The Commercial Bank (P.S.Q.C.) (CBQK) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I am Zubair Chaiwalla, Head Capital Management and Investor Relations, and I welcome you all to The Commercial Bank Annual Equity Research Day. You will be put on mute for the duration of the speaker's presentation. Please stay on mute, and I will come back to you for the Q&A. I now hand you over to Joseph Abraham, Commercial Bank's Group Chief Executive Officer. Joseph, over to you.

Thank you, Zubair. Welcome to everyone who is joining us today for our Annual Equity Research Day. This is the fifth such day that we've organized. And it's really an opportunity for us to share with you how we did in the previous year and the outlook for the years ahead. And also a chance for you to get a better understanding from our individual business heads about how business is going and where we see future business initiatives. 2020 has been a most unusual year, and I would like to, first of all, wish all of you, and I hope that you and your families have been healthy and safe during this unusual time. We have today 35 participants from 26 companies, which is a record turnout. So once again, I'd like to thank you for your presence and for taking the time to join us today. So let's first talk about 2020. And to me, this is really a year where 3 themes came out, resilience, risk management and digital innovation or transformation. And all these aspects will be seen in our presentations that we're going to be making over the next 90 minutes. After I make a general overview and a presentation on what I think are key areas that are important, Rehan will talk through the financials. Paul Gossiaux, who is our Chief Risk Officer, will talk about our risk approach. And I think this is one of the areas where there's been a fundamental change in both how we underwrite risk and also how we proactively manage risk and where we have demonstrated some resilience, which is flowing through into improved cost of risk over the next few years. Raju, who's our Head of Wholesale Banking, will talk about how we've repointed the business both the origination side to new areas and at the same time, our growing non asset-based revenue streams, which will provide resilience in the long term. Amit, who is our Head of Retail and Consumer Banking, will show how our franchise, which is a very good franchise, is actually demonstrating resilience where some revenue streams have gone down, like, say, international card spend, but others have come up to supplement it. And also how we built a very good nonlending-based business. Parvez, who's our Head of Treasury and Investments will show you the resilience that we've demonstrated in our liquidity management. And the liquidity management was, of course, one of the key areas that got impacted during the COVID, and prior to that, the blockade. And we've shown resilience and diversification in risk through our providers. Leonie, who's our Chief Operating Officer, will talk about technology, operations and innovation. For most companies and most banks, tech and ops is considered as back office function. And sometimes, I'll be frank, almost second class citizens. For us, tech and operations and business, that combination is front and center of everything we do. And believe it provides us with a competitive advantage in our ability to first roll out digital products and customize it to client requirements and also implement technology in all aspects of our processing. So that flows through to improved cost income ratios, which will benefit us, as you'll see in the figures. Finally, my colleague, the CEO of Alternatif Bank, our 100% owned subsidiary in Turkey, will talk about the situation there. They've had an unusual year in terms of fiscal volatility and also COVID. And he'll show you the outlook for the bank and the actions that they've taken. First of all, talking about Qatar at an overall level. It's one of the strongest economies in the GCC, and it's demonstrated resilience, both in terms of the way to handle the blockade and also COVID. Some of those fundamental strengths are, of course, its strong fiscal buffers and the fact that it has a low fiscal breakeven point, around $40. The IMF has upgraded the growth outlook to about 2.7% for 2021 and 3.9% for 2022. And it's a AA rated country. So overall, it has strong fiscal buffers, strong cushions to support and ensure the economy grows and invest in further development of the economy. The outlook for 2021 remains strong. In terms of the budget was done at an oil price of $40 a barrel. That has since rebounded to about $55, and gas prices have also rebounded. So it gives them fiscal flexibility. We've seen that the blockade has been lifted on Qatar, which is very good for sentiment and also removes uncertainty for the entire GCC region, which I think is good in terms of external investors' perceptions of the risk profile, both of Qatar, but even of the GCC entities. Because anything which acts as impediment to the flow of people or trade or services is not good for the whole region. So this gives certainty around the World Cup and the continuing investment in the infrastructure, post the World Cup in terms of the North Field expansion, expansion of Hamad port, expansion of Hamad airport and further investments in green technology. So overall, that, combined with the embargo being lifted, will provide a positive outlook for the economy, especially in certain sectors like hospitality and retail, which will also see improved growth and outlook. Of course, it's linked to the COVID being sorted out soon because I think that also affects the same objective. And therefore, overall, the outlook for Qatar is positive, and we are positive on the growth prospects. the Qatar banking sector, of course, is strongly capitalized and has reasonably low NPL ratios. The government is the largest shareholder in all the banks with a minimum of 17% in every bank, in Commercial Bank at 17%. We've seen some consolidation happen in the sector. As you've seen, ibq joined with Barwa Bank and created Dukhan Bank. And this bank was also joining with QIB to create -- sorry, I must put on my specs to see properly. And then we had Al Khalij joining with Masraf to create Masraf Al Rayan. So basically, we've seen the number of conventional banks go down from 6 to 4. And at an overall level, fewer number of large banks is better for the economy and better for the banking sector, especially since the smaller banks sometime act as outliers both in terms of risk and pricing and can cause ripple effects. So for us, in terms of the conventional banking sector, our strategic position has actually strengthened in the fact that we now have 2 significantly sized conventional banks and 2 smaller ones. Now in Qatar, whilst QNB is 7 or 8x our size overall, in Qatar, both at the retail level especially, and even on corporate level, we punch above our weight. And therefore, we are an important conventional bank. We had seen consolidation in the banking sector and people, the natural question is, is there any consolidation planned for Commercial Bank? I would say our approach is to focus on organic growth. Because as I mentioned earlier, we have strong retail and wholesale franchises. So there's very little strategic benefit, either in terms of client acquisition or capability acquisition or coverage from a merger. Our approach is fundamentally that we will continue to focus and improve our fiscal metrics. And with M&A, you can never say never. So if anything were to happen, we would be a much stronger fiscal entity. And therefore, there'd be no doubt as to who is the consolidator. As an example, 4 years ago, we and Doha Bank had the same market cap of about QAR 9 billion. Today, given the strategic plan and the implementation, we are valued at QAR 17.5 billion. Doha Bank is at QAR 7.5 billion or QAR 7 billion. So we are approximately 2.5x the market cap from being the same 4 years ago. And we will continue on our progress. And I think that's the strongest approach and best approach to any potential M&A in the future. But again, I would reiterate, our organic strategy is very much focused on building our franchise in Qatar through an organic approach, rather through inorganic. How did we do in 2020? The theme which comes out is really resilience around our business. As you can see, our operating profit was actually up by 0.7%. And this was really due to the strong underlying franchise that we have and the flows that we had. And Amit and Raju from Wholesale and Retail will talk a little bit about that resilience. We continue to manage our costs tightly, and that is coming through investment in technology, which has enabled us to enhance the productivity of our staff. And that was now showing a cost income ratio about 26%. And of course, our investment in digital continued to enable us to meet the needs of our clients, particularly in pandemic, which is seeing accelerated adoption of digital technology. How did our international do? Well, I would say that Alternatif Bank went through a challenging year in terms of the external environment, both in terms of COVID but also policy volatility. And the work that we've done over the last 3 years and ensure that our NPL ratios did not significantly change because of the volatility. And that's an indicator of the good management, which is now in place. So our NPL ratio at 4.8% is one of the best in the Turkish market and was actually a reduction from 5.4% the year before. In NBO. NBO is probably the best franchise relatively in terms of their position in Oman after Bank Muscat. And we have a new CEO, and we had a challenge this year because of a one-off provisioning, but we expect them to come back. And in United Arab Bank, we have a new CEO and team over at least 18 months ago. They have taken out the costs that were unnecessary and reshaped the branch footprint. So we've seen that happen. And we've also taken provisions to clean up the legacy loan book. And as a bank, Commercial Bank has also taken a significant impairment to bring the carrying value to fair value. I would say that this now has broken the back of that overhang regarding the carrying value versus fair value of UAB. Is there more to do? I would say there was nowhere near what we have done over the last 2 years. This is an annual discussion. But we don't think that anything more would be more than, I would say, about QAR 300 million to QAR 400 million at maximum, which is subject to discussion, and that's what we baked into our figures. But that, again, is not definite, but we think that's the output threshold. So the way to look at our international is yes, this has been a challenging year 2020 when the contribution was actually net negative because of these measures we've taken. But these are necessary hard decisions to take. We have reached the nadir of the international contribution, and there's only upside from here. Because all the actions we're taking with the teams will result in positive contributions in the next few years. So to my mind, that's the way to look at it and that we're going to see better and stronger contributions over the next few years from our international business, but we've taken the necessary hard measures. Finally, I would like to talk about our strategic plan. We created this plan in 2016 when Commercial Bank was underperforming the market on many metrics. And we decided to focus on the key metrics of capital. As you can see, our capital was at 9.7%, which is well below the market. And we set ourselves a range of 11% to 11.5% and total CAR was 16% to 16.5%. As you can see, we've achieved that, and we've overperformed against that. But this is, again, the first stage. Similarly, our cost of risk was well above the market, 1.6%. We set ourselves a target of 50 basis points. We have, last year, had 95 basis points, which is above our target, about 20 basis points. 25 basis points of that was due to COVID-related buffers. And we expect next year to be about 70 basis points. So we're slightly above our target, but we believe we will get there. We reshaped the loan book where we had too high exposure in real estate, 28%; in government/public sectors, 10%. We wanted to come back to a market average. And our target now has been achieved to -- almost achieved, and we will achieve this by this year, which is the last year of the plan. Our cost income ratio was well above market. Market at that time was about 30%. We want to get this down to 30% in domestic and 35% for consolidated because Turkey has a higher cost income ratio. As you can see, we have achieved a 22% rate in technology -- I mean in Qatar and 25.9% as a consolidated ratio. And this, again, is due to the power of, I talked earlier, about the marriage between business, technology and operations. And this, to me, is a long-term competitive advantage. And finally, our return on equity was very low. We wanted to achieve double digits of 10%. Again, last year was impacted 2020, but we're confident this year, we'll be achieving the 10% target. So back then in 2016, when we set up the strategic plan, it looked very stretching. And I must say that we have to thank our Board for supporting us and taking the hard measures which are required. One is we have to take significant provisions. Two is we had to have no dividend for the year 2016, 2017. And we always had to do a rights issue in 2017. So the Board supported us in all these hard decisions. And whilst it's a qualitative factor, it's a very, very important factor in enabling us to actually improve the bank and build it in a really professional manner. So that, to me, is a qualitative competitive advantage we have in a very supportive Board. And you can see that they've continued to be supported. Because this year, even with our profits were down because of the impairments and the COVID impacts and the Board actually reduced the dividend by 50%. And that shows the commitment to building our capital and building strong reserves. And that's a very important factor for us. The second piece is, all this was achieved against a very challenging background. When we did the strategic plan in 2016, we never anticipated the imposition of the embargo on Qatar. We never anticipated the volatility that happened in Turkey. We didn't see the oil and gas prices coming down as much as they did, and we never saw COVID. Despite that, I would say our achievement against these targets have been very good. And that is due to the resilience and hard work and commitment of my colleagues, their leadership and the teams which have worked for them. And that's just something which actually I'm very proud of and grateful to our teams. What does the future hold for us? Well, as you know, this was just Phase 1 of our plan to get the bank back on track. Now for '22 to '26, the next 5-year plan, we want to get back at least to be equal, if not better than our peers. And we had some very good and well-performing banks in Qatar. And they're on very different multiples from CB. For example, our price-to-book is about 0.8 to 0.9. They are at 1.5 to even 2x. Their price earnings ratios are 15x, ours is 8x. So on many factors, we believe that there's an opportunity for us to get re-rated. And so we've decided that our CET1 ratio should be 14% and our total capital in this range. Similarly, our NPL ratio will be 2.5% and our cost of risk in the 40 basis points range. And this is because we believe the quality of our origination will support that. Our loan book, we have demonstrated that we can reshape it, reducing real estate and increasing public sect, and this will be the ratio. So we're -- public sector will be 25% of our book and real estate will be down to 16%, which is in line with the market averages. Our cost-to-income ratio, again, we see the consolidated ratio falling to 22% or below. And our domestic ratio to 19%, which again will put us, at least at the market, if not better. And finally, a return on equity, which is very important, we expect to be in the 13% to 15% range. If we achieve all these, then we believe there's no reason why Commercial Bank should be at a discount to any of our peers. And therefore, that should lead to a re-rating of our stock market metrics. And our aim is to achieve this by year 3 of the 5-year plan. Of course, I'm putting this as a stretch, but this is where we go. And I believe that given what we are doing, the initiatives we've taken, we are confident of achieving this. Another qualitative factor, which I would bring out is that we are the only bank in Qatar to have deferral of bonuses, which is good governance. We defer it for 3 years. But also, we mandatorily defer our bonuses into share options for the senior management. And we've also given all our staff this year a grant of share options and also a voluntary scheme where they can subscribe. Why is this important? Because we want to link the performance of the bank and its improvement to our staff, and they should also benefit. As I told you, I'm very grateful and proud of our staff, what they've achieved. And we wouldn't be putting out a share option scheme and grants to them and giving them a dub scheme, which did not deliver in 3 years because I think that would impact our credibility as a management team. So this is, again, a qualitative factor, but a very important factor, which will also spur us towards achieving these goals. So I have now finished the first part of the presentation. I'll hand over to Rehan, who will take you through the financials. Rehan?

Thank you, Joseph, and good morning, everyone. I'll start firstly with the 5 years of 2016 in which we formulated our 5-year strategy. And then the first 4 years of execution against that strategy. As in previous calls, I have included a normalized column for 2019 and 2020 which enables us to have a like-for-like comparison. When we met last year, we did talk about operating income becoming the main driver for increasing in operating profit. And we've seen that come through both in 2019 when our operating income grew by 10%. And then similarly, in 2020, again, our operating income grew by 10%. In terms of costs, we saw significant decreases in the earlier years of the strategic plan, and then a smaller decrease. It's now 1% decrease between 2019 and 2020. But what that's meant overall is that our operating profit on a like-for-like basis has increased by 14%. And that gives us good momentum going into 2021. Net provisions, at just over QAR 1 billion, are largely driven by IFRS 9, COVID-related provisioning and remodeling for those provisions. In the next section, our Chief Risk Officer, Paul Gossiaux, will go through that in more detail. As we've highlighted before, we have had success in recoveries. And we have more targets for 2021, where we are looking to reach settlements with our customers. Impairments, as you know, this has been against UAB, and we now have a carrying value in line with fair value. I will talk a little bit more about this in the guidance section. And of course, we've taken our share of losses in the associates as well. Overall, net profit at QAR 1.3 billion, but I have included an additional column here, additional role here, showing impact from our international operations. So if I add that back, really to demonstrate the strength of our business in Qatar, that means that our profit was around QAR 2.1 billion for the Qatar bank in 2020. And if you again adjust in 2019, it was about QAR 1.9 billion. So it actually shows that our business in Qatar grew by 10% at the bottom line level, which is a very strong performance given the circumstances that we saw in 2020. I think in the last call, we highlighted that while lending volume has increased by 10% year-on-year, approximately QAR 3 billion of this was a temporary overdraft, which was repaid in January, which means that our growth was more like 6.5% year-on-year. I'll talk more about the ratios in the next section. So firstly, starting with the cost income ratio. As you saw in 2016, we were around the mid-40s level. And then quarter-by-quarter, we've been bringing that down all the way to 25% in the fourth quarter of last year. What that means is that our cost income ratio is 26% at consolidated level and 22% at domestic level. We've seen all the banks decreasing their cost income ratios year-on-year. Only Doha Bank hasn't released their results, so we've shown the 9-month versus 9-month comparison there. But at 22% for domestic, we're getting closer and closer even to the Islamic banks, as you can see on the far right side here. Slide 14 then shows how we compare on some of those ratios against the larger peer banks. So on the nonperforming loan book, we brought that down from 5% in 2016 to 4.3%, and we believe this can reduce further in the next few years. Coverage ratio is now over 100%. And cost of risk, as we saw, is at 1%, up slightly higher than last year and higher than guidance given the COVID measures that we needed to take. Our capital was well below our peers in 2016 at 15.2% and 9.7% CET1. That's grown considerably. We're now getting much closer to where the larger peers are in the Qatar market. Return on average equity is obviously a decrease because of the impairments that we've taken, but we are guiding that this will reach double figures for 2021. Just a little look at where we are on price-to-book. At 0.8, we are less than half of our peers and even more when you measure us against Masraf Al Rayan. And price-to-earnings at 16.3. Again, if I normalize that for around a QAR 2 billion profit that we saw in Qatar, that means our price earnings is similar to last year at around 10% -- at around 10, which is considerably lower than our peers. And market cap has also decreased from QAR 19 billion to QAR 17.8 billion. So we believe there's significant improvement opportunity in this area going forward. On ESG, we are committed. We have an A rating on MSCI. We have full disclosure on Qatar Stock Exchange, which means that we are joint top on the leaderboard and with 100% disclosure. We recognize our responsibilities here and are working on several initiatives to increase this and improve this further in the coming year. Lastly, I'll turn to the outlook and the guidance. On loan growth, we had guided 4% to 6% for 2020. It's come out at 9.9%, as I said, taking out the QAR 3 billion of the overdraft. This is around 6.5%, still at the top end of our guidance. On this number, we're guiding another 5% to 6% growth, higher if it's on the 6.5%, it'll be closer to 8%. On net interest margins, as you've seen, our cost of funding has come down very well. And that's meant that our 2.3% normalized of 2019 has grown to 2.4% and in line with the guidance that we gave. We are guiding that this will increase further to 2.5%, again, driven largely by cost of funding coming down and asset yields maintaining. Cost of risk was 95 basis points in 2020, higher than the guidance, as we said earlier. We're guiding 70 to 80 basis points, so coming down and then much further in the next 5-year strat plan. Cost income ratio was in line with guidance and a further 2% reduction for 2021 is forecasted. And then lastly, on return on average equity, we're guiding at 10% to 11% for 2021. And this is factoring in any further impairment that we need to do. As Joseph highlighted, we have completed that exercise as at 2020, but it is an annual exercise. And we are -- we have budgeted a further amount around QAR 300 million to QAR 400 million for 2021 at the upper end, if required. And within that, we would still reach double figures for return on average equity. Let me turn you now to the next section, our Chief Risk Officer, Paul Gossiaux, will take it from here. Thank you.

Thank you, Rehan. Overall, 2020 marks a year of continuing growth in the consolidated loan book with gross loans increasing by 10% year-on-year to QAR 100 billion. In line with our strategic plan and risk appetite strategies, key growth drivers continue to be the government and public sector segment as well as the commercial and industrial segment. Loans to the government and public sector increased over 15% year-on-year to QAR 17.3 billion, and we have grown at an average annual rate of 30% since 2018. Government and public sector loans now make up over 17% of the loan book compared to just 9% in 2018. Likewise, loans to the commercial and industrial segment increased over 15% year-on-year to QAR 22.8 billion. Since 2018, the C&I segment has grown at an average annual rate of 18% per annum. Commercial and industrial loans represent 23% of the loan book compared to just over 18% in 2018. Real estate loans now make up just over 20% of the loan book compared to 25% in 2018. The real estate segment continues to trend down over the period at an average rate of 3% per annum in line with our strategic objectives. On the next slide, you will see that our risk appetite strategies are driving our strategic objectives, namely growing government and public sector, tightening loan underwriting standards and decreasing real estate segments, are transforming and materially improving the credit risk profiles across the loan portfolio. As of 2020, approximately 40% of stage 1 loans have been originated for the customers acquired since 2016, largely comprising higher risk-weighted government and public sector borrowers. These borrowers have improved credit quality and stability in the stage 1 loan book and will contribute to lowering the cost of risk in the medium term. Likewise, migration to stage 2 has been limited to just 1% of customers acquired since 2016, with pre-2016 underwritings accounting for the remainder. 95% of stage 3 NPL loans consist of pre-2016 legacy borrowers. Moving to the next slide, you will see that the cost of risk increased 27 basis points in 2020 to 95 basis points compared to 68 basis points the previous year. The net 27 basis point increase in cost of risk in the year was largely driven by 2 factors in our ECL model. The first was a precautionary increase in provisioning across the performing book, stage 1 and stage 2, in response to any potential COVID-related impacts on macroeconomic variables, accounting for approximately 20 of the total 27 basis points. And the second factor was a lower recovery rate applied in our ECL model to create an additional credit shock buffer for potential deterioration due to COVID-related forbearance measures granted, accounting for the remaining 7 basis points of the total. In terms of the what if. If we were to exclude these more conservative COVID-related changes in our 2020 ECL model, then the cost of risk in 2020 on a pro forma basis would likely have been in the range of about 75 basis points. Provision coverage in 2020, including hard provision coverage of 67% plus ECL coverage of 35%, increased to 102% from 82% the previous year. As many of you may know, however, our Central Bank, QCB, requires us to apply a 50% cut on all mortgage collateral held, largely for the sake of regulatory prudence and conservatism. If we adjust our provision coverage by this mortgage collateral discount, then our adjusted provision coverage would increase to 115% in 2020 compared to 104% in 2019. On the next slide, you will see that the credit quality in 2020 continued its improving trend with stage 2 loans accounting for 16% of total loans compared to 16.8% the previous year. Since 2018, stage 2 loans have decreased at an annual average rate of 17% per annum. Likewise, stage 3 NPLs increased to 4.3% of total loans in 2020, from 4.9% in 2019. Since 2018, stage 3 loans have decreased at an average annual rate of 7% per annum. In terms of staging coverage, credit loss buffers across all stages increased significantly in 2020, for reasons highlighted in the previous slides. Notably, our stage 2 coverage of 7.8% is well above the Qatari bank average of 5.7%. So overall, the ongoing rebalancing of risks in the loan portfolio composition, driven largely by a continuing growth in government and public sector segments and reducing real estate segments, combined with tighter credit underwriting standards, enhanced provision management and recovery strategies, are all creating increased credit loss buffers and setting the stage for lower volatility and expected future cost of risk. And with that, I'd like to hand over to Raju, who will -- he was the Head of our Wholesale Banking.

Yes. Thank you, Paul, and good morning to all of you. In the next few slides, I'll give you a flavor of the wholesale banking. In terms of highlights for 2020, our lending growth has been 14.3% against the market lending growth of 8.4%. So we are growing faster than the market. And this is primarily coming out of the government and public sector, where our portfolios increased from QAR 15 billion to QAR 17.3 billion. We also noticed a significant increase in low-cost funds, and we outgrew the market. We were faster than the market growth of 23%, and our low-cost funds and wholesale grew by 41%. When it comes to corporate Internet banking penetration, our penetration went up to 94%, which increased from 78% in 2019, so approximately 16% higher. Most of our customers are using corporate Internet banking now. And in line with our strategy to reduce the real estate exposure, our real estate portfolio reduced to 20.5% from 26% in 2016. So these are the primary highlights. Our strategic priorities are a continuation of the 5-year plan that we have shared with you earlier. Firstly, is to maintain lending in the government and public sector at a rate much faster than the market. And this is very important from us from a risk point of view because there is no NPL creation in the government and public sector. And it's risk wise -- risk reward wise, it's very attractive. Then further dominate transaction banking. This was one of our key elements in our strategic plan. We have invested a lot in this transaction banking, and we have shown new metrics last year also. And we want to further dominate transaction banking because it produces low-cost funds for us in the operating accounts. And then there are remittances, LCs, LGS that are all coming out of the operating accounts, and that gives us a lot of fee income. And therefore, we would like to further dominate transaction banking, continuing to reduce the real estate exposure, as we have done in the past, to achieve a 16% number -- 16% real estate exposure compared to the whole balance sheet. And we have new revenue initiatives which we are launching in 2021: the insurance advisory, escrow accounts and digitized nonborrowing customers. So for the nonborrowing customers, we offer a digitized platform, which will help us access many more nonborrowing accounts. Next slide, please. So I wanted to show you the growth of the government and public sector business, which is one of the key elements of our priorities. And if you see, last year, we grew by 15% against a market growth of 11%. And our compounded annual growth rate is 30%, as shown by Paul earlier. And since we are growing much faster than the market in the last 3 years, our market share has increased from 2.4% to 4.6% in 2019 and 4.9% in government and public sector. We are -- we have a huge opportunity here because our portfolio is only QAR 17 billion out of a QAR 353 billion market size. We are very focused, and we are going to target 25-plus additional government departments for lending and cash management business. And while the net interest margins are slightly lower than the private sector, we also get the operating accounts, and we get the ancillary business and the FX business that actually makes it worthwhile for us to actually invest in this particular sector. Next slide. So the other important element of our strategy is to dominate transaction banking. We are now the exclusive service provider for the major utility company in Qatar, an aviation conglomerate and a large real estate company. We have significant wins with these companies, and all of their cash management is going through us. We are also leading in innovation in this particular sector because we want to be a step ahead of competition. So we have done the supply chain finance. We also have the ability to do highly customized solutions. And these bespoke solutions are implemented within a very short time. For example, we have done direct debit for the utility provider. We are doing invoice reconciliation also for the utility provider, and we are scaling it up for other customers. In line with this, we have been recognized by Asian Banker and Global Finance, and we have the best online cash management for 2 successive years from Global Finance, also the best trade finance service. And in 2020, our mobile banking app was highly appreciated. And now we have the omnichannel ability, where you can initiate the transaction through one channel and approve it on your mobile banking or any other channel. Similarly, on the Asian Banker, we have won the Best Cash Management Bank in Qatar for 5 years in a row now and also the Best Transaction Bank for the fourth year -- for the third year. Next slide. So in terms of wholesale banking, we see the 3 pillars as follows: The first one is risk culture. Much has been spoken by Paul in this area so I'll just highlight some of the key items. We still want to grow faster than market in government and public sector because of the risk-reward and lower NPL creation. We are very, very selective in private sector, and we want to continue reducing the real estate structure. And it's important to note that loans that were originated post-January 2017 comprise only 5% of total NPLs. So for the last 4, 5 years, whatever loans we have originated are of very good credit quality. We also have a very strong franchise. From 1975 onwards, we have been here for almost 46 years, and we have all large conventional groups, almost 90% of conventional groups have relationships with us. We are penetrating further into government and public sector where we used to have a low market share, and we already have 50% penetration into this segment and rapidly growing as we implement more and more trade and cash management solutions for them. We possibly have the best contracting portfolio because we have implemented tight credit measures, and we deal with very selected set of contractors. And for the first time, many of the Islamic companies have started doing business with us, and we have significant wins in the area of cash management and also borrowing relationship, where we do a finance lease structure, which is approved by the Sharia company -- Islamic companies. So that opens up a huge new target market for us. In terms of digitization, we have a highly competitive trade platform. So this one, we have customized in such a way that we can offer very good digitized solutions for our customers. And we have the best transaction banking platform, which is host-to-host. And this is one platform where we used to take approximately 3 to 4 months to convert a customer onto our platform because of different ERP systems that customers have. But over a period of time, we have learned and we have invested in technology. And now we can actually convert it within 4 to 5 weeks no matter what the ERP system of the customer is. Next. So in terms of digital adoption, I'd like to share some metrics with you. We have a 56% increase in the corporate mobile log-ins in 2020. Our online transactions have gone up by 25%. And in terms of online trade transactions, we have seen a growth of 114% .So 94% of all corporate transactions are now received through corporate Internet banking, host-to-host. And therefore, they follow straight-through processing, which is very cost-effective, and it delivers standardized client experience. 75% of all trade finance requests are received through online portal and is significantly higher than the market average of 45%. So we look forward to 2021 because we have a very healthy pipeline, and we continue to execute on the strategic plan as we go forward. Thanks. And I would like to invite Amit to give you a flavor of our retail franchise.

Thank you, Raju. Good morning to all. Commercial Bank is one of the largest retail franchises in Qatar and is known for being in the forefront of bold innovation and leading the way in bringing the customers' value-added products and services on a regular basis. A robust all-weather multichannel operating platform allows us to service -- serve diverse needs of customers at their convenience, and a near-normal service level during COVID is a testament to this capability. The retail bank provides strong diversified income contribution to the bank as a whole with high returns on capital, with over 80% of income derived from deposit and transactional products. So that also reduces the risk we take in the portfolio. The individual loan book is secured either by tangible collateral, 63%, or by salaries for personal loans and credit cards, which makes it a relatively low-risk portfolio. And once again, as we have gone through cycles over the past few years, whether it's the blockade or COVID, we saw that our risk losses were very, very low relative to the size of the portfolio. It is also a provider of high-quality liquidity, with low-cost funds being more than 60% of the book. Our growth during 2020 in the low-cost deposit was a healthy 22%. So this is continuing to be a good provider of liquidity. It is a strong business and has now been supplemented with multiple growth initiatives, which I will be talking about in the later slides. But overall, we can't over our weight -- above our weight in this market and hope to be a meaningful contributor both for Commercial Bank and the industry in Qatar in the years to come. Next slide. Before I move to other aspects of the business, I would like to take a moment to update on the state of our business during COVID and post-COVID. We are tracking ourselves to perform in January 2020, which was the last full month of pre-COVID operations, as is evidenced in the various charts if you look at total products sold. For example, we are in January 2021 95% of where we were in January 2020, and this is even with some limited lockdown and the full flow of customers not coming in from overseas. But we are almost there, and I do hope to get back to the 100% very soon. In cards, domestic spend volume actually is 20% higher. And this is, we believe, largely because of migration from cash, which is also one of our long-term strategic initiatives. If you look at the contactless card transaction spend, we have gone 5x of what we were a year ago. And this is largely coming from cash because these are very small ticket items, but it also helped society as a whole do transactions more safely that cash. So we do believe that our leadership in this space, since we are one of the largest acquirers in this market as well, has helped the overall long-term strategic objective of migration from cash. The international spend is low, as expected. It's not expected to revive at least in Q1 because -- until such time that the vaccination drives are effective, we expect this one to lag a bit. But hopefully, end of quarter 2, early quarter 3, with the summer season, we would expect this revenue to come back to us as well. So next slide. We have had a history of innovation, which got accelerated in 2020 due to COVID. Our efforts have been well received by all stakeholders. But most importantly, it is eventually customers who decide what value is derived from these innovations. We have been fortunate that our customers have responded very well with high adoption rates, and I will share a few statistics with you in the next slide. If you look at the top left, we have seen a distinct shift away from branches. And in 2016, almost 10% of our transactions were being done physically in branches. That number is now down to 2%. Once again, I think COVID helped in 2020. We have to leverage every opportunity which comes our way. And in many ways, the crisis always throws an opportunity. And you can see the steep fall from 6% to 2% in 2020, and we hope to sustain this. If you look at our digitally active customers, there's been a rapid growth, and log-ins have multiplied almost 5x over 5 years. On an average, our customers log in 7 to 8 times a month, which is almost twice a week. And that shows the value and the engagement that our mobile and digital platforms provide to our customers. And one area which has again rapidly grown is the funds transfer area. Both for local transport, but most importantly, for the international remittances, which, again, in the next slide, I'll share some more detail. But this has been a standout success for us in the market. And not only have we offered our customers the best option, but we do believe that the whole market has had to transform and digitize because of our strong presence and our strong offering. Exchange houses in mobile companies all have upgraded their offerings in response to what we have been able to achieve. So in the next slide -- yes. So here is the story of a very, very successful business initiative. In 2016, we were hardly digital. Most of our customers were going through exchange houses to remit money. Qatar being a large expat market, an efficient, reliable and cost-effective remittance solution is critical for most of our customers. Through sustained development of offering, we have been successful in reshaping the remittance market in this country. The numbers tell the story. And since revenues are directly related to the number of transactions, you can extrapolate and see how well we've grown so rapidly. This has generated almost a new business by itself over the past 4 years. And we do expect to grow to 6 million transactions this year. And this number is likely to grow to up to 10 million transactions in the next 2 years. So by the end of this year, we hope to close at a run rate of about 8 million, and next year, get to over 8 million and 10 million probably the year after. But this, as I said, by itself, not only has added immense value to customers. It had created a new business by itself for us. Another growth business that we see coming up is the wealth management business. This is a pressing need for what is a really underdeveloped market. Loan deposit rates and uncertainty in real estate just reinforce the opportunity. We have now put in place a world-class system, which is an end-to-end wealth management platform, starting from customer onboarding to transaction execution and post-transaction portfolio management. Our workforce has been trained to global standards. Early results, as you'll see in the charts below, are very encouraging. We do expect these numbers to just grow rapidly over the years. And we could hit 8 to 10x of where we are in the next 3 to 5 years because I do believe that the best is yet to come. Next slide. Another business which I wanted to talk to you about was the SME business. This, to our mind, in our opinion, is another growth engine. It's a very vibrant and realigned SME business that we have. We are generating high-quality sustainable income in a business critical to the economy. Dependence on loan revenue, if you look at the pie chart, it used to be 31% in 2017. It's now down to 17%. And we actually expect this to go down even further. In a typical SME business, one of the risks remain the credit quality. But like I said, we have now moved away from a loan-intensive business to a business which is in line with our strategy of dominating the transaction banking space. Revenue realization per customer has gone up by 56%, reflecting improvements in customer profile and the segmentation strategy that we have followed. I think as an important point to note, there's been a game-changing behavior by customers in adopting digital transactions, providing us with a business model which is low cost to serve, scalable with reengineered processes at the customer's end. And that's important because once customers change their behavior and the customers change processes that they're in, it's extremely difficult for them to migrate out because no other bank in this market, at least today, offers anything close to what we are offering these customers. So -- and in a product like trade, which is a very paper-based product, 97% of transactions in December by the SME business were done through the online platform. Funds transfer is almost 99%, and there are so many other of these examples. Feedback from customers has been very positive. They're honest. They didn't think something like this is possible. But once they got used to it, they find it extremely convenient, and we are seeing our business grow. This is, again, another business we expect high double-digit growth over the next 5 years, and we will be doubling our income stream from this business. So last, but not the least, I want to talk a little bit about physical distribution and our thoughts on the future of physical distribution. This is a question I'm asking almost every forum. We shared the examples of digitization. And the question is, what is the role of branches? Our view is that branches will remain important in the foreseeable future. However, the focus will shift from a one-size-fits-all branch to affect the focused distribution model. We are building high-quality premium lounges from where we will serve our premium customers and offer wealth management products. I spoke about our strategy on wealth management. These are the lounges from which we will -- these are totally redesigned and nothing like a normal branch. And they would be -- we want to build some world-class lounges with highly qualified relationship managers serving our premium customers in a very relaxed environment. We have also -- a core branch has been redesigned and the launch of our new small but highly digitized branches, which allow us to expand in the path of traffic like metro stations. It's really going to be our growth strategy because we can put up these branches in a time frame and a cost which is 15%, 20% of what it would take us to bring a normal core branch. So as a result of this, if you look at the graphs -- and not only the actions we have taken, but the change in customer behavior, which I spoke about earlier, whether it is individual customer or SME customers. We will maintain or grow our market presence over the next few years at a cost base of 33% below where we were. So we have been able to achieve all our objectives, including higher market presence, but at a cost base of 33% below where we were. My view is this would stay for the next 3 to 5 years. And who knows? This is an area that can change. But at least for the next 3 to 5 years, branches are a reality, but there will be a reality in a different form. In summary, I would say our priorities remain: continue the pace of innovation to stay ahead of our client expectations, provide world-class service experience to our target customers across all segments and leverage the well position. We have a very strong position because the market leverage it for sustained growth through expansion of our core business, but also some of the new initiatives that I spoke about. And last, but not the least, again, we hope to continue to be recognized and rewarded by the market but more importantly, by our customers. And it is now my pleasure to invite next speaker, Parvez, the next speaker on the call. Thank you very much.

Good morning. I think before me, it will be Fahad will be speaking. If it's okay, otherwise, I'll continue with the treasury part. Thank you. So 2020 has been a story of a bit of rollercoaster in the sense that we saw liquidity leaving the region because of demand in the domestic market for the international banks. So we saw in March, April liquidity squeeze into the -- overall in the GCC and also in Qatar. But the situation gradually eased out as the state of Qatar went and issued $10 billion bonds in the international markets. And following the issuance of the sovereign, the financial institutions in Qatar started adapting to the market, and that saw the liquidity situation easing quite substantially. We, as a bank, also took advantage of the market as the oversupply of liquidity has resulted in tightening of the rates. We saw the rates coming to very attractive levels. And then in totality, we issued around $1 billion both in the capital markets and the private placement market. We issued CHF 150 million bonds, which was, again, one of the largest issuances from the financial markets in the Swiss market at a very, very tight spread. Subsequently, we released $500 million from the Reg S market at one of the tightest pricing that Commercial Bank has issued in that period of time. We think that the liquidity is going to be available. But any increase in the current situation, we'll see the squeeze on the liquidity again, especially geopolitical situation and the situation arising out of the second strain of corona, which is right now hurting the markets. We as a bank maintain sufficient liquidity buffers in our book. We have approximately QAR 15 billion worth of sovereign bond, both in Qatari riyal and U.S. dollars. What it gives us is it acts as a back-up liquidity buffer. We can repo the whole Qatari riyal bond portfolio with the Qatar Central Bank at any given time. At the same time, the dollar-denominated bonds have been repo-ed, with most of the international bank as they are greatly in demand, and they are also very high-rated instruments. So we think that from the overall liquidity point of view, the bank is in very a strong position. And we do have a strategy in place, where, in the case of disruption, we tend to basically tap into those markets. So going forward, the funding outlook is robust. We will continue to diversify our funding base across the products and geographies. We will be tapping into a syndicated loan market, which is our bread and butter business. EMTN issuance will be very tactical given where the rates are. We think that the rates are at a very, very attractive rate. We'll definitely go and tap the market. One issuance that we are basically looking to diversify our investor base is a Tier 1 capital issuance. We had one internationally of an issuance done [indiscernible] by one of the Islamic banks. But given that -- now that the regulations are out too low, we will see both company banks going and tapping the markets for Tier 1. At the same time, on the private placement side, we are seeing a lot more demand coming from local currency bonds, which are fully stocked into dollars, like Chinese renminbi bonds. And also in Japanese yen, we have issued quite a few private placements in Japanese yen bond. We have also done a NINJA loan in Japanese yen, which basically gave us 20 to 30 bps advantage over the straight dollar issuance. We'll continue to look at opportunities where we can bring our funding cost down. As Joseph has stated earlier in his introduction, that interest costs or the funding cost of the bank is one of the most important elements that we keep an eye on, and we will continue to manage it down. One of the important components of overall funding is the deposit. The deposit market domestically is tight. We think that the market is structured in a manner where 20% to 25% of the market, basically, comprises of nonresident deposits. We, as a bank, have tactically made sure that we are not too dependent on any seasonal deposits. So we have a very strong relationship with the private sector, where basically, the strength of the franchise helps us in basically touching much above our bill. So if you look at the pie charts at the bottom of the slide here, on the left-hand corner is the market solution. In the right-hand corner is The Commercial Bank. So if you look at it on the corporate, which is basically the private sector and the individuals that specifically represent that retail banking sector, we are near 10 percentage points over and above that amount where it was. We continue to tap into the government and public sector deposits but -- given that those are basically skewed more towards the national bank, but we still get our market share. Our nonresident deposits, we have a very diversified nonresident deposit base. We'll continue to tap into those markets. And when needed, we'll do take this portion of our funding up, but we'll continue to manage within the leverage that are being assigned internally. So we see the markets being quite conducive in terms of liquidity. Given that the credit uptake is expected to be a little muted, we don't see any challenges until there is some major disruption at a global level. Other than that, we are in a very, very strong position to manage the liquidity funding. Just to give you, I think, on how our overall funding mix is structured, we tend to fund ourselves 50% to 51% through customer deposits. And this is, again, a function of the cost of deposits. We will be looking to put a duration on our deposits. We have around 8 to 9-month duration on our overall deposits. Around 14% to 15% of funding comes from capital market issuance, which we get to tap on a tactical basis. 14% of our funding base comes from shareholders' equity. And around 13% to 14% comes from interbank market. We tend to go high or low on the funding depending on the price advantage that each of these funding mix provide. We'll continue to strategically see our funding be distributed in the pie chart at the right-hand corner. It basically will be a guidance to our funding strategy going forward. But in terms of overall percentages, we might -- that might be changing depending on where the price advantage is. Thank you very much. Now I would like to hand it over to our Chief Operating Officer, EGM, Dr. Leonie Lethbridge, to take you further on our operational and innovation strategy. Thank you.

Good morning. Thank you, Parvez. You've heard this morning how we fundamentally reshaped our business. You heard from Raju that we've moved our wholesale banking book from domestic corporate to a much more -- and real estate to a much more government public system book based on the domination of transaction banking. You've heard from Amit that the same -- exactly the same strategy has been executed for our enterprise banking client tool, so a key sector of the economy, and who also has very tight transaction needs -- transaction banking needs. Of course, there is the same agenda or opportunity in relation to the retail business with the wealth products that we're talking about. And you've seen how in the last year the demand for remittances has basically doubled and how we've been able to service that. We see that continuing. So of course, execution capability, which is infinitely scalable, and that's essentially what we have built and what we're going to continue to leverage. You can see what we've done is disconnected the transaction and volume, the revenue from cost. And the way that we have done this is we have leveraged an entity that we've built -- a business capability we built called CB Innovation Services. Previously, our execution was substantially offshore in India, offshore and outsourced. But we brought it back into Qatar. And we've built -- that has enabled us to build a highly scalable solution. We are -- instead of paying on -- or cost being incurred on a per-transaction basis, actually, the incremental cost is essentially 0. So that gives us a huge degree of scalability. That also means that we've got very significant flexibility, which, in the face of COVID, we needed to deploy. So you saw the remittance volumes doubled, and we project strong increases. We expect that those -- for that matter, the contactless payments exponentially increasing. We expect the same thing to occur partially driven by -- in the past by COVID, but we've leveraged our ability to pivot around that and to capture more customer flows as a result. We've done that through excellent client service, but also a mastery of innovation, which we've built in CB Innovation Services and which is executed by a very joined-up execution capability between relationship teams, clients and technology and operations and with the product development teams. So that is essentially leveraging the digitization that is end-to-end. That's not just about getting clients to use mobile banking, it's about straight-through processing of everything that occurs in between, including some quite complicated assurance checks, checks for AML or fraud and the like. So we are using robotic process automation. We said we were going to do this, and it is now very well embedded in the business to help us take big outcomes. Similarly, we're using artificial intelligence and machine learning to deliver this seamless, end-to-end capability. We also have this ability to customize client solutions. So as Raju said, there's basically no mandate that comes onto the market, which we cannot win by providing excellent, bespoke solutions for our clients. They also help out with attracting the clients because it helps them with their cost base. It also is a proposition that's highly convenient for them, and it's also scalable for the client. So it's a win-win, but it's also -- it's definitely a prospect for revenue stream. So the question is, what does this mean in terms of JAWs, in terms of the revenue base and the cost base. You can see on the chart on the right-hand side that typically transaction volume equates to cost, but as I said, we've broken that nexus. So here, transaction volume really equates to non-funded income and revenue streams. What -- you can see our cost base has declined, not only on this slide, but on the slides presented by Rehan. So in total, our JAWs are double-digit this year and building on the same trajectory from last year. On a consolidated basis, you've got 10.5%. On a domestic base is 15.5%, which is actually really marked outperformance. The next slide, please. The question is -- the real question is how sustainable is this going forward? So we think, very sustainable. We think there is much more in the tank. The strategy around building bespoke solutions for our wholesale clients with digital conversion strategy is -- particularly this hard-to-digitize corporate need is 100% there. We see much more of that this year, and we'll have the innovation capability to be able to deliver that seamlessly, as Raju said. Retail clients need something different. They need -- particularly the -- some of the retail base who are not digital natives. We need to provide really intuitive, easily adopted solutions, which they can just blend with almost as an extension of their arm, as an extension of their phone. So that's exactly the strategy, and you've seen the outcome. To date, there is definitely more, as I said, in the tank. In the last year, you can see that whilst there's 55% CAGR in those digital transactions over 5 years, in the last year it's actually doubled. That's partly due to COVID-induced effects but more than that, it's because we're providing the right solutions. So where to from here? You can see that there are many more digital offerings coming to the table. We are running all -- many, many forms of digital and international counters -- I'm sorry, domestic and international counters. Domestic wallets, which are about to take hold in a very significant way in Qatar; merchant payment solutions, the bespoke solution for that; and of course, a traceable SWIFT proposition, which are just a few examples. Amit mentioned the wealth management product as a key -- and everyone knows where equity markets are at the moment. But that's also important in deepening the whole client segment and doing so in a way that from the start is very, very digital. So very, very scalable revenue and basically a flat cost sign. Transaction, banking we've spoken about, including a unique supply chain proposition, unique to this market, and also solutions such as receivable financing. Of course, just to the last column, none of this is just short-term or pragmatic, where there is an ongoing investment for the future because we continue to drive these -- this scalability as fundamental to the strategy. So aspects such as client security are very important, whether it's cybersecurity, whether it's fraud or whether it's contactless security through -- in a COVID context. Client experience is absolutely key to this. Clients need to -- want to deal with the bank, be delighted by dealing with the bank, and so we're continuing to invest in there as a way of taking those revenue streams. We're also investing in digital because as the whole world is digitizing, there -- that's the opportunity for more revenue streams, but also this completely scalable cost base is underpinned by that DAS capability. So as we said, data is the currency of the future. The bottom line, of course, is that the strongly positive JAWs is high scalability is fundamental to the strategy, and we see a whole lot more of it to come. I would like to hand over to my colleague, Mr. Kaan Gur, the CEO of Alternatif Bank. Thank you.

Thank you, Ms. Leonie. Good morning. I would like to welcome you all. Let's start with the Turkish macro economy. We see positive signals from the new economy management such as tight monetary policy stance, back to orthodox [indiscernible], strong commitment for stability, frequent communications. Eventually started to pay back as the rising policy credible, I can say. So we believe in that the natural dynamism of Turkish economy, together with the increasing vaccination rates, enables Turkey to grow at 3.5%. As you know, we saw high current account deficits in 2020. It was 5.2% of the GDP. However, we expect to see better picture this year with higher tourism revenues, increasing export performances. Besides, local demand conditions will be contained to keep importing demand at current levels. Therefore, it is going to be a shortfall in current account deficit. And most likely, it will end up at 2.1% level in 2021. Recovery in current account deficit is and will be crucial to contain the fixed volatility and capital inflows as seen last couple of months, encouraging to promote further Turkish lira strength. Fiscal discipline was main stronghold even in the corona days. This approach might change, and we expect 3.5% budget deficit to GDP level in 2021. After all, we do not expect significant Turkish lira devaluation further. Next slide. You can see our macroeconomic expectations. And our projection for the Turkish banking sector, I'm going to touch upon on the banking sector expectations mostly. Recovery, we expect that should be observed starting from late second quarter of 2021. Fall in CPI and funding rates should enable sector to see an upward trend in net interest margin and generate better profitability performance in the second half of the year. We expect a moderate growth, 14% for the sector. As it was the case in the previous years, we do not expect to see a fixed long demand regarding the volatility in Turkish lira. On the deposit side, we expect sector to increase its deposits more than loans, with a 19% growth and loan-to-deposit ratio to improve slightly. More importantly, our NPL ratio expectations at 6% is pointing a slight deterioration in asset quality, assuming the regulation on deferrals to end the end of the first half of this year. In contrast, however, the last year trend, we expect the sector to increase is fees and commissions generation performance by 16%. All in all, our mutual and average equity expectation for the sector stands around 12 to 13 for 2021. Next page, I would like to give you a brief update on our 5-year business plan. I can say that we have made an extensive road map in 2 phases. First phase that covers last 3 years, whilst focusing on fixing the basics: new functions, system developments, team building and culture, of course, the legacy transformation. Focus on asset growth and keep focus on cost optimization. I will be sharing the details. The first, especially at the pace. Successfully, we ended up that phase. However, I can say that we have started to work hard for the second phase of our plan. Next page. Okay. This is the exact outcomes of first phase, 2017, 2020 -- including 2020 is, yes, it was very volatile, but I can tell you that Alternatif Bank, as you see here, outperformed the private sector in many key metrics. As you can see on the left-hand side of the table, our compound annual growth rate in the last 3 years was much higher than the private sector. And we have significant market share gains, which has been driven by the growth in our Turkish lira balance sheet rather than metrics. Apart from growth, it is also a pleasure for me to show you our outperformance on the income slides. Another positive was on the asset quality. Yet, more importantly, owing to our prudent approach, and target to have a healthier balance sheet by focusing on corporate large commercial companies in a very selective approach, our performance on the asset quality has been much better compared to the private sector. After all, we have shown our resilient prudent risk management within very turbulent times. On the next slide, I will share the details of our second phase plan. Our main target is higher profitability. As I said before, we have started to work hard to successfully execute the second phase of our plan. In order to reach our targets, we will optimize our income generation via digital. From now on, we will be using our digital channels and capabilities to build up a broader loan and deposit base because last 3 years, we invested those areas heavily. And we will relaunch our customer contact center, and we'll launch a new central sales. Of course, getting the support enhanced digital capabilities. This new organization, channels and functions will also help us to reduce our loan and deposit concentration. In the meantime, we will selectively grow in business segment via our corporate clients' ecosystems. We will build up a large retail portfolio via digital and partnerships. And with a larger retail portfolio, we'll increase the share of small ticket low-cost deposits. And additionally, we will optimize the share of our external borrowing in our total funding. Ultimately, we will be targeting a double-digit return on average equity starting from 2021. We will increase our sales via product or segment-specific campaigns, with a main goal to increase cross-sell in both potential and existing customers. And this also enables us to generate a strong fee income growth which is even more crucial as net interest margin will be still under pressure in 2021. For higher profitability, we will also continue to improve our asset quality and maintain a below sector NPL ratio. Next slide. Let's look at the details of our 2021 targets. Of course, I'm not going to one by one, but we target to reach QAR 41 billion asset size, with a 15% year-on-year growth, which will be driven by a loan growth of 12%. While our deposit growth targets is 23%, thus, we will be improving our loan-to-deposit ratio this year. We will focus optimizing our net interest margin by repricing our loan book and optimizing both segment and product mix. While smaller deposit portfolio will also be contributing this journey. We target to maintain strong growth in fees and commissions income with a 35% year-on-year increase. We have done a very good job on risk management, and we performed much, much better than the sector. We will continue to derisk legacy assets and transforming loan book towards a more sustainable profitability. Thus, we will continue to be improving our asset quality and maintain a low sector NPL ratio which is around 4%. In order to increase our efficiency, we will leverage robotic process automation to automate existing manual workflows. And we will maintain our tight control over OpEx also. All in all, our inspiration for the next 3 years is to reach a sector average cost income ratio, which we expect to improve down to 35% level, and to improve our profitability year-by-year in coming years up to mid-teen levels. That was my last slide, and I would like to thank you all for listening to me. And I will be handing over to Mr. Joseph. Thank you very much.

Thank you, Kaan, and thank you to all the speakers for keeping within the time limit of 90 minutes that we had set. In summary, I would just say, in the beginning, we talked about the 3 aspects of resilience, risk management and digital innovation or transformation. As you can see, these elements have been present and woven through each of the speakers' presentations. Last year, in 2020, commercial bank showed resilience in its operating income and operating profit despite the challenges of the epidemic. And also in the way it pivoted its business and its capabilities to handle the challenges of COVID. You saw we have very good franchises in our wholesale bank and in our retail bank and that we are showing resilience in our operating incomes in these franchises by building alternate revenue streams and by building new revenue streams and also managing the risks well within these new businesses and existing businesses. This is highlighted also in the risk presentation where, again, we saw the approach that we have built, prudent risk management, building of prudent buffers and ECL levels. And at the same time, the new underwriting will help to drive down our cost of risk in the coming years. And we saw that we have liquidity and diversification of liquidity sources to meet the needs of the bank at very acceptable cost of funding, and it will help to bring down our cost of funding in the next few years. And you saw that we have the technology, operations and digital capabilities to really transform our business and to support the launch of new product, so the customized solutions. And also the costs, so that effectively, we are providing a digital transformation, which is where the world is heading. And at the same time, managing our cost income ratios and driving efficiency and productivity in [indiscernible]. So -- and if you've also got an outlook for Turkey, where our management team has done a lot of work, and where, as I said, the outlook is positive for the next few years, given the work that has been completed. And Rehan has already spoken to you about our guidance for 2021, and therefore, I do believe that the strategic plan, as I outlined. We started in 2016 on what was quite a significant transformation of the bank, and we have achieved almost all of the targets that we have set ourselves. And as you saw, the indicative guideline figures for our next strategic plan, which will then bring all our metrics back in line with the best in the market in Qatar. And that will, therefore, lead to, I do believe, a re-rating of Commercial Bank. So that's now all the presentation is done, so I do hope you've got a better idea of the business and of our individual work streams and how we see the outlook for the next few years. And I have every confidence in this team, given the track record that they've delivered so far, and on the excitement with which we face the future because there's a lot of potential there. So I'll now hand over to Zubair, who will just talk through the logistics of the asking of questions. And then all of us are available, the entire team, and I'd also like to welcome Fahad Badal, the Head of our International, who had to step away for another -- I think, he had a TV interview because he climbed a mountain in [indiscernible], and he is the only Qatari person to have summited Everest. So that's why he had a press and TV interview. He couldn't join us, but he's now joining us for Q&A session. So again, over to Zubair, please talk to logistics, and then all of us are happy to answer any of the questions. Thank you.

Thank you, Joseph. We will now start the Q&A. [Operator Instructions] We now have our first question from [ Aybec Islamal ].

So I have a couple of questions on your guidance point that you raised there. Firstly, I believe you're more focusing all on the government -- model government revenue model. Will they assume a change or certain adjustments in your funding portfolio? How are you thinking your funding mix? Does that demand of your funding costs going forward? Or what are your thoughts here? And I think secondly, on cost of risk, you've shown for the information about the sustainable cost of good and that's around about 20 basis points. To what extent the government active participation in your asset book will drive the cost of business to such a level? So that will be my two questions.

I think thank you for your question. With regards to the government, what has happened is that the government, yes, they do get competitive rates, but I think they have also been asked to raise their funding independently. So I would say there's a balance in that. But for us, the cost of funding and the sources of funding is something that we've been working on independently of, say, a pure focus on the government. Our whole objective has been to lower our cost, and we've done that consistently over the last 3 or 4 years by, I would say, one is looking at diversifying our investors; and two is also being present and building our credibility rates. So as an example, in the Swiss bond market, we are one of the largest issuers from the Middle East, and this has been done over the last 4 years. We've been consistently there in the market, whether we are raising funds or not. And this has enabled us to build credibility and, therefore, confidence in commercial bank. So as we said, we've looked at the timing of some of our EMTNs as we -- we actually allowed some of our EMTNs to mature in the last 2 years because we felt that the timing was not correct, and this is why we're going now. We're looking at alternate funding sources, and that's why -- which will drive down the cost of funding, and of course, low-cost deposits. As you've seen, our strategy has been to dominate transaction banking, and the prime benefit of this is the development of low-cost deposits which have now grown just in the last year itself by 25%. And we see that, and we have targets for what this should be as a portion of our funding mix. So this is the sort of holistic approach to lowering the cost of our funding. And that's not driven purely by a focus on the government, but definitely, it's about benefiting and improving our net interest margin. And so you've seen despite the increasing proportion of government and public sector, our net interest margin has actually increased. It was about 2.1% 2 years ago. Now it's 2.4% and heading towards 3.5% for this year. So that's the key approach. In terms of the cost of risk of government, I would say, yes, definitely, the government, as a proportion of our portfolio, is improving. We'll benefit in terms of new migration that we see that as being low on or relatively low or nonexisting, but it's also about the whole quality of our origination, which has happened since 2016 where we see very, very limited migration. And even the 5% migration to stage 3, which we showed from 2016 origin. It was actually some of the -- I'd say, some of the enterprise SME accounts where we had a sort of clean facility, and that has been stopped because, as we said, we tested and learned. So we actually see that also contributing to our cost of good. So it's really the quality of our origination and the ongoing very strong monitoring that we put in place which will make the cost of risk low.

Just two follow-up questions, if I may. Do you think the merger of Masraf Al Rayan and Al Khalij Commercial Bank changed the competitive landscape dramatically? And what are your thoughts about the banking -- setback in market after that merger? And secondly, obviously, the GCC Brocade was recently [indiscernible]. If we consider your strategy in your GDC marketing situation the UAE, for example, we know that previously, your investments in the UAE, it was up for sale. Is there change in the [indiscernible] in the landscape? [indiscernible]

Okay, let me take the first question. It's regarding the merger between Masraf and Khalij. I would say, as I said, at the macro level, I do believe consolidation is good for the economy and good for the banking sector as a whole because having a few larger bigger banks, well capitalized is -- brings more stability. As I said, lots of smaller players tend to push out the risk envelope or the pricing on the envelope. And so having this consolidation is good for the Qatar banking sector in the long term for the sustainability of its returns. With regard to Masraf and Khalij, Khalij was a smaller player in the conventional market, and you've now created a bigger player in the Islamic banking market. I would say, Masraf was always strong in the government and public sector. And so the addition of Khalij will probably not add materially to that, but I think it will give them some private sector exposure. As regards to the competitive position, I don't think it will make a big change to us competitively because Khalij remains the dominant player in their segment, we have been making market share gains in that segment anyway. So Khalij being added to that doesn't change materially. I actually think it's good for us as a conventional bank, because now, there are 2 fewer conventions, 2 banks less in this market in the commercial market. And we and QNBR are the undoubted leaders in the conventional market, and therefore, our position has become stronger. With regards to the UAE and the lifting of the blockade, and as I said, the lifting of the blockade is positive for Qatar, but it's frankly the policy for the whole GCC. With regards to UAE, our focus is primarily on turning around UAE and releasing the value that we do think is there, and it's not fully reflected in the market price. So that is our focus. As I said, the new CEO and the new management team have done a good job on the costs, and now, it's about -- we cleaned up the legacy portfolio. So we see an upward trajectory there. So that is and remains our primary focus, while writing down the value of our holding and to a much closer fair value. If anything, it gives us a little more flexibility. If anyone was to discuss with us, it gives us a little more flexibility to have a realistic discussion, but that is not our prime focus. We are not looking for a sale. We're not looking for buyers. Our focus remains on an organic strategy of turning around the business and releasing the value that is then seeing positive contributions coming from UAE. We've had the hard grind, and so I think we'll see positive returns coming through.

Our next question is from Vikram Viswanathan.

My question is that mostly around the associates, which have been the major overhang for the stock price. Can you give us some visibility on the profitability from these associates going into 2021? It's quite obvious that you have done lots of cleanup in the bank in UAE. Is most of the cleanup behind us? Should we expect another year of losses in United Arab Bank for 2021? And also the -- you mentioned the number, you put a number of QAR 300 million to QAR 350 million, which is the worst-case scenario for additional impairment. Is it including losses from UAB or excluding losses? And my last question is on MDO. Should we expect profits to come back to 2019 levels in 2021?

Yes, Vikram. Let me take that. I think, as you quite rightly say, we've taken substantial action in Commercial Bank in terms of impairment. Obviously, we've recognized our losses. As you know, both UAB and NBO listed entities -- what I can say is that both have taken additional provisioning in 2020 in light of COVID-19, in light of the specific circumstances. We do -- we are working with both of them very closely. They are -- in both of them, we are the single largest shareholder, so we are confident that, that turnaround will happen in UAB in 2021. In 2020, NBO had a new CEO join in the second half of the year. Just now new CFO has just joined NBO also, and we're very confident in their ability and the rest of the management team in improving the performance of NBO for 2021 as well, given that there were additional provisions taken in 2020 versus previous years.

Okay. Okay. Just in terms [indiscernible] asked about impairment as well. And I did give in the guidance that we have, in our numbers, between QAR 300 million and QAR 400 million for impairment in 2021. This is really a conservative estimate given the actions that we've taken in 2020. But I think it -- and there is an annual exercise, which will be done again in second half of this year. But it would be wrong for me to say that no further impairment will ever be required on those 2 entities, and therefore, it is prudent to have something in our forecast for those impairment. And that is included in our overall guidance that we gave you just now.

Okay. I have two follow-up questions. Do you see any chance of an impairment at NBO?

As I said, look, we will assess again this year. We did the assessment in 2020, no impairment was required. And I'd just add that in our guidance, we also showed that there's no losses expected in either of those 2 associates in 2021.

Okay. Okay. So the number that you provided, which is 300 -- I think QAR 350 million to QAR 400 million, that is the Empire, which is expected for United Arab Bank, right?

It's not ex -- I mean expected, but as I said, a prudent, yes, exactly. Overall. Overall. So 3 associates, overall, that's the number.

Overall. Okay. Okay. For all the associates [indiscernible].

Our next question is from Rahul Bajaj.

I have two quick ones, actually. Some of my questions have already been answered. 2 quick ones. One on growth. So when I think about growth, what would drive volume growth in Qatar going forward? I see your guidance for 2021. But if I like look ahead, 2022 and ahead, the FIFA World Cup was the main driver in the last 3 to 4 years, I would guess, in terms of business volume growth. Once the World Cup is done, what would be the next sort of kicker for growth over the next 5, 6, 7 years? If you could help us understand that, that would be very useful. My second question, partly linked to the previous question on 2 -- 1 or 2 less conventional banks and the mergers that are happening. So if I have to kind of think about the Islamic versus the national banking landscape within Qatar, I mean is one at an advantage to the other? Do you see market trend or market share changes happening or maybe Islamic banks taking bigger market share versus conventional bank or visa versa? Or I mean, how should I think about the dynamics between the 2? That's my question.

Okay. I'd like to answer the first question regarding what happens after 2022. There are several initiatives that are being planned in Qatar, and 2022 is just one event out of it. So I'd like to quickly take you through some of the growth initiatives that the country is planning. The very first initiative is the expansion of the gas production, which is NFE, North Field Expansion, where the production of gas is going to increase by 65% over the next 5 years. This whole project is expected to be in the range of $40 billion, which are stated projects, both upstream and downstream. And if you add the ancillary and the indirect business, it comes to almost $60 billion. A lot of that business going to local companies and, of course, to some specialized joint partners. Qatar's already working on another large initiative, which is opening 2 free zones, 1 near the airport and 1 year Ahmad port. And this is expected to generate huge amount of economic activity. The third one is that we also have free zones, where several benefits have been offered to the companies who come to the free zones. It offers 100% ownership, repatriation of profits and leased land for 25 years and so on and so forth. That puts it at best of all features in various free zones. On top of that, infrastructure development is constantly going on. And in addition to that, for handling the larger gas production, the shipping companies are ordering more ships and so on and so forth. So if you look at the overall activity and the investment calendar of government and public sector, you'll notice that there's a huge amount of activity planned also because the infrastructure and the sports facilities have already been created in the country. Therefore, Qatar is increasingly bidding for several world events. And you must have noticed that we have already won an event in 2030, okay? And we hope that we will actually win several other events, which will keep the sports calendar going. And we want to be the sports capital in GCC. So if you add up all this, it will come to around QAR 300 billion to QAR 350 billion worth of known and declared project investments in the country. So we do not expect any shrinkage of economic activity. In fact, it's the other way round. The country has a full-scale plan of how to keep the economic activity going, and we are increasing -- we are expecting an increase in population that also leads to the entire retail as well as wholesale banking space.

Sorry, just to clarify the 300 to 350 was U.S. dollar or Qatar riyal?

No, QAR 350 billion. So regarding the question about Islamic versus conventional, I would say that what you're seeing is you're seeing a few bigger Islamic banks. So that will obviously increase the competition between the economic banks. The overlap between the Islamic and the conventional banks is already happening in the competitive space. We compete for clients, et cetera. It's just the structure of the offerings that is slightly different. Again, we have the capability to also be attractive to Islamic clients by some of [indiscernible], and therefore, I see this as not really -- the consolidation per se is not going to change the dynamic. I think it's the banks which are able to deliver customized products and solutions in the retail space and even in the corporate space, the agility around developing alternate solutions. Of course, there has been element of price competition, I'm not saying no to that. But I think that is there anyway in the market between [indiscernible]. So there's no differentiation between banks. But I think it's really the banks which are able to [indiscernible] digital transformation and new product streams which will be win. So I would say, per se, it's not going to change that now. Sorry, I have one contribution from Amit to add a detail.

So I just want to add, on the retail bank side, I think there are going to be 2 drivers for the growth. One is, I think, Raju and Joseph spoke about the overall market going even after the World Cup, so that obviously, it is the size of the market. But we do believe that our position in the expat segment, with the products I spoke about, is very strong, and we will gain market share. But more importantly, so while we have a good position in the catering market, it is not as strong as we are in the expat market. And this is where UNB and some of the Islamic banks have better hold. We do believe that with our new wealth management offering, the new [indiscernible] we are talking about, the relationship management upgrading. This is one huge opportunity. So this will be the second driver of growth, which is getting more of the core market, and that's a huge market. So I think there is enough runway in the next few years for growth for the fact.

I had one more question, actually. A quick one on the real estate sector because -- I mean I know CBQ has been reducing the kind of share of their loan book in the real estate space, but it still is quite a sizable share of the whole business. And we've heard about stress in the sector in the last few years, partly -- maybe after the lockdowns after the embargo, et cetera, how is the sector faring now? And do you think the lifting of the embargo would be a positive sort of pick up from the real estate side going forward?

Yes. Okay. I think the -- with regard to the real estate sector, I would say that's like a case of severe indigestion. There was over capacity, et cetera. And this is not unique to Qatar. I believe this is -- we've seen it with commercial real estate across the world. It goes in cycles. So the good thing is that fresh financing for lots of commercial real estate declined, the quantum in the last few years. So I'd say, since 2017, '18. So new incremental supply is limited. What we had was projects in -- which were under construction on the process will continue, then they came on stream. So obviously, that oversupply led to a drop in rentals, et cetera. So I would say that indigestion is being absorbed through the system. And it's -- it will find this peak. I think the downturn in prices and supply rentals has also sort of stabilized it. So now because we went through some pretty challenging times, the blockade, the pandemic, et cetera. With the lifting of the blockade, I think that's a strong positive commercial real estate and hospitality in other related areas and even residential because all the infrastructure that is built needs people to manage. And it's a different category of, let's say, a workforce, which will be using the -- some of the residential, which is been built. So I actually see residential being a bit stronger in upturn. Commercial real estate will -- I think, with the lifting the blockade, with the positive sentiment and with all the measures that Raju talked about, to diversified economy, will also [indiscernible] I think, slowly improve. But I think that capacity that oversupply is being absorbed, and I think that will happen in the next few years. But we reached the bottom in terms of further downturn. We have been very careful in our origination since we started on this journey. Therefore, we'll continue to manage this carefully. So I would say that we are at the bottom of that, and there's more upside than downside at this stage.

Our next question is from Edmond Christou.

Just want to follow-up on the asset yield. You said you expect asset to be flat. Also, you are targeting over the next 5-year more government exposure. So I believe you will support your asset yield either by more investment client of liquidity into investment portfolio or by growing your retail books? And if that is true, what the percentage of the retail book you are targeting over the next PAUSE 5 years, let's say? And what about SMEs proposal? Where do you see this is going as a percentage of the total book on the retail side? The second one is on the digital life cycle. Where do you see that now in the life cycle? I mean, has the pandemic changed the whole strategy you had in place? And now you are thinking about expats on the retail banking? I think they are more demanding in terms of the digitalization and services to become quick and agile. How do you see the full digitalization on fully digital bank in Qatar? I have very limited knowledge about [indiscernible] and digitalization. So if you can enlighten here. The last question is you look optimistic about the UAE, but the UAE is very competitive market and consideration is going on, so I will be surprised if you're increasing your share in the UAE and most likely exiting the UAE. And if you do want it the capital over 5 years, which market do you think there is diversification, synergies, it makes sense in terms of the trade flow?

Amit will answer the first part about the retail side and the asset yield. I think -- but I would just say that in terms of the asset yield, we are definitely not going to just grow the retail side, as Amit said, on the asset side. I think our asset yield improvement will also come from the nonlending-related revenues and which will ultimately add up to our overall yield. So if I lend someone and he has some fees and other ancillary business, that's where we see it. And similarly, the low-cost deposits, which lower our cost of funding, maintain our net interest margin. But on retail, I think there was a thing about whether we're going to grow our retail or not. I'll let Amit handle that. In terms of the investment book, yes, we will grow our investment book as part of our normal business. And that I think will be an ongoing part of our strategy. I'll just hand over to Amit, so he can discuss what the retail book.

On our retail book, as I said, our portfolio is either secured by tangible collateral mortgages, cash or shares or sort of secured by cash flows of salary. Retail is roughly about 15% of the book today. I would think it will stay in that same range. But again, looking at very selectively the customers we go after. The SME book is less than 2% of the book. Again, I would expect it to stay there. I think the growth in SME can come from transaction banking. Selectively where needed, we will support it with loans, but loans to SMEs as a separate initiative is not one of our priorities. So this is broadly where I think -- where the current mix is where it will stay going into the future. On the question of digitization, I think one of the questions you asked, if I understood correctly, was that COVID gave a temporary boost to digitization, will that stay? I have no doubt. It's a permanent shift in customer behavior, whether it's in banking or in any other field. This is a permanent, irreversible shift. Having said that, our strategy is to give customers the choice of where they would and how they would like to bank with us, like I showed, customers now 98%, prefer to bank in digital channels, and we'll continue to grow them. But where they want to come to our branches, whether it's for wealth management sessions or whether it's for digitized processes. We will give them that opportunity, and I see that the trend, not only in Qatar, but globally over the next 3 to 5 years, branches will remain an important part of whole strategy. But digitization is irreversible. And the good news is whether it's expats or the Qatari nationals, we see almost an equal adoption on both sides.

I think Leonie, our Chief Operating Officer, will also say something about the digital transformation [indiscernible]

Yes. So there was certainly an uptick in digitization globally as a result of COVID. One of the bigger questions that many people are asking around the planet, is this permanent? Or is it not? When we talk to our clients, 5 out of every 6 item say that they became more digital last year. But 7 out of every 10, say that they will stay more digital. And so we are very confident that this is banking on the convenience, the security and the accessibility of digital. I think you asked a question about whether there is a proposition for a digital-only banking cutter. Digital-only banks, we typically compete on price. When you look at the cost-to-income ratio in this market, I think it's hard to see that as a proposition. And we the franchise value, the brand value of the service that we offer, I think, also means that the -- there is actually not too much need for that or not too much opportunity for us. So I think that we are very confident on the future digitization strategy, with demand and more than that, our ability to take economic value out of it, whether it's nonfunded income, low-cost funds or just driving down this cost-to-income ratio positive JAWs more to the bottom line.

I would add also -- sorry, go ahead.

Just to follow-up on digitalization. So in terms of the digital manual ratios for a loan transaction, are you able to issue a loan digitally or it has to go to the back end and done manually? I just want to see where we are on to the digital, I call it, cycle or the framework. I mean how much investment we need in order to become more efficient on transaction on the retail side?

So you asked a very good question because as we speak, this week, we have launched our digital loan and digital card product, which means the customer and existing customer cars can go to our website. And if the loan is pre-approved because we have all the credit parameters. The transaction will go through fully digitally. Similarly, customers can now open accounts digitally. They can do all kinds of profile updates, change. So there is a lot of functionality, which is there. Honestly, customers don't need to come to branches today. However, as I said, if they do choose to and they feel more comfortable, we are going to make that available. But as I said, more than 98%, 99% of transactions are now happening. But to answer your specific question, yes, starting this week, we have launched a loan on mobile product and the card on mobile product.

Yes. Just to emphasize that point, Amit. I think loans as a form of testing the maturity of digitization is a question, which has just been responded to. But really the scalability question comes to very, very frequent transactions, where -- and you've seen the statistics, where more than 98% of all transactions across the bank are delivered digitally. So in terms of does stuff fall to the floor straight to paper, all of that kind of stuff, it's largely very significantly being dealt with. We see more revenue streams coming through on the digital space as opposed to -- the creation of new streams as opposed to substantially only operational expense reduction.

I believe the last part of your question was about UAB. You're absolutely right. I think UAE is a competitive market, and UAB is a small player. Where we see it is that basically, it's had significant credit loss in the last few years. So just by cleaning up the portfolio, getting crop underwriting standards and making sure that we're not bleeding, that itself is a major contribution. And I think that you'll see that slow return to profit and contribution to ultimately our bottom line coming through in the next few years. I don't think they're going to go gangbusters and [indiscernible]. I think it's very measured and prudent growth is what is the posted out there.

Our next question is from [ Skrim Minstoikov ]. Our next question is from Deniz Gasimli.

This is Deniz Gasimli from Goldman Sachs. I have one question on Alternatif Bank, please, on ABank, on Slide 48 where you saw kind of ABank trends versus the rest of the sector. I can see that cost of risk that's provided is meaningfully lower than the private sector average at around 130 basis points. So just wanted to understand what drives ABank's meaningfully lower cost of risk compared to the sector, and where do you see kind of normal levels of cost of risk for ABank as I think this year the expectation is that the banking sector will see even further cost of risk improvement? So how do you see that trend for ABank?

Thank you very much for the question. First of all, I would like to emphasize that managing the existing cost of risk with a very volatile return, actually, we were very focused on especially the collection side, and our existing collection performance is very much higher than the market. And the second thing is, of course, the fixed volatility, starting from the first half and through November, actually, our NPL formation it's much more lower than the sector within the last 3 years. That's why it is a long-term strategic initiative of Alternatif Bank in order to decrease the NPL ratio lower than the private sector and at the same time having lower cost of risk again lower than the sector practices. And at the same time our main focus was in 3 years in order to build up new solid loan portfolio, mostly focusing on the large commercial and the corporates. When you look into our total loan book, 98% of the total loan book is coming from corporate and large commercials. And then actually, we are much more immune rather than the sector within that aspect. And I think lower NPL formation, better performance collection, those are the main reasons that Alternatif Bank is exceeding lower ratio in terms of cost of risk and at the same time NPL ratio.

For normalized cost of risk, I'm hearing you have 100 basis points for next year. Is this where you see normalized cost of risk as well going forward or even lower?

100 basis points is going to be lower for 2021.

Our next question is from [ Ahmed Abdulrahman. ]

Can you talk more about or repossessed collateral in terms of real estate? I've seen that the balance has declined year-on-year, so how did you -- did you sell these assets or were they revaluated downwards? And what do you plan to do with the remaining going forward?

Yes. Ahmed, yes, that's quite correct. We did dispose of some of the repossessed assets during 2020 and we do have an aim to dispose of some more during 2021. And that will be normal course of action as we do settlements where we have collateral. We initially take them on to our books and then exit as soon as we can in an orderly fashion.

And are you selling these at the book value or are you getting more or less than what's on the financials?

Normally, very close to book value. That's always the intention.

We do not have any more questions at this stage, so I'll hand you back to Joseph for closing remarks.

Thank you. Well, thank you, everyone. That's been a very useful session for us to also understand your questions. And thank you for the insightful questions, I would say. We remain open to any queries which may come later. Rehan and his team are always available. And so the objective really of today is to give you an idea of how the bank is performing and what our plans and thoughts are and that you should come away with a better understanding of the bank's strategy and the levers on how we going to deliver on it. As there are no further questions and I'm sure you have busy days ahead of you, I'll -- we'll close this session today. And once again, I really appreciate your presence and your -- being part of this journey with us. Thank you very much.