Qatar International Islamic Bank (Q.P.S.C) (QIIK) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Qatar International Islamic Bank Conference Call. Please note that this call is being recorded. I'd now like to hand the call over to Shahan for opening remarks.

Thank you, and hello, everyone. I want to welcome you to Qatar International Islamic Bank's Third Quarter and 9 Months 2026 Financial Results Conference Call. On this call from management, we have Hossam khattab, the bank's CFO; and Mahmoud al-Ahmad, Head of Treasury and Investments. So as usual, we will conduct this call with first management reviewing the company's results followed by a Q&A session. I will turn the call over now to Hossam. Please go ahead.

Good day, everyone, and welcome to QIAB's investor conference call covering the first 9 months of 2026. Today, I will review our operating performance, balance sheet development, asset quality and profitability. Ahmed, our Head of Treasury and Investments, will then provide more detailed update on our funding and liquidity position. We will be pleased to take your questions following the presentation. The first 9 months of 2026 marked by geopolitical developments and uncertain global interest rate environment. These conditions have influenced banking sector operations, funding cost and market activity. Against this backdrop, we focused on identifying appropriate growth opportunities, safeguarding credit quality, maintaining sound liquidity and preserving financial flexibility. This approach has supported our financing growth, positive earnings and capital position that allowed us to respond to the evolving customers' needs. At the end of Q3 2026, total assets reached QAR 63.6 billion, representing 5% higher than a year earlier and 1.5% above December 2025. Net financing assets reached QAR 44.1 billion, an increase of 6.9% year-on-year and 5.2% since year-end 2025. The expansion reflects measured deployment of the balance sheet within our established underwriting standards. Customers deposits reached QAR 43.2 billion, up by 2% year-on-year, Although broadly unchanged from December 2025 In a competitive funding environment, we had focused on managing deposit pricing and composition for other than pursuing growth at any cost. Meanwhile, total equity increased by 7.9% year-on-year, further reinforcing [indiscernible] strong financial position. The first 9 months net profit reached QAR 1, 116 million compared with QAR 1, 098 million in the same period of 2025, an increase of 1.5%. Net operating income declined 1.9% from QAR 1,634 million to 1,603 million in 2020 -- 2026. However, our disciplined expense management helped in mitigating this revenue pressure and sustained bottom line growth. QIIB continues to benefit from stable diversified shareholder base, while [indiscernible] holds about 16% of the total bank issued shares. Qatari companies and individuals hold above [indiscernible] the meaning 21%. Segments. Corporate Banking accounted for 46% of the total assets and 50% of the revenues at the end of September 2026. Personal Banking representing 26% of the assets and 32% of the revenue, while treasury and investment account to fall 27% of the assets and [indiscernible] of revenue. Together, these segment supported customer relationship, earning diversification and efficient wealth management challenging conditions. We managed to sustain our balance sheet composition under the rest of the [indiscernible] financing portfolio during the first 9 months of 2026. Our balance sheet allocation reflects a clear performance for continuing to meet our customer financing need, supported by a sustainable invent. The bank financing portfolio represents about 69% of the total assets. As an example, while financing investments account for 20%. Balanced with banks -- balances with banks and represents about 5% of the total assets. Our financing portfolio in diversified key sector, where the consumer financing account for 42% of the total credit portfolio, followed by [indiscernible] and real estate sectors at 16% each. Government and public sector financing at 15% while contracting only 5%. We keep monitor to exposures closely and apply portfolio limits and assessment standards to manage concentration risk where ever necessary. If we move to the asset quality section now, the bank asset quality and prudent provisions -- provisioning remains central to our risk management approach, particularly in the current environment. The bank nonperforming financing ratio stood at 3% in September 2026 compared with 2.9% at the end of 2025, which is still well below the current market average. If this coverage was at 90.6%, which represents one of the top coverage within the local banks. The overall expected credit losses coverage on financing assets increased to 5.7% from 5.5% at the end of 2025, while Stage 2 average enhanced to 23.2% from 16.3%. The increase in Stage 2 coverage is particularly evident in the current environment, reflecting the level of provisions allocated to exposure acquiring close monitoring. Turning to [indiscernible] and operating efficiency. We remain disciplined expense measurement throughout the first month of 2026, a defining further of QIIB opening model its clean cost and simple CapEx OpEx management. The cost to income is steady at 18.7% from [indiscernible], enabled the bank to absorb a part of the pressure operating environment while maintaining a positive bottom line growth. The bank also reported a return on average assets at 2.4%, return on average equity at 14.4%, underscoring the bank's ability to generate higher returns while maintaining a on capital position. The bank capital position further during the period. The total capital [indiscernible] 22.3 at September 2026, up from 20.1% at December 2025. And remaining comfortably above applicable beta requirement. The CET1 ratio stood at 17.1% compared with 14.8% at year-end. Liquidity and funding indicators also remained above regulatory thresholds. To conclude the first 9 months of 2026 reflect a period of city and measured progress for I -- the bank achieved continued growth in its financing portfolio, maintain a positive earnings growth despite data operating income. At the same time, our strong capital and liquidity positions provide a sustainable financing flexibility and capacity to support future business expansions and sustain growth. As we look ahead to the reminder of the year, our strategic priorities remain focused on disciplined financing growth, maintaining a diverse funding base and continuing to enhance our customer value proposition. Digital transformation remains as integral of our strategy, supporting greater operational efficiency and improved customer experience. Our objective is to build on these strings to deliver sustainable funding performance while supporting our customers' evolving needs and creating long-term value for our shareholders and other stakeholders. That is my end, and I will hand over now to Mahmoud al-Ahmad to continue providing our funding and liquidity position.

Thank you, Hossam, and good afternoon, everyone. So with regards to our funding profile, QIIB maintain a well diversified and stable funding structure primarily supported by customer deposits. complemented by secure financing and the bank's strong capital base. As of September '26, customer deposits stood at approximately [indiscernible] year-end 2025 or with slight reduction was about 0.25% reflecting the stability of our franchise. Looking at the composition of our funding customer deposits remain our principal funding source, representing approximately person of total and, with a reminder coming from the group financing and the bank funding, capital and other abilities. From a customer perspective, we continue to maintain a strong presence in the retail banking sector with a market share of approximately [indiscernible]. We have also continued to enhance our deposit offering, including the introduction of our obvious savings accounts and partnerships with Qatar Airways, supporting customer engagement, deposit franchise development. Turning to liquidity, our position remains particularly strong. As of September, our equity coverage ratios stood at approximately to 40%, while [indiscernible] ratio reached 118%, both remained comfortably above [indiscernible] of 100%. Furthermore, our regulatory loans-to-deposit ratio stood at 95.1% exact with [indiscernible] Bank isomers. Overall, our funding strategy remains focused on maintaining a stable and diversified funding base preserving adequate liquidity buffers and supporting our balance sheet goes. Going to the next slide on [indiscernible], I continue to maintain a strong investment grade pert profile, so posted by rating from international rating agencies. Starting with [indiscernible], for the short term with a negative outlook following September 2026 as. Moody has maintained our A2 long-term issuer rating and C1 short term rating with a stable outlook as appeared in June 2026. Similarly, Capital Intelligence assigned a long-term rating and A1 short-term rating with a stable loss. So from our perspective, the bank loan capitalization and asset quality, consistent profitability and established market positions remain potent foundation of our credit profile. Thank you for your attention.

[Operator Instructions] Your first question comes from the line of [indiscernible].

Just to a couple from my end. Can you please confirm the guidance for the full year for 2026 on loan growth, NIM and cost of risk? And second, in terms of NIM, I mean, this year, we have seen a bit decline -- a bit of a decline because of as you said, like government loan has increased in the mix. So where do you expect the NIMs to normalize to like historical levels?