, although it's market-leading, it's industry-leading in our mind. It's very difficult to have a conversation with shareholder and tell them that we want to raise additional capital when the return on equity is not somewhere in the 10%, 11% range. So we believe that the existing dividend distribution is a well-balanced approach where we reward shareholders adequately and ensuring that we have a very strong capital buffers through organic retention of earnings.

Bishen?

Congratulations to the entire team on a great set of numbers. I wanted to sort of start and kick off with the loan book split up. I've seen that there's been significant growth on the manufacturing and construction side, even though cumulatively, it's around less than OMR 300 million, but there's been significant growth over there. How are you seeing these sectors and sort of -- it stems from the fact that you're confident about lending to these sectors going forward? Or is it just cyclical in nature? If you could just touch upon these 2 sectors specifically?

So like I mentioned, if you look at our approach, and we were public about it, historically, meaning last 3, 4 years, we've been focused more on GRE and certain segment of the market. But given the market situation, the benign risk profile of the market, we started looking at other sectors and other segments that we shied away. And we believe that we have a strong underwriting approach for those sectors. In particular, manufacturing and construction, against construction, we are very selective related to oil and gas or very strong pay master to these entities. So again, our approach is very calculated, very studied, and we take adequate analysis before we take any other step. The new sectors that might also potentially see improvement here is oil and gas continues to be an interesting sector. We believe the renewable segment of the market is also offering interesting opportunities, which NBO is well positioned to take a good market share in these different segments.

Sure, sure. Well appreciated. And it stems from the fact that one of them was that one associates with NBO is prudence and in terms of giving out loans with an accretive angle at play. So encouraging to see that. Next would be with regards to what -- as a bank, what kind of conversations are you having today with your lead clients and the market in general? You would imagine a couple of years ago, it was all risk-based, today it is more opportunity based? And while I say that I do not mean that there's risk aversion. But in general, is there a change in the tone of conversations you're having with your clients or in general, what you're seeing out there in the market? I would be glad to get your comments on that.

Exactly. That's what I call it as interesting market opportunity and the benign risk profile, a very different conversation. It was a bit stressful post -- since COVID and in the immediate period after COVID where the discussions were about restructuring, reprofiling of facilities, difficult conversations. That has substantially -- it really started towards 2024. But clearly, we've seen good signals in 2025, which gives us confidence for 2026 as well. The conversation has changed from simple risk management and ensuring that we protect ourselves while also offer hope and opportunity for our customer base to more, okay, what investments are you doing, CapEx that you are undertaking? So how can NBO support in those endeavors, new ideas, new ventures. So we are optimistic on that front.

Great to hear. Great to hear. And in a long time, I haven't looked at the restructured loans as a percentage because that was the only conversation going back probably 4, 5 quarters. So that's encouraging...

Don't remind us of those days...

Congratulations on that. Next question, and I won't take too much time. Next question will be regarding ROE. NBO, reflecting on my previous conversations with the team has been about that pathway to reaching a target ROE. And I believe NBO was one of the few banks that put out there they have very high sort of standards when it comes to target ROE. And I think if I'm not mistaken, it was probably 14%, 15%. What pathway do you see to that number if that number is correct? I don't look for the forward guidance, but if that's an aspirational number, what's the pathway to the growth you've already seen in your ROE? And going forward, what are the key contributors to that?

Okay. I don't know, Bishen, how did you calculate? Maybe you've excluded AT1 from your equity. From our perspective, we see about 8.5% to 9% as a potential range. Our aim is slowly to beat those numbers in the next couple of years.

Thanks, Bishen. I just got off a HSBC investor call this morning. I couldn't help jump into [ Pam ] speaking about ROE, and they were talking about 17%. I wonder whether you listened to the call and you were telling us about it, okay? There's difficult ROE conversations, mid-teens in this market. I think we should aim in the medium term to double digit and cover cost of capital. I think I would estimate our cost of capital anywhere between 11% and 12%. Doing in that range, I think, is good. Our -- if you strip out the AT1 then at December, we were at around 9.6%. I think we steadily grow that over the plan period is how we operate, Bishen.

So if you look at the total AT1, then it's including the old and new one, then we are at around 8.5%, 8.6%. And if you exclude that, then we are around the 9-point something.

9.6% closer to the double digit. Yes.

Finally, with regards to AT1, we've seen that issuance in November very well absorbed, well priced. Now there's an interim sort of period for probably 2 quarters where you would bear a $450 million additional sort of interest expense. But post that, when I net off your April 21 first call and assuming that nets off, we're looking at a $150 million net at probably a 130 basis point lower burden than the 8% you issued. So ideally that should be accretive in the medium term.

100%, 100%. That's -- as the CEO mentioned, we both manage these numbers like hawks, right? Liquidity and capital are bread and butter. We've covered this with you guys in the past. This is bread and butter -- the timing of it, as the CEO mentioned, we got the timing [Foreign Language] right, priced at a very competitive level as you even observed. So that is accretive, absolutely. And that was the intent of doing it there, Bishen.

And kudos, we often sort of stress so much on numbers that we forget to sort of congratulate the management. And I remember when interest rates were high, the conversations you had with your sort of lenders was to convert call deposits, which are hurting you in being a temporary source of capital towards long-term fixed deposits, so you could at least manage your sort of asset liability mismatch. So credit where it's due to the team and wish you guys all the best. Look forward to further conversation.

Thank you as ever. And I remember having conversations about us opening up and talking to you guys more often. I remain open for any conversations as well. Let's go to the next one. Thanks Bishen. [ Bijoy Joice ]...

Congratulations for excellent set of results. My question is more on the macro level. We see 40% increase in capital projects in Oman in the year 2025. And currently, the pipeline is quite high for Oman. Where do you see the opportunities in terms of sectors? And what sectors are you excited about?

I think I've alluded. Thank you very much for your question, [indiscernible]. I've alluded to some of those sectors when I answered to Bishen. I mentioned the renewable side, we see a number of projects that have already been announced or the process being announced, especially in the solar as well as in wind. The oil and gas, be it at service level or the support level is also interesting segment of the market. But overall, also, we are having conversation in different segments of the market, but with specific client base who are looking at expanding their operation, looking at CapEx, looking at new plants and new business lines. So we see a quite a widespread. So for specific sectors, those are the sectors that I mentioned, but it doesn't mean that other sectors do not offer that, but these are with specific clients or customers of ours.

Yes. Also, how do you see the traction on the port side. And we have seen that over the last quite some time that there has been -- the projects were a bit slow. So how do you see the traction on the port side?

Are you referring to ports? Sorry, I missed that.

Yes. Yes. Ports, yes.

In terms of the discussions that we are having, they are online. Some of these projects has already been -- have started. Drawdowns have already started. We don't see a delay per se. Of course, there are certain -- the larger green hydrogen element, but these are quite large and will take -- by nature, take quite a long time. Those are slightly slow. But overall, I think we've seen other sectors delivering in terms of whatever we've been discussing with them.

There's a question on the chat box, which I think we can go to now. Pushpitha you are unmuted. So let's come back to you if you have questions after we finish the question on the chat box.

I'll start again at a high level, and then Giridhar can answer those questions. Fees and commission, strong growth breakdown. I think we do have a breakdown of fees, and I'm happy to go through that. I'll just comment in terms of sustainability. This is a key element. Rather, we have an internal challenge for ourselves to ensure that the contribution of fee income grows compared to the contribution of NII. In the Omani banking sector, it's usually around the 70-30, 70% net interest income and 30% fee income. Our aim is to beat those levels and be market leaders. So quite a bit of focus is happening for the past now 18 months on fee income generation. We've invested in a number of business lines that we are hoping to see generating fee income. So we are confident that these are sustainable. Cost-to-income ratio has improved over recent years. What is your sustainable medium targets? I think around the 40% to 41% is a realistic number. Like I mentioned, we have an investment program to ensure that we maintain our leadership position on the technology side. So I wouldn't also want to see cost to income to go down quite a bit unless there is a strong revenue coming in. Following the exit of Egypt, what are the key focus area for UAE operations and you see our UAE operation contributing to the group. Actually, for the past now 2 years, UAE has been positively contributing to the whole NBO profit levels. Our focus there has been very similar to the focus that we have in Oman. We started with more larger GRE kind of exposures where risk levels are lower. But as you would appreciate, the UAE market is quite dynamic and also has been on positive trajectory. So we are expanding that, but focus on the Oman and UAE corridor. And again, we see increased flows coming either from UAE or coming from Oman to UAE. And our aim is to capture a large portion of that flow that is happening between the 2 countries. Giri, if you have any specific question.

Thank you, Sandesh, for the questions. Thank you, [ Akhila ] for your answers as well. So the fee contribution, firstly, as the CEO mentioned, we aspire to do better than the 30% contribution of total fee to income. 2025, we were at 31.5%, I think, 31.5% as total income, up from 28.4%, I think, the previous year. So we -- it is a stated objective for us to grow in a balance sheet-light manner, number one point. Number two, fee is contributed through all business lines. We are a full services bank. We have a retail bank, we have a corporate bank, we have investment bank. Fee comes from all of these lines. Volume increases primarily one in the retail bank. And second is wealth management income is an area of focus for us. And it's globally, you would see other banks talking about this as well. Remittances, service charges, all in the retail bank. In the corporate side, then we have loan-related fees and fees such as trade fees as well. In the transaction banking side, we have trade as well as transaction banking. Then we have investment banking as well. So remittance also is a service that we offer. So we believe that this is -- this continues to be an area of focus for us and will -- is sustainable. However, bear in mind that the guidelines issued by the Central Bank from -- in late Q4 of 2025, which means that charges for local transfers, et cetera, are no longer possible, will have a bit of impact. But we are looking at other options to grow this line. Improving our return on equity, growing on a balance sheet light manner will continue to be a focus as explained in the strategy document. Hopefully, that answers the first part of the question. The CEO has already given your view around the medium-term targets, and we are committed to investing in the franchise. We set out to you all that we are not here to cut cost and arrive at a lower cost/income ratio. That continues to be the focus. UAE question being answered. Hopefully, during 2026, we can say that we have permanently closed Egypt. It's in our objectives. Let's see if we can achieve that. Okay. Hopefully, that answers your question, Sandesh. Thanks Pushpitha. I just thought because you are unmuted, you wanted a question. Thank you for clarifying that position.

Any other questions?

It's Mikhail Shlemov, OIB. If I may ask a question, please.

Please go ahead.

And again, congratulations on the great numbers. I wanted to ask a question about the upcoming strategy, which you basically have approved. In the point one, you actually talked about actually a sustainable and profitable growth going forward. So I wonder if you could share a little bit of more detail of the return on equity assumptions on, let's say, RAROC or whichever other way, how you think about the business lines and the broader business in the new 3-year strategy, especially given that you have shared that you think that the cost of equity for the bank is somewhere between 12% and 13%.

So thank you very much for your question. Like we mentioned, we do not give forward-looking guidance. But again, directionally, in terms of what we want to see in terms of performance. We've alluded to some of those as well in the conversation with your colleagues just now. So basically, our aim is to ensure that return on equity of the bank to trend towards the low double-digit levels of, say, 10% to 11%. We are very close there. If you remove the impact of the soon to mature or for the first call AT1, then we are around the 9.6%. Our aim is to be around the 10% to 11% is something that is our objective. But sustainability comes in from also ensuring that and this comes from our checkered past or the past of the organization where we've seen 2 to 3 years of positive performance and then a downturn. Our commitment to the Board, the shareholders over the past 5 years is to ensure that we embark on things that we are comfortable, we have the skill set and understand. And we've delivered that over the past 5 years, and the aim is to continue to look at the same approach in the coming 3 years.

Anyone else has any other questions? So if there are no further questions, we will conclude today's session. Thank you all for joining us, and hope to see you in the upcoming sessions, Inshallah, Ramadan Mubarak, and have a good day. Thank you.

Thank you, everyone. And again, we are also always available to meet or respond to your queries as well. Thank you very much.

Thank you [Foreign Language].