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

Good afternoon, ladies and gentlemen, and thank you for joining us today. I'm Mohamed Farhan, Head of Investor Relations, and I'm pleased to welcome you all to the Commercial Bank's First Half 2026 Earnings Conference Call. On this call, I have on to my left, Stephen Moss, who is the Group Chief Executive Officer, Commercial Bank of Qatar. And on to my far left is Noman Ali, who is the Chief Financial Officer of Commercial of Qatar. During the duration of this call, we will put you on mute. And once the presentation is complete, I'll come back to you for question and answers. Now, I request everybody to please put yourself on mute. And now, I'll hand over to Stephen Moss.

Thank you, Farhan. So good afternoon to all. Let me first start by providing some comments on the regional situation. So as I said last time, Qatar entered this period with strong macroeconomic fundamentals, significant sovereign buffers, prudent fiscal management and strong credit fundamentals. The country continues to navigate the ongoing uncertain environment from a position of strength. Situation clearly remains fluid. But what we have seen on the ground is the return to normal operations across government, financial markets, aviation and trade. Construction, real estate and finance have held up well. The sectors most affected, in particular, hospitality and recreation, we very much expect to recover, although the timing clearly depends on how the situation develops. That said, the foundations for recovery and growth are robust, supported -- further supported by the planned LNG production expansion. Now, moving to Commercial Bank. Our established business continuity arrangements enabled us throughout the first half to maintain seamless and secure access to banking services for all of our customers. We at Commercial Bank continue to operate from a position of institutional strength with a very clear strategy as we set out earlier this year for the period from the 1st of January 2026 to the 31st of December 2030, supported by prudent risk management, a resilient balance sheet and a clear focus on delivering sustainable long-term value for our customers, our people and our shareholders. We also benefit from the support of a proactive and forward-looking regulator, the Qatar Central Bank has during the period, as you would expect, taken prudent precautionary measures to support liquidity, customers and orderly market functioning. So let's turn to strategy execution. In January, when we announced our strategy for the period of '26 to 2030, I said that 2026 would be a period of execution. I want to give you an update of where we stand at the half year. The newly established Strategy Execution Office tracks the execution of the strategy with strategic initiatives across retail, wholesale, treasury and the group's enabling functions, supported by detailed actions, milestones and executive accountability. The outcomes during the first half demonstrate that our strategy is well into execution mode. Overall, we delivered a resilient operating performance. We made progress in managing our funding costs. We continue to work on the legacy book. We progressed our digital and AI agenda, and we maintained strong capital and liquidity. In retail and wealth, we continue to deepen customer and wealth relationships while protecting the strength of our core businesses across cards, employee banking and remittances. We strengthened our position as one of Qatar's leading wealth advisory providers for affluent and high net worth clients, supported by our digital wealth platform. Assets under management increased by 18% year-on-year to QAR 3 billion. Fee income continued to grow, supported by wealth management and remittances. In Wholesale Banking, lending growth remains selective and focused on higher return customer segments. We continue to strengthen our transaction banking proposition and deepen cross-sell opportunities through cash management, payments and trade finance. Furthermore, we enhanced collaboration between our wholesale and retail businesses across salary accounts, pay cards, commercial cards, wealth management and insurance. In overview, we remain very focused on achieving 5 clear outcomes: drawing a line under our legacy book, reshaping the bank to a more capital-efficient and fee-driven business model, capturing growth in our under-penetrated segments, including categories, SMEs and affluent clients; delivering sustainable shareholder returns and embedding AI across the bank. So turning to AI. AI is an enabler of our strategy and an area where we are making tangible and measurable progress. Priority use cases continue to be identified, and during Q1, I highlighted the progress made through our customer retention AI program, our credit card spend and activation predictor and the launch of the bank's proprietary generative AI platform. In Q2, we continued to introduce initiatives as part of our AI road map. We developed our proprietary Agentic AI credit proposal platform. This supports end-to-end credit request workflow from document collection and data preparation through analysis, review and approval. This materially reduces the time required to produce a credit proposal. We also introduced an AI agent assistant for our contact center. This provides agents with immediate access to information on products, services, scripts and standard operating procedures through a single interface. It's designed to improve the consistency and accuracy of customer interactions, reducing handling time and supporting faster resolution of customer inquiries. We also introduced a machine learning enabled point-of-sale back lending proposition for SMEs. This uses transaction-level business performance data to identify customers with a strong propensity for a particular product and provides relationship managers of targeted data-driven actionable opportunities. The product is now available through digital banking, giving eligible SME customers more convenient access to financing. Our AI program continues to be focused on unlocking new income opportunities, improving productivity and reducing costs. Now, let me walk you through our consolidated performance and targets, which is a chart you will see quarter-on-quarter up to the end of 2030. The group delivered good operating performance during the first half. Core operating performance remains solid, supported by good momentum in net interest income, fee income and underlying lending, excluding acceptances. Net interest income increased year-on-year, driven by growth in earning assets and disciplined earning assets and disciplined liquidity deployment. On liquidity and capital, our position remains strong, and we remain focused on improving our funding mix building customer deposits and reducing the cost of funds over time. Overall, reported profit was as it will be for each of the first quarter's first 3 quarters of this year, as a result of a more balanced approach to provisioning as we set out at the beginning of the year. As opposed to the previous practice of carrying a significantly larger provision charge into the fourth quarter, we are provisioning more consistently throughout the year. In the first half, we also adjusted our ECL model so as to have a higher weighting of the -- to the downturn economic scenario to account for the regional conflict. This has contributed to higher provisions and entirely accounts for our first half net cost of -- in our target range of 90 to 100 basis points at 106 basis points. Our full year 2026 net cost of risk guidance remains 90 to 100 basis points to be clear. From 2020 onwards, we continue to target a more normalized net cost of risk of 70 to 90 basis points, as we continue to work through our legacy exposures in an orderly and proactive manner and reduce our NPL ratio to below 5% by 2030. A prolonged regional disruption could, at some point, affect provisioning and recovery timelines, and we will continue to reassess the position through our normal governance processes, but at present, there is no change to our cost of risk targets that we set out at the start of the year. Regarding loan growth, we expect selective growth of approximately 3% per annum, subject to market conditions and our strict return of discipline. As I will continue to say, we will not pursue balance sheet growth at the expense of appropriate risk-adjusted returns. We continue to target a steady improvement in our return on equity with our targets reflecting the impact of the global minimum tax, and our cost-to-income ratio does remain work in progress and is currently above our target level. Our form costs reflect continued investment in our people, technology, digital capabilities and AI. Our focus remains on converting these investments into sustainable operating leverage so that we can deliver positive jaws from 2027 onwards, supported by ongoing digital simplification, operating leverage and cost discipline. In terms of our dividend, we remain committed to targeting the delivery of a sustainable dividend. Finally, on asset quality, our 2030 target for our NPL ratio is below 5%, and we target improving our stage recoverage ratio to above 70% by 2030. And on capital, we continue to target maintaining a strong CET1 total car, comfortably above regulatory minimums, while creating room for selective growth. So to close, the regional conflict has, of course, created uncertainty for our customers, businesses that we bank and for markets. We will continue to monitor developments closely and manage the bank's operations accordingly and prudently. However, I wish to reiterate that we remain very focused on the execution of the 2026 to 2030 strategy as announced in January this year. Thank you.

Thank you, Stephen. Now, we'll go on to a financial performance update by Muhammad Ali. Muhammad, over to you.

Hello, everyone, and thank you for joining in. Getting into the results for the 6 months ended 30 June 2026. I will focus mainly on Slide #11, which shows the consolidated financial highlights of the group. In summary, the group reported a net profit before the impact of Pillar 2 tax of QAR 1,083 million. The year-on-year movement in profit was supported by strong and resilient operating performance in the first half of 2026. Net operating income increased by 9.4% to QAR 2,459 million, driven by increase in net interest income and fee income. This was offset by higher net provisions due to a more balanced approach of loan provisioning across each quarter and increased operating expenses as the group continued to invest in digital capabilities, including AI and people. The results also include a reported loss of QAR 28.2 million from Alternatif Bank after the impact of hyperinflation accounting. The group also accrued for the BEPS Pillar 2 tax charge a charge of QAR 69.3 million. As a result, the group's reported consolidated net profit after tax for the 6 months ended 30 June 2026, was QAR 1,013 million. Talking about our businesses, the retail and wealth business continued to perform strongly with good and consistent returns supported by higher fee income. We also continue to strengthen our advisory wealth proposition through enhanced digital capabilities, supporting deeper penetration of the mass affluent and private banking customer segments. On the wholesale banking side, our lending book, excluding acceptances grew, with growth remaining selective and focused on higher return customer segments, while we continue to deepen cross-sell opportunities. Treasury continued to make progress in diversifying the funding mix and managing funding costs while maintaining a strong liquidity position and access to funding markets. Our associates continue to perform well, as we continue to work closely with them in the execution of the strategies. If we deep dive into the numbers, our consolidated net interest income increased 14.4% year-on-year. Firstly, in relation to interest income, the gross consolidated interest income increased by 6.5% when compared to 30th June 2025. This was driven by growth in loans and advances to customers, excluding acceptances and investment securities. Alternatif Bank also contributed to the growth in the interest income. Our interest expense increased by 2.4% when compared to the year-on-year 30 June 2025, mainly due to higher funding volumes, including customer deposits and wholesale borrowings. Despite the increase in absolute interest expense, the group's overall cost of funding reduced as a result of growth in low-cost retail deposits and the replacement of high-cost international deposits with repos. As a result, our net interest margin stood at 2.2%, similar to the levels reported in the previous 3 quarters. For the rest of 2026, we will work towards maintaining our NIM around 2.2% with a downward pressure of 10 to 15 basis points. NIM pressure is mainly due to stiff competition, all domestic deposits and refinancing of some of our medium-term debt issuances, which were previously at a lower rate. In the next phase of our strategy, we specifically identified the need to optimize our funding mix by increasing CASA deposits and improve the deposit composition in the overall funding pool. We made progress during the first half, and we will continue to do so in the future. Moving on to noninterest income. Our net fee and commission-based income increased as a result of retail banking fees, in particular, high wealth management and remittances fees. Further, there was a reduction in net income from investment securities due to lower dividend income and mark-to-market movements related to investment securities at fair value through P&L. In terms of operating expenses, the reported costs were higher year-on-year, primarily reflecting increased staff costs and continued investment in technology, digital and AI capabilities as part of the execution of our strategy. As a result, the group's reported cost-to-income ratio reached 31.6%. At domestic level, the cost-to-income ratio on a reported basis now is 26.9%. Alternatif Bank reported a cost-to-income ratio of 68.2%. Our cost-to-income ratio remains a work in progress and is currently above our targeted level. Going forward, we expect to maintain positive jaws, reflecting revenue growth outpacing cost not just in 1 year, but consistently across the cycle, starting from 2027. Moving on to net provisions. Net provisions increased to QAR 717 million as compared to QAR 295 million for the same period in 2025. In relation to provision to loans to customers, the increase in our provision for the first 6 months reflects our approach towards maintaining a more appropriate balance provisioning throughout the year and also includes an ECL charge due to the regional conflict. Our ECM model includes a higher weightage for the downward economic scenario. The macroeconomic indicators will continue to be reassessed as they continue -- as the situation continues to evolve. In relation to recoveries, we continue to -- with our robust efforts, resulting in an increase of 39.7% year-on-year to QAR 187 million, which supported the net provision position. As a result, our gross cost of risk was 142 basis points, and our net cost of risk was 106 basis points. The net cost of risk is slightly higher than our full year guidance range due to the conflict related ECL charge, as mentioned earlier. Our stage C coverage ratio has improved to 61.5% at 30 June 2026 versus 60.4% at 31st December 2025. The NPL ratio slightly decreased to 6% at 30 June 2026 from 6.1% at 31st December 2025. There is also a reduction in Stage 2 balances year-on-year, and our Stage II coverage ratio increased to 14.2% coverage ratio from 10.4% reported at 31st December 2025. Moving on to the balance sheet. Total assets were up 1.4% year-on-year to QAR 184.5 billion, which included an increase in investment securities. Loans and advances to customers stood at QAR 102.7 billion. Excluding acceptances, loans and advances to customers increased by 3.6% year-on-year to QAR 98 billion. This is driven by growth in wholesale lending, both in government and public sector as well as corporates. For the retail lending also continued to show good progress with year-on-year growth. On the wholesale side, our focus will be on lending to higher return customer segments and high-growth sectors. On the retail side, we will aim to accelerate growth in customer segments and maintain our leadership in the expat segment. From a 2026 perspective, we continue to expect selective loan growth of 6% until the end of the year. Investment securities increased by 15.4% year-on-year to reach QAR 41.3 billion, with the group continuing to invest in high-quality market securities. Customer deposits increased by 1.8% year-on-year to QAR 85.1 billion at 30 June 2026. The year-on-year increase mainly is driven by time deposits. Further, we continue to focus on low-cost deposits, which increased by 1.6% year-on-year and represent 42% of the total customer deposit mix. There was a change in the funding mix as decrease in wholesale deposits was replaced by repo transaction and syndicate borrowings. The proactive management of funds during the conflict period was mainly done through a combination of short- and medium-term repos. This was tied with the maturities of certain high-cost bank borrowings and more expensive international deposits. Our capital remains strong, CET1 ratio increased to 12.8% at 30 June 2026 from 12.5% at 30th June 2025, and the total CAR increased to 18.9% at 30 June 2026 versus 17.2% at 30 June 2025, mainly as a result of a new AT1 issuance at Alternatif Bank level and lower AT1 reductions. Alternatif Bank reported a net loss of QAR 28.2 million after hyperinflation for 6 months ended 30th June compared to a net loss of QAR 107 million for the same period in 2025. Although there is an improvement in the performance at the operating profit level, the results were impacted by hyperinflation accounting. Alternatif Bank at consolidation level represents only 4.9% of the overall balance sheet size. That was all from my side and happy to take questions.

Thank you, Mohamed. [Operator Instructions] We have our first question from Rahul.

This is Rahuja from Citi. I have 3 questions actually. The first one is on margins. We see very good improvement in sequential margins, and Noman kindly explained the maturities and how the cost of funding has helped the bank. Can you please 1 highlight if there are any one-offs in the second quarter sort of margin number? You mentioned 10 to 15 basis points decline from here on into the second half of the year. Just wanted to understand what are the kind of moving parts here? Is it again mainly purely because we are expecting higher cost of funding as we move into the second half of the year? And also ABank, if I look at ABank's margins, it appears quite strong whereas some of the other MENA-based banks, GCC banks who've had Turkey business, they've seen Turkey margins compress quite considerably in 2Q. So why is there a divergence wherein CBQK's Turkey business margins have gone up in 2Q, whereas most of the banks are seeing margins decline in Turkey. So I just wanted to understand that on the margin front. My second question is on provisioning. I see, of course, a sizable jump in provisioning in second quarter. I just wanted to understand to what extent -- and you mentioned that this increase is driven by kind of changes to base case sort of scenarios in the IFRS 9 model. But I just wanted to understand to what extent the increase in provisioning is driven by deterioration in accounts because of the conflict? As the conflict resulted in increase in sort of bad loans or accounts defaulting? Just wanted to understand that. And to what extent that is the reason for the increase in provisioning? And my third and final question, if I may, please, is on lending growth. So Noman just said from a 2026 perspective, you continue to expect a 6% loan growth until the end of the year. Just wanted to clarify -- 6% on top of the first half number or is it like for the full year 6%. That does include...

Rahul, I think you've had I think that was 4 by my accounting, but anyway, so...

Our lending growing, Rahul, it was 3% actually.

Apologies, so I think I just misstated there, but it was 3% lending growth we are expecting.

So that's a lot of margin...

Is it for the full year?

3% for the full year.

Yes. That's right.

So on the margins, actually, just on the margins, as we mentioned that we have maintained margins over the last 3 quarters. And 1 of the reasons I explained was that the way we are managing our cost of funding, we were able to do certain repo transaction and replace it with some of the high-cost borrowing in some of the international deposits. So that helped us in maintaining some of the pressures. And on the interest income side as well, I think we are being selective and getting loans at a rate which is meeting our internal target thresholds. So overall, from a pressure, which I mentioned about 10 to 15 basis points, that remains there because of 2 main reasons. One is that there is a stiff competition for local Qatari deposits. And secondly, we had our EMTN, which matured in May, around $700 million. And we are looking at the market conditions and whenever the market improves, we'll go to the market, but that was done at like a few years ago at around 2%, 2.1%. Whenever that gets refinanced, it will be at a higher level. So we do expect some margin pressure from that side. On the Alternatif bank side...

Just to add on margin, Rahul. Just we've taken -- we -- you can see from the investor presentation, and we can talk about this later in the week when we meet. But we've taken the acceptances down quite materially, and that's the highest cost source of funding, certainly for us. So that's been a reasonable contributor. And you can see us, we're talking about billions of Qatar rail lower. So that's one. And then just to address the sensitivity, 15 basis points potential reduction, I'm not sure that's not a position for -- between now and the end of the year to be clear. That's just medium term. We think there is a risk there could be a decline in margin over the medium term, certainly not by the end of the year. And clearly, if there's an interest rate -- at a 25 basis point interest rate rise, that's going to help us on the margin. So it will make the 2.2% more resilient. Yes. So Alternatif Bank.

Alternatif Bank, as you can see that the alternative bank lending has significantly increased. So year-on-year, there is a significant increase in lending, which has helped -- and I think an Alternatif Bank, the NII has increased considerably because of our lending growth. And then I think some of the swap cost has also increased, although the interest expense has reduced -- has increased a bit, but we also had some swap cost, which is going in the fee and expense line. But overall, as you know, the rates in Turkey at the start of the year, the interest rates went down by 300 to 400 basis points, and that helped us during the year in improving the net interest income at the Alternatif Bank level. Then you had a question on loan provisioning. So as I mentioned on loan provisioning, one of the key things was that instead of taking a large provisioning in the fourth quarter of the year, we are basically making sure that in the first 3 quarters of the year, we are taking more balance provisioning. Hence, what you will see is, Rahul, that in the first 3 quarters of the year, you will see more provisioning compared to year-on-year. However, and then you will not have a big catch-up in the fourth quarter. So that is 1 of the main reasons for the increase in provisioning. And then, similar to the first quarter, we have some property related provisions as well, which we have included, which is increasing the provisions as well. And then, from a -- yes, so that is the main thing. And from an ECL perspective.

Yes. I'll add to the -- so the downside scenario point, Rahul, we're at 106 basis points net cost of risk for the first half, which, as I said, is above our range. That in of itself is -- we probably haven't disclosed the actual number, but you can work it out because it's about 10 basis points. So without that downside, the effect of the increase in ECL from the downside risk scenario, being the weighting being increased to 25%. Without that, you'd be within -- you'd be banging within the 90 to 100 basis points range. Are there any idiosyncratic reasons for it? No. It's purely -- there's nothing we're seeing that is a concern linked to the current situation in terms of provisioning at all. So nothing to draw out there for you.

Yes. So the provisioning is in line with our expectation as this ECL chart. Other than that, we have not seen any significant deterioration in any of these names until now from a credit perspective. .

And I'd say what I said at the first quarter, which is the retail book has held up much better than expected. So yes, it's -- we're still surprisingly robust.

Just, Rahul, one point.

Lending growth was the last. We addressed that...

Just 1 point on the ordinary bank because they had strong 6.4% NIM. One of the reason is that if you remember last year, they sold 2 large properties and generated QAR 3.2 billion of positive cash flows. So that's also helped them to improve the NIM. And it's going to be -- they are for a long time because money has been invested on interest of generating assets.

And finally, for good measure, the AT1, we refinanced our Alternatif Bank refinanced. It was at a lower cost than the previous AT1. So that's helped from a NIM perspective as well rule.

Any questions -- any further questions from you, Rahul?

No. All good.

We go to the second question. We have got a question from Bijoy.

My question is mainly on the lending book. So how do you plan to increase the lending book and improved margins once the lending cycle picks up, given the lower CET1 versus some of the other private sector banks, especially when the bank is fixing the legacy book?

I think to be fair, if you look back at our -- certainly, our capital ratio itself, it's progressed quite nicely over the last year. When we show -- clearly if you look at moving around a little bit. So if you look at where we came from the end of '25 at 2.2 for CET1, and now, we're at 12.8. And then for total A, you can see and we basically externalized the AT1 financing for alternative bank and for MBO. So we didn't participate in either, whereas we were pretty much the sole subscriber last time around, hence increase in the total CAR. So we have balance sheet capacity. In terms of how do we -- I think it's a margin-related question in terms of, one, we have the capital. Two, we -- part of the underpin of the strategy is actually to do cross-sell. And basically -- we may, on occasions like many banks do sub-return lending, but the discipline around making sure that you fill the gap in income to get above hurdle is something that we're very, very focused on from my date of joining. And hence, that's going to be -- that is serving, I think, kick serving as well to date. And we'll continue to do so. So that's a further uptick. So disciplined around, as moment said, the margin discipline around return, and as I say, when you do pure lending and it doesn't hit return, then you do cross-sell. And if the cross-sell today doesn't meet the requirement, then you make sure that the future cross-sell is -- will meet the requirement and you track it accordingly. So it's basically much more discipline around returns. And I say from a balance sheet capacity perspective, we have the capacity.

Not sure that Bijoy does that answer your question.

Yes, understood. I have 1 other question. So see, the previous CEO said that there are legacy issues, he fixed it and improve the performance, the incoming CEO -- I mean, you came in and you said there are further legacy issues fixed -- planning to fix it again, right? But this is something which is continuing and it's not getting fixed at all, right? Like if you look at 5-year performance, 10-year performance, 20-year performance of CBQ, other than dividend returns, there's not much for the investors, that barely covers the inflation, right? And on your LTIS, long-term incentive scheme, right, how do you plan to retain your employees where part of your remuneration that you're paying to the employees is in a long-term incentive scheme, which, again, is not doing much?

Yes. So on the legacy book question. I mean, that's why if you go back to our strategy of this simple strategy on the page, it's pretty front and center. The legacy book is related to 2016 around that -- up until that time around that time. And listen, I can't answer what came before I wasn't here, but I can assure you the reason why I put in the strategy to draw in under the legacy book is because I've sat down with many analysts who said pretty much what you said, sometimes more directly, which is you've been talking about this for 10 years, why you're still talking about it. And I -- my objective is by the end of my tenure, we won't be talking about it anymore, and I understand the frustration. We've got to put it behind us. So it is very much my priority. And linked to that, when we make -- whilst we set out these ranges for the cost of risk, and they are clearly higher for the next year -- for this year and next year for reasons we've said, if we make -- and we talk about gross net cost of risk, it's clearly a gross cost of risk, which if you look at the first half, it's 142, I mean that's high. So we are taking provisions to address the legacy book, and we will continue to do so until it's behind us, to be very clear. If we have significantly higher recoveries than we anticipate, and we are planning for reasonable recoveries each year, the first half, we had about QAR 187 million, then we will provision more heavily to if we have the ability to do so and use those advanced recoveries above and beyond what we've got in each of the next 5 years plan. So yes, your question is understood. I've heard it very directly from analysts publicly and privately, and hence, getting our arms around the legacy book is frankly up front and center, is something I think about every day because it's something I want to be talking about. On the SCS, I didn't quite get your question. I understand the frustration. We don't want to be presenting 2 sets of numbers because it's confusing and it's complicated. We understand, and yes, so we have to resolve that, too.

We go to the next question from Chiradeep.

This is Chiro Ghosh from SICO Bahrain. So I have a couple of questions. So first, let's get into the noninterest income side of it. So the fee income this quarter was relatively lower than the past 2 quarters. So just want to get your sense of how should we model it for the rest of the year? How do you see it picking up? Or what is exactly your fee income-related strategy? Also, if you can please help us understand what exactly comprise of the other income, which was not a very big component, but around QAR 52 million, what exactly comprise of that? And the third question is related more towards the domestic lending market. So from the previous question, I understood that you have the capacity to lend, but you want to get an understanding of how is the corporate appetite or the government appetite in the Qatari market, especially the domestic market, especially with the crisis going on, do we expect projects to get halted? Or more aggressive project rollouts? So I just want to get a sense from the ground.

Yes. So thank you for your questions. So in relation to noninterest income and fee income, I think, as we mentioned in Q1, we had we had 1 one-off wholesale banking fees in Q1 as well. We did mention it at our Q1 results. But even if you strip that out, we have seen that from a core perspective, our core fee income relating to our retail business, wealth management, remittances is doing really well, wholesale banking side as well, cash management, transaction banking, we are focusing on that. So I think the way to look at it is, I think quarter-on-quarter, we would expect fee income to be -- to increase around 3%. That's what we are looking into. Then, you asked about the other operating income from the financials. So you could see like there is a big increase there. There are 2 reasons for it. One is that last year in the other income -- operating income line, that number was netted off. There was a loss on sale of repossessed property in Turkey. So that was included in that. So this is -- that is not repeated this year. In addition to that, we are -- we were able to successfully sell some of the repossessed properties. So there is a gain on repossessed properties in that other operating income line. And then from a project perspective, I think we will see how the regional situation evolves. They will -- so I think some of the projects are continuing, and some of them, I think we'll just need to see -- wait and see how things pan out. So that's the current situation there.

Yes. Just -- I mean, our 3% is based on our knowledge and what we're seeing in the market. That is our view of full year loan growth at the moment. And I think that's actually possibly slightly conservative, but let's see what happens. Clearly, if the current situation continues, then we're probably likely to be more aligned to the 3%. If things get resolved, and hopefully, the last 3 days continue, then it may be slightly better. But there's certainly -- there is -- we are seeing line of sight to 3% loan growth.

We have a question on the Q&A box from Gunnar from Ashmore. I'll read out the question. Could you please give us an update on the real estate collateral that I believe is the source of the other provisions, which is guided to be ongoing. How much is to come for full year 2026? Does this run into 2027 and 2028? Also, is there NFI growth target for full year 2026 and 2027 and maybe a percentage of the total income contribution?

So on the real estate profit, thank you, Andrew, for your question. So we have built up certain provisions. So I think there will be some more to come in the second half, but maybe slightly less than what we have taken into the first half of the year. So I would say slightly lesser than what we had in the first half. And then, in relation to your question on...

'26 and '27, what's the contribution of total income?

Yes. So I think...