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

[Audio Gap] Through awareness of Qatar in the Middle East and on a worldwide basis, which will be positive for Qatar in the long run. But the real benefit will come from, of course, the North Field expansion. So everything remains in place in terms of the positivity. I think the one thing which I would say is that -- since our last call is that the volatility in the international markets has probably increased. And the pace of Fed interest rate increases is obviously higher than a lot of people expected, so that -- and inflation has remained strong. So that component, I think, will have some impacts in the long term on the economy and the bank in terms of cost of funding, et cetera. So if you move to the next Slide 7 on guidance -- sorry, Slide 5 on guidance. Again, our guidance remains the same for 2022, and we remain committed to our 2026 5-year plan targets. The one area that I would probably look at is 2 factors. One is the cost of funding is likely to go up if the Fed increases rates by another 150 basis points over the next 2 cycles. So increasingly, I'd say whilst normally interest rate rises have been very good for banks and we've also seen the benefit in our interest income, I think they're reaching that point where borrowers are starting to find it difficult to continue servicing these high interest rates. So I believe our ability to pass on all this interest rate increases will be less than it was before when we were early in the cycle. So therefore, not being able to pass on fully into our entire borrower base and the full extent would obviously have an effect on your net interest margin whilst at the same time having to absorb the cost of increased deposits -- sorry, increased funding costs. So I think that's where I would say, particularly for 2023, you might see some pressure on net interest margins. So I would say 2.8% where we are right now is probably the top of the net interest margin. There's more downside risk than upside risk on further interest rate rises. The second piece is, again, relating to the cost of loans and the high interest rates. I think that's going to also have some effects on let's say, creditworthiness. And therefore, I believe, therefore, we should be conservative. And then if you add in also that the COVID support measures have been withdrawn or phased out completely, that will mean that we should be conservative in our outlook for risk. And therefore, I would say that whilst our guidance has been 100 to 110, I think there's potential for higher cost of risk. Again, being conservative, being prudent, we believe that there might be another 25 basis points above that. So I just -- and again, we also need to be conservative in our approach. So therefore, I think that are the 2 sort of changes to our outlook and guidance. We remain committed to the 2026 targets, as I said before. But given this situation of the much higher interest rates than I think anyone anticipated, that's why I would say these are the 2 effects on net interest margin potentially and on cost of risk also for this year. Apart from that, look, our core business remains strong. I'm actually excited about the potential of our retail business in Qatar where we've made some new team members coming onboard and we are seeing some good upward momentum in our retail business. And I actually see this as a good opportunity potential for the next few years. There's a lot of opportunity there given our name and our presence in Qatar. Again, on international, of course, Turkey, Kaan Gur will speak to it, but that remains, I'd say, a challenging outlook for this year and next year. But we continue to manage very conservatively for risk. And our other associate banks, both NBO and -- continues to perform well. And I see an improving trend. And similarly, we have a new management team in UAB, who we feel very confident about will help to bring a real turnaround in that business. So the international outlook of our associates is positive. So I'll hand over now to Rehan. And then, of course, we are happy to take any questions. Thank you.

Yes. Thanks, Joseph, and good afternoon, everyone. I'll focus on Slide 8, which shows both the quarter-by-quarter analysis as well as the year-to-date as well. As we can see, we have achieved QAR 2.2 billion for the first 9 months of the year. It's 3.3% up year-on-year and 5.3% up quarter-on-quarter. So what are the main things that are driving this improvement? Firstly, you can see operating income is up 9.5%, mainly driven by net interest income, but also non-funds income as well. Even though we saw some reduction in Q3 and that is mainly as a result of investment income and the market volatility that we've all seen. Despite that, year-to-date, we're up 9.5%. Costs are fairly flat year-on-year, 0.4% up and slightly down quarter-on-quarter. So the main driver of operating profit being up 12.8% is the income and that's something that has been a very important part of our strategy that it should be income now that drives the growth in our profitability and also the reduction in our cost-to-income ratio. That's down from 24.8% a year ago to 22.6% for the first 9 months now of this year. Just a little bit on the balance sheet before we carry on. You can see that the lending volume has decreased by 2.6% from QAR 101 billion to QAR 98.4 billion. Within this, as we've talked about in the past, the government has been paying down their overdraft. So about QAR 6 billion is the movement downwards from that and that's the main impact. So underlying, we are seeing growth. It is conservative, and we'll continue to be conservative on our lending growth. But the overall reduction is mainly as a consequence of the overdraft reduction from the government. Then if we look at deposits, you can see deposits are up QAR 6 billion, almost QAR 6 billion year-on-year, which is 6.9%. Within that, the low-cost deposits, and again, a very important part of our strategy, is up 11% year-on-year. And that is helping us maintain our net interest margins, which you can see are constant at 2.8% quarter-on-quarter, but up from a year ago from 2.6% to 2.8%. So that has been helping drive net interest income further upwards quarter-on-quarter as well as year-on-year. Then if we look at provisions, you can see that we are increasing provisions. Provisions are higher year-on-year by approximately 27%. We will take a conservative view on provisions. As we know, Q4 is the quarter in which we make our final decisions both with the auditors and with the Central Bank. And we do expect provisioning to be to be higher in Q4 than it has been in the previous 3 quarters. You can see the cost of risk right now on a net basis is 95 basis points. We had guided QAR 110 million as the -- QAR 100 million to QAR 110 million as the range for the cost of risk for the full year. And it potentially is around that area with a slight upside risk, I would say, depending on where we finally end up and the view we take in this rising interest rate environment that we're currently in. On the associates, you can see that it's 72% higher year-on-year. This is driven by both NBO and UAB. And as Joseph earlier said as well, these entities, we're working very closely with. We're very much involved in the strategy and obviously passing on some of our experience and some of our learnings over the last few years. And we're pleased to see that that's now beginning to translate in a better performance from both of those entities. And we expect that to continue further next year and beyond also. And as we've seen that Turkey is in a hyperinflation situation right now. We took an adjustment in Q2 of QAR 69 million just on the noncash net monetary loss basis, a further QAR 29 million in Q3. Of course, Q2 was from 1st of January, so it did equate to 2 quarters worth being taken in Q2. And now we've taken 1 quarter's worth in Q3. And that's how we expect that to continue for as long Turkey remains in a hyperinflation situation. And then just a bit more on the ratios down below. You can see NPL ratio is at 4.5%, consistent with previous couple of quarters really. And then on the coverage ratio, on the coverage ratio, you can see that we continue to build that up during the year. It was 97.4% at the end of last year, and we've been building that up to 107.6% now. On the capital adequacy ratios, you can see that there is a reduction. This is as a result of the fair value reserve, negative fair value reserve on our bond holdings. So that again is something we've seen as a result of the market volatility. That's something that has impacted our capital although we remain very well above any of the regulatory ratios that are required and our own internal benchmarks as well. So we remain very well-capitalized, both from a Qatar and a international point of view. So overall, I think in summary, what I would say is that income continues to be the driver for the improvement in our profitability. Costs are fairly flat. Provisioning is higher than this time last year and we expect that to continue in Q4 as well. We're pleased with how the associates are doing and that's helping us on the overall profitability side. We will be conservative on balance sheet, and we do expect a bit of NIM pressure in 2023 as a result of these interest rate rises. So that's the overall summary. Before we go to Q&A, I will hand over to Kaan Gur in Turkey to just take us through the results of Alternatif Bank, and then we can go to Q&A session.

Thank you, Mr. Rehan. Good afternoon, dear all. Let's look at together with the Turkish macroeconomic situation for a second. I'm going to summarize the existing situation. And then we will go to Turkish banking sector overall, the performances. And finally, I'm going to speak on Alternatif Bank's third quarter financial performances. On the Turkey side, I would like to say that especially the growth is important. As you know Turkey was one of the fastest-growing country in 2021, which is 11%. Actually, we are seeing a kind of a down trend. And in the first half, we have seen 7.6% as the growth performance. But it is obvious that the growth expectation is decreasing and we are expecting to 3% growth in third quarter. And most probably last quarter is going to be 0 growth in Turkey. When you look into that aspect, actually, the most important thing is your current account deficit performances. Actually, last year, it was very well-performed. But now we can see important rise there, so 3.9% current account deficits as of first half of this year. And unfortunately, elevated energy costs increasing current account deficit to GDP level from 4% to 5% by year-end of this year. So inflation, again, especially CPI increased to 83.5% in September. And we'll see again some rise till October. But before starting November, we are going to see some base effects, which is going to a kind of decline trend and we are going to see some below 70% on the CPI side. As you will know that Central Bank start to cut the policy rates, it is now 12%. And that, in the same time, macro-prudential measures are the main tools of the monetary policy and market expects CBRT to cut the policy rate to single-digit levels as of this year-end. Another important thing is maybe a last sentence for the Turkish microeconomics, I can say that especially macro-prudential measures may be effective with the cost of weaker growth momentum. So rising geopolitical risks and weaker economic expectations may affect the dynamics of the Turkish economy, but it's a global issue as we well know. On the Turkish banking side, next page, I can say that especially Turkish banking performance on the profit with the site supported by the improving Turkish respects and CPI linkers banking sector will see as of third quarter a kind of improvement on the bottom line performances. So asset side also increased, but the growth mainly coming from the higher dollar Turkish parity. Loan increase, especially on the corporate and commercial loan utilization was the essential factor. Now the whole environment is changing rapidly and not in favor of the growth, of course. And maybe last thing I could emphasize that the balance sheet composition, [indiscernible] is the main issue and you can see very strong [indiscernible] on the both asset side and the liability side of the banking sector. And the other important thing is, I would like to mention that our performance, especially on the NPL side and the cost of risk, Alternatif Bank again, continues its outperformance as a result of our consistent focus over the past year. So this is the overall Turkish banking sector, let's say, summary. When you look into our performances, I would like to start with our balance sheet performance. You can see that total asset size grow by 31%. Year-to-date performance is strong. And of course, the performance is coming from the Turkish lira side. You know that we have been optimizing our loan book in favor of Turkish lira. So I can say that, especially now total Turkish loan book is 58% of the total loan. So again, it's continuing performance for Alternatif Bank. Of course, as a result of our actions starting from last 2.5 years, now we are fully hedged. Our focus still remains on decreasing Turkish lira funding costs because this is the main issue and we're trying to optimize our funding mix and we are trying to increase our share of low-cost deposits. And of course, we are very active on FX Turkish components in funding. So I can say that, especially FX-protected Turkish lira time deposits, there is a threshold there, 20% Alternatif Bank has been in over those thresholds in both FX-protected deposit and Turkish lira deposits. So we're well-positioned, I can say. On the profitability side, our net profit increased by 7% quarter-on-quarter, is TRY 232 million. Mainly positive effect comes from net interest income, thanks to increasing Turkish lira spread especially and very strong net fee and commission income. So our net interest income in this period increased by 15% and reached to quarterly TRY 426 million. So we continue to especially focus on expense base. We have very tight management on that and as you can see here, significantly below yield inflation levels. And our total gross operating income as of September reached at TRY 1.3 billion. At the end, actually, our overall profit performance is very good. And then I can say that after the IAS 29, we are still carrying positive bottom line. So third quarter was again better performance for Alternatif Bank and we are trying to increase our contribution to our overall group performances. This is all I would like to share with you. But of course, I am ready to answer your questions during the Q&A session. Thank you.

[Operator Instructions] We have our first question from Waleed Mohsin.

I have 3 questions. First on domestic loan growth. Shall we be concerned that going forward, the government by putting an equity into projects given the high liquidity environment at the state level, that private sector banks and domestic banks will actually be crowded out both by the government as well as international banks looking to participate in these projects and as a result, the medium-term outlook for loan growth could be materially downgraded? So that's the first question. Secondly, if you could provide an update on local liquidity and funding. And the reason why I ask this question is that there has been a change in how the regulator looks at nonresident deposits. So I was wondering if you could provide an update both on the liquidity, but as well as kind of the funding situation in the market? And my third and final question is on cost of risk. I mean, we completely hear your comments around being conservative. But in a period where the macro has done well and by and large the banking system has delivered, be it that most were deleveraging is coming on the public sector, but still, the system hasn't grown that aggressively. So the higher cost of risk guidance seems to be a bit surprising. Is this driven by regulatory instructions from the Central Bank?

I think let me handle the first part about the outlook for loan growth. If you remember at the last investor call, I had said that our outlook for the next years is approximately a GDP, which we see at 3% to 5%. And we remain with that. In terms of the international, let's say, the expansion projects of the government. If they are funded by project finance and the local banks tend not to take part because frankly we don't have the ability to do such long-term project finance sort of transactions, except for QNB. We would be sort of taking part in the loans at the contracting side, so the subcontractors and the onshore component. So that will continue because any project will have a onshore component and we will provide some element of financing and the bonding, et cetera. So I don't see any change in that. But I do believe that we will grow at the 3% to 5%, so there's no change in our approach on that. And that's I would say a conservative way we want to grow our balance sheet so that we ensure that we maintain necessary credit quality, et cetera, because at these higher rates, I'm always concerned about people's ability to pay. In terms of the second question about liquidity. Yes, I think there has been some changes to the way particularly nonresident deposits are classified. There's -- for some of the ratio calculations, there's an element of a haircut, which is implemented on that. I think the logic for that is basically because there's this perception, especially from some of the rating agencies, work that has been done that Qatar's external liabilities of the banking sector are very high compared to its -- some of the countries in the region. So as a result of that, there's a little bit of, I'd say, haircutting being put on the benefit of foreign currency deposits in the ratio calculation. So that automatically leads to a little bit more, I'd say, demand for local currency deposits because they're worth that much more in terms of the ratio calculation. So that is -- plus along with the increase in interest rates, that's led to, I'd say, increase in interest rates in the domestic market. And again, it feeds back to what I said about cost of funding and net interest margin is likely to be more challenging, I think in 2023.

Yes. And Waleed, your third question was on cost of risk. I think there's a couple of things to consider here. Firstly, the COVID schemes are finished. So that means that we need to monitor very carefully how our customers behave post that. We're still in the early stages of that. So that's why we're highlighting the need to be conservative on cost of risk basis. And secondly, coupled with that, that interest rates are rising right now and forecast to rise further, we do think that that may lead to a little bit of stress on certain customers as well. And therefore, the cost of risk, we don't see going down this year or next year. Although our 5-year guidance remains intact of cost of risk coming down, but that will be more in years 3 to 5 rather than years 1 to 2.

Our next question from Edmond Christou.

So the first question on the overdraft facility. Is it possible to tell us what is the market share on the overdraft facility of the government for the bank, just to anticipate if this drag will continue into next year? The second question is on the -- if possible, on the IAS 29, I think the impact on the third quarter was QAR 29 million. Is there any reversal or provision that been set aside? And what is the gross impact if possible to provide? And just follow up on the same question. I think last quarter, we discussed that 26% of the Turkish lira portfolio is CPI linker. And also you are talking that next year the CPI is likely to fall from the 70%. So does it make sense to grow this portfolio or not to grow it at all because it will have a normalization impact on your margin? Just want to understand the strategy to hedge against IAS 29. What is the thing behind it? And the last question, if possible, it's on the -- I noticed that the deposit for the international, it's still stable. You have a decline in the deposit on the wholesale. It's probably shedding expensive deposit. But probably this doesn't give an indication what is resident on nonresident deposits. So is it possible to split what is the resident nonresident deposit from Q4 until September?

Okay. Thank you for those questions. Let me answer those in turn. Firstly, in terms of the government overdraft, it is nearly 0 now for us, very close to 0. So we don't think that that will now be a driver for variance in our loan book going forward. So I think that is now pretty much fully settled from our own bank's point of view. There may be some still outstanding with other banks. But from a commercial bank's point of view, this is now virtually 0. So that's, I think, not going to be a factor anymore going forward. In terms of IAS 29 and the impact to the books. Yes, as you said, QAR 29 million is the overall impact on the net monetary loss. There is some further movements within income and costs as well, but they're not material overall to the numbers. In terms of CPI linkers, I think that was your third question, maybe Kaan Gur, you can answer that question.

Yes, Mr. Rehan. Thanks for the question. First of all, I can say that's -- till our last meeting actually, we add up some 6% on our existing CPI linker portfolio. It means that now we are around 34%, 36%, around there. But we are already well-positioned there. We're not going to see upcoming the increase there. So I think we're going to keep this as it is. So we are not going to a strong intention to grow up our CPI linkers because we know that there are different tools that we can offset that net interest margin, especially on the Turkish balance side. So we are keeping our existing situation as it is. Thank you.

Thank you, Kaan Gur. I think your fourth question was around deposit and the mix. We can see that in Slide 16, where nonresident deposits are now 15% of the makeup for commercial bank. That's versus 20% in the market. We don't have September numbers here just yet. So it's August in terms of market and September in terms of commercial bank. And then you can see the makeup is 28% for individuals, 29% corporate and 28% government and other agencies of the government. I hope that answers your question.

Very useful. Can I follow up on the first question, if possible?

Sure, sure.

Just on the capital generation. I mean it used to be straightforward to think about capital generation with capital savings from expanding into government lending. Now government is repaying and it's unlikely to see uptick in the government lending demand into next year or the next 2 years, depend on the oil prices. So how should we think -- personally, how should I think, myself, about cash generation here since margin could contract a few basis points, cost of risk could pick up and you're going to grow 3% to 5%? So this is 3% to 5%, which sector you think you're going to grow where you are able to maintain a capital generation and improve the CET1?

As I mentioned earlier about we see opportunity in the retail banking sector where we have -- I'd say there's still opportunity. There are opportunities in the consumer lending side, opportunities in the individual consumer mortgage. The Qatar Government has come out with residency programs. And for -- everyone's familiar with the Golden Visa in Dubai, but Qatar actually has a 5-year visa and a lifetime visa depending on the amount you invest. We see opportunities in this space both for residents and nonresidents. And then we continue, as you said, with the 3% to 5% coming from a mix of private sector and there will be some government also because I think the government is investing in downstream industry as part of Qatar's 2030 vision plus. So we believe that this will constitute the growth path for the bank in terms of its assets.

Our next question is from Rahul Bajaj.

2 quick ones from my side. First one is on Turkey. So I understand you are kind of taking a more conservative view for your cost of risk mainly because interest rates are now much higher and that kind of changes how kind of borrowers would repay. But just kind of if I focus on Turkey, how is your thinking about cost of risk and NPLs in Turkey? Because that has remained pretty low and at least the headline interest rates remain low in Turkey relatively. So how should I think about the asset quality cycle and cost of risk there? Do you think that 2023 would be more challenging than -- I mean, the recent past? That's my first question. The second one is on the tax rate. I would be repeating this question. I can't remember if I asked this in the second quarter results as well. But I see elevated tax payment in this quarter as well. So is this the kind of new norm, new effective tax rate that we should consider that we've seen in the last 2 quarters for the near future? Those are my 2 questions.

I will just briefly talk about Turkey at a macro level and then Kaan can speak in more detail. But basically, we have been running our Turkey business in a very conservative basis and on a risk basis over the last 4 years since the new management team came in. And I think that has paid dividends in the sense that our NPL ratio is one of the lowest in the market. And we continue to see that positive trend in terms of a low NPL ratio. And we're not trying to grow very fast to do anything very dramatic. And therefore, we anticipate that low NPL ratio will continue in Turkey. Kaan Gur, you have anything to add to that?

Thank you, Mr. Joseph. Exactly, I totally agree with your comments on the -- this is exactly we're going to sustain our conservative approach. So it's paid out so far and we are going to keep that approach. I don't anticipate any, let's say, divergence from our existing levels in terms of cost of risk in terms of NPL. But at the same time, I can say that especially in Turkey, even though there is a risk on the high interest rates overall the world, but in Turkey, especially the SMEs, the large corporates, they have chance to tap lower interests in the market. So actually, we are well-positioned in all terms and we don't expect any divergence on our existing cost of risk and NPL levels actually, I can say that. Thank you.

And Rahul, your second question was around tax, which is also, I mean, completely Turkey. Kaan Gur, would you want to add anything on the tax? Obviously, it is a function of us doing better in terms of income and pre-provision costs.

Yes, we can say. So our, again -- yes, this is as a result of our growing gross operating income. So I think this is the factor of this. So if there is any additional question on this, please, again, Rahul, could you -- if you need anything else?

Yes, sure. So basically, should I expect the current kind of tax rate to continue in the near future?

Yes. Yes. Yes. Actually, on the corporate tax side, there are some rumors, but it's not going to make any considerable change because we know that especially when you look into Turkish fiscal discipline actually, corporate taxes coming from the banking sector is essential. But of course, we don't expect any very considerable increase there. So this is so far actually, this is our knowledge, but of course, we're going to monitor, especially the governance action regarding that. But we don't expect any unexpected possible increase there.

And Rahul, just to add, of course, that in Turkey, the hyperinflation adjustments and accounting has not been adopted. So we're adopting that at group level only. So obviously, the profitability of the banks is still very good in Turkey and therefore, they are paying higher taxes as a result as well.

Our next question is from [ Rajat Sao ].

I had a few questions that I wanted to ask and they relate to some of the previous points raised in the presentation. So the first one, I'm curious to know and to have more color from you, if possible, on the impact of higher rates on the lend quality. Do you expect to see any drastic deterioration because of the increase in rates? And how do you assess how our borrowers prepared to pay these higher rates? The second question also discussed previously, so we do see that across the Qatari banking segment, a lot of banks are trying to be conservative and adding more provisions at this stage. So is it kind of internal intention of each single bank which is driving this? Or is it some kind of a regulatory initiative and regulatory kind of effort to prompt banks to be more conservatively provisioned? And the last question, if you could please repeat your outlook for cost of risk for credit costs for this year and for the next year as well?

Yes, thank you for those questions. Firstly, in terms of net interest margins, yes, look, that's exactly what we've said in the presentation that we do expect a little bit of pressure, a little bit of -- and we're guiding 10 basis points possibly for next year as the downside risk, so from 2.8% where we are right now to potentially 2.7% next year. And that's totally because of our view that we may not be able to pass all of the next couple of cycles of interest rate hikes on to our customers. The provisioning that you mentioned, yes, that is linked partly to that and partly to the fact that we are out of COVID. So certainly, as commercial bank, I cannot speak on behalf of all the other banks, but certainly for commercial bank, that's why we believe a conservative approach is required right now. And the third question is in terms of guidance for cost of risk, we set 100 to 110 basis points for this year and next year is the guidance we've given at the beginning of this year. And we think there's a potential slightly higher upside risk to that for this year, maybe 10 to 20 basis points. 20 basis points I think is possible once we conclude on all of the provisioning requirements for the year.

And just coming back to the first question. So I was curious about how high your interest rates locally affects the lend quality, the performance of the borrowers from the bank. So do you expect any drastic deterioration over the near to medium term in the lend quality specifically in response to higher rates?

Yes. I think your questions number 1 and number 2 are linked as in we're saying there may be some NIM compression because of the interest rate rises and there may be some quality concerns as well as a result of those rate rises. So that's why we're seeing potentially a NIM compression of 10 basis points and the cost of risk to stay at the guidance level that we gave for this year stays for next year also.

To summarize, particularly the smaller borrowers we think are more vulnerable to these quite significant interest rate rises. And that's why we have been conservative, particularly in the post-COVID and support schemes have been withdrawn. So I think that's just a double effect coming through.

Our next question is from Aybek Islamov.

I think 2 questions from me. The first one is just want to check on your subsidiary performance, associates' performance, which looks quite stable. But would you be able to guide us on potential impairments related to your subsidiaries in Oman, UAE in the fourth quarter, right? So what do you expect there, if you can give us some color? And I think secondly, you mentioned about loans which were impacted by COVID, but can you please remind me what were your deferred loan ratios like at the end of 2020 and at the end of 2021? Yes, that's it.

Yes, Aybek, thanks for your questions. Firstly, in terms of impairments, as you know that's a Q4 exercise that we do. Certainly we can see with our initial discussions with the auditors and of course, they're not concluded at this stage, but the performance of both of the associates has been very positive this year. So that gives us a much better level of comfort than in previous years. As you know, we've taken considerable impairments on UAB already. So as of now I would say that if there is to be any impairment, it is likely to be minor. I would think that at this stage, we can say that it's likely to be 0. Of course, as I said, the work is not concluded. But as of now we don't think that an impairment will be required. And if it is, it should be a fairly minor number. That's on the impairment. On the COVID schemes, I'll have to get back to you in terms of what the percentages were in terms of end of 2020 and '21. We'll come back to you. But I think it was about 2.5% as of the end of '21.

Yes, I believe that's what you mentioned on your previous conference calls, yes. Yes, exactly.

Yes, that's right.

Can I just add one more question? On your liquidity position. So in your slide deck, you show that the nonresident deposits right now are 13% I believe of your total deposits, right? 13% or 15%, I don't have it in front of me.

15%.

Yes, 15%. And I think in 2020 or '21, they were much higher around 20%, 21%. So in that regard, can you give some color, what was your net stable funding ratio like 2 years ago when your nonresident deposits were higher? And what your NSFR is like now?

Yes. Actually, NSFR has also been subject to change. So it's not a like-for-like. There are new regulations in place. So that's now becoming effective. Certainly you're right that banks have been bringing down the amount of foreign currency deposits as a percentage of overall deposits. We are -- so the NSFR needs to be 100% or greater. That is the requirement per the new regulations from the Central Bank. We are pretty much there. As of now we track it on a weekly basis. So currently we are compliant with the NSFR requirements. But it is quite a tough ratio to manage. So it needs a very, very close watch.

Yes, I would just say it fluctuates.

Yes, it fluctuates.

Around the 100% plus or minus 2% or 3%...

Exactly.

Would be best way. Because when we have such a high low-cost balance and also deposits, movement can easily swing it and that's why we tend to be within that ratio.

Yes.

In that sort of a range.

What would be your comfortable nonresident deposit ratio within your deposit base so that you're absolutely comfortable about NSFR that it doesn't worry you on a day-to-day basis?

I don't think it's as much about the nonresident versus resident, which is the issue on the NSFR. It's really just making sure that we have enough long-dated deposits because there's a bit of a haircut applied on nonresident deposits for the NSFR.

Okay. So it's about the tenure, yes?

Yes, it's about the tenure.

Tenure, yes.

Our next question is from [ Vijay Singh ].

I have 2 questions. The first question relates to the investment book. And what is the interest rate sensitivity there and potential for further mark-to-market losses, if any, if there was another 100 bps movement? The second question relates to the total exposure that you have to Turkish sovereign bonds and how you're looking to manage that exposure?

Yes. So on the investment book, if we have another 100 basis point movement, we could look at around QAR 30 million to QAR 50 million further losses. The number is relatively smaller as compared to the investment book because most of our investments are HTM and therefore, will not be subject to mark-to-market losses. On your second question. The Turkish sovereign bonds are basically held by Alternatif Bank as part of their requirements for meeting their ratios in Turkey. But at Commercial Bank in Qatar has probably 0 holding of Turkish sovereign bonds.

Yes. My question is that if at some stage, we have some sort of a domestic restructuring in Turkey, what is the total size of exposure that we're looking at because ultimately that will come to your balance sheet as well?

The overall balance sheet size of Alternatif Bank to the group is about 7.5%. So it's relatively small, and the impact is becoming smaller as we grow the bank in Qatar. Thank you. We have no further questions. Joseph, over to you for closing comments, please.

Thank you very much, Zubair. And thank you, everyone, for your questions. Very interesting as always. And we are very happy to answer any other questions which may come up and come back to you with any other clarification. So please do reach out to Zubair and Rehan. So thank you again and we look forward to talking to you again after the end of this year. Thank you.

Thank you.