United Bank Limited ($UBL)

[Foreign Language] I welcome you all to the corporate briefing session of UBL Bank. This corporate briefing is for the year 2025. And the way we will work this is that we will have a presentation. With us today, actually, we have the President of UBL, Mr. Jawaid Iqbal. We have our Chief Financial Officer, Manzoor Zaidi; and our Chief Operating Officer, . We will begin with the presentation by the President of UBL. And after that, we will follow up with a Q&A. Just one housekeeping route to be aware of. The questions that you wish to ask, please ask them in the chat box, Direct them towards me Ali Khan, and we will take the questions from the chat box. So again, we'll begin with the presentation by Mr. Jawaid Iqbal and then move to Q&A.

Good evening, and [Foreign Language]. So we are here on another investor conference, and we understand that lot of people have got a lot of anxiety about UBL, especially about UAE and our investment book. So we have tried to answer, you can say, a lot of questions quite upfront. UBL has got a huge amount of floaters. So first, I will give you a background why we have got our floaters and how it's important for us. So we are a bank, we do not want to call a set pattern whether we have to make this much of lending or how much we have to say, make investments. We are quite neutral. So lately, the on corporate banking have gone really down. So if anyone is aware of you or you can say or more of you are aware of it. A lot of transactions are being, you can say, taking place for a tenor of, say, 7 years, 8 years, 5 years, around 3 months, 6 months gave us at a spread of 10 to 15, 20, 25 basis points. So that is the rising of the risk at this point in time in the corporate segment. So when you are lending to the government and when you are dealing with the same tenor, so you have to see that what kind of should be for there and how profitable it is. So what we chose that we are lending to the government where the commercial risk is nearly 0, and as, we have got better than many of the corporate transactions that have taken place in the last 1 year. So we've gone through -- I mean, just as a example, we have gone to of all the transactions that have taken place in Pakistan over half a trillion where the average spread is clearly 30 basis points. And the average tenor is about 8.1 years. So if you look at the -- and then you have to see it from that perspective. So that's the reason, we took a huge position into floater, especially 10-year floaters, and we plan to hold these for a very, very long term, number one. Number two, you have to see it, what is the weighted average maturity for the government bond. I mean it was 2.2% and probably under IFRS requirements, they wanted to increase it. So in June -- '24 and March '25, the government issued a lot of floating bonds, and UBL was one of the institutions that picked up in a huge quantity. Subsequently, we also bought them, because the government issue has gone down substantially, and supply went down. So we got more separate because we got again the surprise upgrade, and that's the reason we are having a lot of these floater bonds, and we plan to hold these bonds until maturity. Majority of the bonds till maturity. We might create a little bit, we continue to trail, but I think if you ask me broader objective is to hold them till maturity because these provide great spreads and our deposits are, you must say, growing at a fast pace. So maybe we have today we are financing it through borrowing, but there is a possibility that in 3 years down the road, we may not be needing as said for to finance these things. So our deposits maybe enough to finance these things. I think the spreads, which were on December 25 at 0.63% were very reasonable for this kind of asset which has virtually 0 risk of default, only the liquidity is being tied in, and we have excess liquidity in Pakistan. So if we take into account, I think, in my personal opinion the spread should not be more than 50 basis points. When this war broke and in panic, the rates went up to something like 99 basis points on March 31. Now these have settled back to at this point in time, 82 -- and I think, again, it's a short-term, we might see them going down further. And then we -- by the way, we are ourselves a supplier at low spreads. We are one of the people who will continue to invest into this area. We are ourselves a buyer. And then the other thing is, if the interest rates go up, whether we would be making a loss, you have to see if the interest rate goes up, definitely, our spreads are locked for a shorter period of time, and we would make a loss. So all these bonds are you can say, spread over 6 months. It's not concentrated in one specific math. It's just spread over a 6-month period time. So the average duration depending on when the rates go up, it would likely to be somewhere 2 to 3 months. And then you would lose money when the rates are going up, but you make money when the rates will go down. So because these are A tier tenor, so there is a possibility you lose 2x going up and then you make money 2x going down. So again, it's not a major concern. And today, say, if the rates go up by 1%, the impact is not going to be more than PKR 8 billion, and I think that's not really looking at our revenues. That's not really a huge amount to absorb. Unrealized gains have gone down on March 31 because I think at that time the panic was higher. Now I think after 15 days, and I think they are settling, the spread has come down as said in the low 80s. And our post-tax gain on these floaters have gone to about PKR 47 million. And I think going forward, we do not see much issuance, although we would like a lot more issuance so that we could buy more. But unfortunately, seeing the last 1 year issuance, that issuance is going down and probably there's more demand for these bonds as well because of kind of a risk-free spread. So the next thing we will share with you is. And here, we have to see 2, 3 things together, how much is available for sale and how much is HTM. So we have shown you the exact numbers. About 69% is available for sale and 31% is in amortized cost. The total duration is about 2.5 years on the fixed bond portfolio. A 1% interest rate change, the impact is PKR 21 billion. So we will have a negative impact. But I think this is a theoretical maximum. Theoretical maximum mean the rate would go up in all durations. So rate will go up less than 1 year by 1%, rate will go up 1% in 1 to 3 years, rate will go up by 1%, 3 to 5 years and 1% by 5 years. So I think that's not likely to be the cases. I think if the rates go up by 1%, the net impact on the back equity post ex going to be something like PKR 10 billion to PKR 12 billion. So PKR 10 billion to PKR 12 billion is likely to be offset by the gains that we have got the floaters. So I think that is -- at a maximum case, a few of the rates have to go to, say, 3% to 4%. And I don't know whether it would go up or not. But I think if the rates were to go up, then I think we have quite a cushion into our floaters. Then another important aspect we have to discuss how these fixed bonds compared with our current accounts. So if you -- I think we will just show you in this sheet, our current account growth has been phenomenal -- phenomenal. And then we are going to see something like a very high, hopefully -- hopefully, high growth and future as well. We see by June this year, our fixed gone to -- current account portfolio is going to be the same. So exactly same. So that means even if this -- you can see the rates go up, but our revenues are locked in because it -- these are being funded by our current accounts. Sorry for -- these are being funded by our current accounts. So our -- you can say, both floaters and fixed income, our net interest income is clearly protected. So anything, which is, you can say, impact rates on, so that will affect our capital but not all net interest income. On the revised losses on these bonds have come down to PKR 2.9 billion as of yesterday. And you have to -- you can understand that this is based on the recent rate. So rates are already even say since February 28, the rates are already up by something like 100 to 150 basis points, so that is the -- what I've said today, our loss is close to PKR 3 billion, but you can see on the other side, floaters, we have got a huge gain as well. So we believe that our net interest income is not exposed to it, and we are comfortable from that perspective. Now we have shown you the thought -- our historical average car has been 19%. So it's shown you something like a 10-year trend. But I think the average is higher because in December 2020 due to COVID, the dividends were not paid out so temporarily the car went up so that you can say that has affected the average. We are at close to 17.6% of our total car at this point in time. Minimum requirement is 13%. So we have got quite a huge cushion. So our calculations show that any 1% rise in the interest rate, what impact I've got on a total basis, around 40 basis points. So maybe 42 or 38%. So that's the impact we have calculated. So -- and already 100 basis point to 150 basis point where increase is already built into the current. And every quarter because we are making quite a decent money every quarter, and I said that our net interest income is protected by and large, whether they go up or not except a small blip due to floaters. So every quarter due to retention -- and despite paying out dividend, our retention is likely to be 40 basis points. So if you lose on one side or any impact could be there maybe there is a possibility that in one quarter if the rates were up. They're not suggesting the rates are going to rise, but even if the rates rise by 3% or 4%. And then you can say your car is impacted, first of all, it is not going to go below, likely to be go below 15% or something like 16%. And then we will be covering back entire reduction over the next 3 to 4 quarters and without impacting our dividends. So that is the calculation we are looking to do it. And from that perspective, we are reasonably comfortable that we can upgrade in all kind of scenarios. And then another thing is that if the rate goes up in this quarter, so what happens 3 quarters down the road, 3 quarters down the road, we will have higher, number one, because NII seems to be quite predictive. Cyberbase, our duration on fixed bond would have gone down by then as well. So I think things -- we have not brought that conclusion into it. But as right now, the duration of the fixed bond is 2.5 years and I think it's going to go down further than in 6 months down the road. So I think that would be again working in our favor. Now I think a lot of anxiety about the GCC asset book. First of all, I cannot predict the future. Situation is quite fluid. What happens at the GCC, to be honest I'm not aware of. We are hopeful and praying that things settle down. But I think as you are all aware that it is impossible to predict the outcomes in this war kind of situation. So we will -- we are looking at what we can control, number one. What we can control, so we will be working on things that we control, and be prepared if something goes horribly wrong and understand the situation clearly. So we are, you can say, just waiting the -- you can say, how things shape up after the war. And when it happens, I cannot guess, or maybe it happens in 2 days or it ends up in say, 2 months I really don't know. And what would be the impact of that war in terms of destruction at any of the we work on, so I really don't know it cannot comment it. But I think we will, first of all, look at things from a broader perspective. Number one, the UAE government is fairly rich. They are running a huge capital surpluses every year. So they have a huge one. So I think you may have to go back and look at the corporate examples of what they did in core. So we feel that once the word settles that the government of UAE will come back and try to do a lot of stuff, number one. So I think that's our hope. The other thing is we have shown you the entire portfolio. If you look at our investments, our investments are clearly fairly productive. So we have a government bonds 413 billion -- USD 413 million. And out of that, PKR 169 million has already been paid because this position is reflective of the March 2026. Since the government of Pakistan, Europe exposure, we are comfortable on that. Rest is. So I think we are not worried. And again, it proves a lot of liquidity if there is some kind of a deposit withdrawal, we are comfortable on that side. And on a similar way, if you look at our advances side, if you see something like close to, you can say, 56%, 57%, 58% probably is into the government of Pakistan GCC government entity, a financial institution where explores 3 to 6 months is not really an exposure, and I think we are very, very comfortable on this portfolio. The rest is the real estate, how the real estate would behave, again, it all will depend when the war ends, and what happens in between. The difference between this time and 2008, what we have seen at this time, a lot of developers are, you can say, financially much stronger than the kind of people we saw in 2008. A lot of people have now got lot of equity. There's not that much leverage, and the people we have worked with in the real estate, majority of them are, which I have, you can say, a high ratio of equity compared to debt. So I think if the things settle down, there will be, in our opinion, slow down in real estate but I think we are not seeing any kind of a serious distress. If things were to settle in the short term. So I cannot comment on the long term, if what would happen and whatever again in that. So rest of the customers are divided over a large number of sectors. So I think at this point in time, we are not worried. But again, we are waiting what happens on the GCC and then we would be able to probably share more with you. But I think at the same time, we have to understand UBL and other perspective. UBL is a bank that has changed over a period of time. In 2021, our total revenues were under PKR 100 billion. In 2025, our revenues are close to PKR 420 billion. And we are expecting similar or better revenues in 2026. So our on is quite strong, and we are quite resilient. And then if something to go wrong in UA, I do not see the provisions coming back in just 1 year. I think it's going to be stepped out, and it may be stand out about 3 years, maybe government helping a lot of people over there. So again -- but at the same point, I would say that we are quite comfortable at this point in time and not worried in any aspect. Not over the war. Yes, we are looking to the -- hoping for the early resolution. Now, the current deposits -- so far, we have done very well. I think probably it has never happened in the history of Pakistan that when something like this 39 months, deposits are almost tripling. We had a very, very strong quarter. So we did it very well in 2025. We gained a significant market share, about 2.4% market share we gained in 2025, and this current deposit total market, and we have done well in the first quarter, but at the same time, the industry is also doing great. Some of our competitors are doing also very great, so we will see how we can perform the rest of the year. We're working hard. And then on the end the time would tell how we are able to maintain our growth. We are working hard, that all I can assure you. We are quite focused on this. but I think only the time will tell whether we can maintain same kind of growth or not, only time is going to do. Our total deposits, again, the growth is very, very high. In total deposits, we do not follow any kind of target for a total -- there is no targets. So in the current account, we work hard, but on the total deposits, it all depends whether the deposits that we get out of marginally -- even say are profitable or not or even the marginally profitable now. So we do not have any interest in balance sheet expansion at a loss transaction. So we are quite focused -- if there is some margin, you will raise money, if there's not, we'll not raise nothing. So we are not really looking to it. There's a possibility our deposits might go down, there's a possibility or deposits might go up. So we are keen on taking deposits, but our rates are competitive. So if we can get the money and those competitive reports only then these deposits are profitable and there is no fun in having a lot of deposits where you're not making money or you're making losses. So we do not follow that strategy. Our strategy is based on making -- you can say, having deposits as long as those are profitable, and we would follow this strategy. We have no ambition to become #1. We do not mind slipping #4 in total deposits. So if with the real work and the real deposits come on, we will say, come to our balance sheet, we are very happy. Otherwise, we are very happy without them as well. So we are the market leader in foreign exchange of Pakistan, we were already -- you can say the #1 almost always number one, in the market share. We lost some market share. The competition has it up into this area. So we had 23% and now maintaining it about 20%. Our trade market share was very low in '22, and now it has gone to 9.6%. Our problem is that we do not have a lot of export refinance payment same because over the last 1 decade, we did not really work much want to export for in on to exports. So a lot of those numbers went to, you can say, other players. But now since we are increasing our exports, we hope that we will have more refinance limit, and we would be able to gain more market share of exports. But together with straight, we have -- we handle the product around USD 19 billion, which is highest in the country, and this is one of the -- one of our goals is to further increase this ForEx one. Now these are the profitability snapshot. The last year was good. This quarter has been great. We proactively generated some capital gains. And so even without that, if you see the net interest income has gone up because of the strong current account growth and the trading positions that we have taken. So that has resulted in a strong growth. Our cost -- our costs have gone up, but that's -- you have to pay some time for the growth as well. So that is the cost of growth. Our cost has gone from 26 to 40. So -- and I think -- as I explained earlier, that our revenues currently 2026 are likely to be higher than last year. So I think by and large, our revenues are locked in -- so we have the fixed bonds, which are almost people into the ceramic account. So I think our revenues, we seem to have much more into on the revenues. So I think these are highly likely to be higher than 2025. So there is a number that I think we sent to the stock exchange. So you must be having all those numbers you must have gone through these numbers, there is a balance sheet review -- and this is one thing as a CEO, and I'm truly proud of what we have done for the country. and then ourselves as well. I said there was a low economic period. So if you see the '23, '24, '25 relative as to economic growth period. And we have seriously contributed to the society, and we have seriously proud of that. We have hired, I think, with 1 of the things which I am truly proud of is the hiring of 6,000 people, and we have hired these people as a permanent employee with education of just or intermediate and these people are doing in. So that is our real contribution to the society. We have generated a lot of deployment. -- during this time, and we are the largest private sector wise for the employer. So that is truly a proud movement for us. So now we are open to Q&A. So a word of over to you. Thank you.

Thank you, Jawaid, for that detailed presentation. Just another reminder, as I said at the beginning of the call, any questions you have, some of you are already sending them across, just send them via the chat box to, and we will answer them. So I've already received a few questions and I'm just trying to sort of bucket it into various themes because there's quite a bit of repetition in terms of the question. But what I can see is that there are around 3 segments where the questions are primarily coming from. I think one is around the investments and the interest rate impact that we are getting from the change in macroeconomic variables. The other is regarding UAE operations and then there are some questions coming in around domestic operations as well. I'll start with the investment part of investment and interest rate impact questions, I think it was well covered in the slides, but -- just to ask you, can you please provide an interest rate sensitivity of 100 basis points change in interest rates, given the large size of the book. The fixed intruding book and what will be the impact on equity and car and profitability?

So I think I covered it extensively during the presentation. So our calculation, as I said it, our calculation shows that the 1% rise in interest rate would impact was something like 40 basis points. And our CAR has got enough cushion to absorb it. And the then other question is that whether the interest rates are going to rise or not, that's also a question that has to be seen because whether you have to see what the monetary policy would be effective at a time when there is a supply shock because most of the time, it is -- it is -- the monetary policy is used to manage the demand side, but it's a supply shop so they don't know what would be the rate hike. But if the rates have to go up, I think we have got more than adequate cushion. And then I think it has to be seen with one very important aspect, how your overall income is going to go. So we are very comfortable when our profitability that it is likely to be maintained because of the structure of our portfolio on the fixed bond because on the fixed bond, there is a large maturity into 3 to 4 months. And by June, our current accounts are going to be almost equivalent to our fixed bond portfolio. So I think we are fully helped on that part. So I think I see our earnings to be fully protected. And when the earnings are fully protected, even after the, you can say, when you pay the dividend and whatever is left helps us to increase our by 40 basis points. So that will offset. But the only difference would be that if rates were to go sharply up, say, 3%, 4% or 5%. So I think we are again quite covered for that kind of a situation. So I do not see any serious stress on our capital adequacy due to movement on the interest rates. And then as I have told you earlier, any loss on the fixed bond portfolio is more than likely to be offset from the even say, the revaluation gains that we have got on the floaters, I think floater issuance is going to be very, very low and the spreads are going to even say, go down further. So that's our assessment.

Okay. Great. Just to follow on to that. There is a question on rising interest rate scenario and what will UBL strategy be? Does the bank plan to reduce more and more positions? And also related to that, another question that the bank has booked PKR 30 billion of capital gains in the March quarter? And is there a plan to sell further securities to book capital gains during the year?

So I think as I've told you that we would maintain, you can say, our asset side, which is our investments into we can say floaters at fixed bond. And any OMO retirement is likely to come from the growth in deposits. So we are quite neutral on to that. If we get more deposits, we will retire that. We may make more investments. So I think it will depend -- it would depend. So has anything changed in our strategy based on the potential risk of rate increase? The answer is, answer is no. So we are quite neutral and we would look at what kind of opportunities come up. We -- frankly, we would rather be eager to invest if the opportunities to arise. So if there is opportunity in any side, we would rather be happy to invest more. So that's primarily on goal. But again, it will depend what kind of, you can say, opportunities come up and how we would respond that we really don't know who I think experts is something we will see and then we will decide to go to the situation. And the second question sorry, can you repeat it? I think you had 2 parts.

Again, there was a capital gains -- outlook on capital gains?

I think, again, we do not follow any set better, and we don't know whether we would realize more gains or will sell smart security or not set some security to ones, I'm not aware of. So again, it will depend on the situation. what we are going to take action. So only -- we are not aware of it, what we're going to do tomorrow.

Okay. And there's also a question with regards to the March profits being mostly driven from security selling? And how will you cater for it with a decrease in revaluation surplus?

So as I think I have explained clearly. So the March quarter earnings, you have to see it 2, 3 ways. First of all, you can see the numbers by stripping the capital gains. So if you strip the capital gains, if you see the net interest income was strong. So if you see that point of time, to be honest, that number itself is strong. Our NII is quite protected going forward as well, maybe some all you can say, change, not any significant, in my opinion. So capital gain, again, we don't know whether we'll have it or will not have it. Noninterest income is decent. So it's fine. I don't think that our net income is going to change by anything significant. If the interest rates to go up sharply, yes, there will be some, you can say, adjustment period before the floaters are repriced. So that will, you can say, take -- we will take a certain hit on our earnings -- say, for example, if the rates to go up by 1%, we would be losing about roughly 7 billion, 8 billion on our floaters -- but I think whether the rates are down, we will be making up that on that net interest income. So it will be just a timing difference, not a true kind of a loss. So on our stand-alone results without -- you can say, without capital gains are strong enough, and we are in line with our expectations and our own goals.

So I think, again, a lot of similar questions on the investment side, so I won't keep asking the same thing. Just one strand of questions on, which I think is regarding the interest rate swaps, particularly with Jazz and the impact of those, given that interest rates are now higher. Any comments on that?

So I think first of all, we have to say the function was worth PKR 75 billion. And these are that you can say, the average tenor was 7 years. So 5 years and then 7 years, the total level will be the average tenor of the is 6 years. So I think you have to see this kind of transaction not over a period of 6 months. If the period is 6 year, you have to see that -- you have to forecast the average 6-year interest rate projection. Yes, if the interest rates were to remain, are even first to go up and then remain high for 6 years, definitely, you're going to make a loss on that, right? But if, for example, in the last -- we have undertaken this transition for some time. The rates are set, so we have made some money on the first part of this thing. So there's a possibility we might do for 3, 4, 5 quarters if we lose. And then probably we'll be making money again. So I think we used it as more as a hedging then of an outright, you can say, better on the interest rates. And by 6 months, 8 months, we will have, you can say, PKR 75 billion of the swap would be even a generated through our current accounts and fully hedged. So I think, again, this amount is not -- you have to see the total context, PKR 75 billion in the total context of our balance sheet, in terms of our current account or in terms of our fixed income portfolio, this amount is not really large enough to be even say, to be concerned of.

Okay. I think with regards to the investment questions that covers most of the ground. I move to the UAE operations. And in terms of UAE operations, we have sort of a strand of questions there. Again, you did speak about the situation and the composition of the book. There are also questions on what is the growth outlook for UBL in that region. And of course, there has been very strong growth in the past. So does that strategy -- questions on that strategy.

So I think our growth was very strong. We had a growth under this quarter, but now that growth has stopped, and there is also a possibility of our -- some of our deposits may be going away. So if -- at this point in time, it will be very difficult to state again how long the work goes on. But I think if you ask me today, I would say 10% to 15%. There's a possibility of reduction in this quarter -- in this quarter on -- and if we are unable to unable to, you can say, generate more deposits. What's happening is some of the deposits may be going out and but some of the new deposits are also coming in. So the growth is definitely as we can't maintain, it's a war-like situation, different people would be rating differently. Some of them may be transferring to safe havens. So again, it's all possible some of the people will be moving money out. So if the war stops, then I think the growth would come back, may not be as strong as it was in the past, but definitely the growth would be there. We have established a fairly large team over there. We are establishing a seventh branch and soon, we would be establishing the eighth branch. So we are focused on the growth. But definitely, the situation -- the war has changed the dynamics. So the growth would go down. But again, we have to see it from the total context of the bank. Now GCC is just 12% of our total balance sheet -- sorry, in total, our income side, 12%. And the first quarter has been strong. This quarter also looks strong. But I think if there were to be dipped in this profitability, say, from 12%, it goes down to 6%, we are not really concerned because we would try to make it up through our, you can say, domestic operation. So our domestic operation is fairly large. Yes, the GCC, the impact of GCC would be on our growth, but it's fine. I think this kind of situation, you cannot predict and this is something it's out of our control. So we are just focusing on what we control. We are not focusing on what we cannot control. So again, a lot of questions can only be answered with the time, and I think it would be quite premature to comment on anything with a certainty.

Okay. Sure. I'll move on to the questions that are coming through on the domestic operations of UBL. So one question that we got was that there was a significant increase in deposits in 2025. It was driven by institutional deposits as well. And could you please elaborate on this trend?

So I think, again, as I said, majority of the large deposits are with the institutions, we have to understand it. The large corporates which are flushed with the liquidity, they have got lot of huge institutional deposits. They are all rate sensitive, and it's not a kind of a relationship kind of deposits, majority of the deposit. It's not a kind of a relationship deposit that -- no one has a perpetual relationship in this business. So I think it will all depend what kind of rate they get. So there is some impact of marketing to these kind of customers. But at the end of the day, a lot of deposit is a hard deposit. So someday, it may be with us and it may not be with us. So again, our strategy is very clear. we will take the deposits when it makes sense for us, and we would follow this strategy. We are not obsessed with having a #1 position into deposits or #2 or #3. We are fine to whatever number it comes up. So we are not obsessed with this deposit. So our -- this is not part of our -- even frankly, it's not out of our strategy as well. This is a -- I would call it is a randomness.

With regards to branch expansion as well, there are a few questions, strong branch expansion last year. And there are questions around the branch expansion targets for 2026.

UBL is a kind of bank which does not operate on too many targets. So we operate on the kind of opportunities available. The branch operations, we did, you can say aggressively, but I think we lost a bit of money last year. These new branches because they take time. And when they take time, you make losses as also. We made about PKR 4 billion on to these branches last year. So we are watching the situation closely. We are definitely looking for a high potential places where we can place a branch. So we would continue to look out for those kind of branches. We do not operate but target if I get opportunity to open the right kind of branches, which can turn into profits quickly. So definitely, we will go for it. So I cannot put the numbers. It will all depend on what kind of -- what kind of a potential location we'll get on where we can, you can say, those are the branches -- they will open the branches if these become profitable fast because at the same time, we are also mindful that digitally even market is penetrating through digital means. Our network is now robust. So we will be looking for opportunities only at high potential locations. So we are a lookout for those, and it will depend what kind of opportunity we get.

Okay. And with regards Islamic expansion and conversion, also, there are a few questions regarding Alamin and what is the conversion plan to Islamic?

We have seen a very strong growth in our Islamic footprint. We have -- as I think everybody almost knows now that we have converted entire PPK and Balochistan, and then we have set up, you can say, branches in a few cities. So right now, we are close to something -- if I remember correctly, something like 750 Islamic branches. So that is a, you can say, a very strong business we have got and that is being run independently, and we will continue to focus on this business. And -- and on the -- on the conversion into industry. So if the industry has to convert, we are fully prepared for that. So it will all depend if it translates into you can say by 2028, if we have to convert all branches into Islamic, we are fully prepared. We have already even ran the experiment in this -- not experiment. The actual conversion of all KPK and Balochistan branches, we did it successfully. But if we have to do it, we can do it very, very fast. So it will all depend on what kind of you can say how the environment unfolds. But the answer is we are prepared to convert. And this have to be come we would convert them.

Okay. Okay. And there's some question around cost to income as well. I tied in with the question around admin growth that you may have had a 37% increase in admin in 2025. And were there any one-offs in this expense, some kind of trend going forward?

I think there's no one-off. Only in the last quarter, we -- you can say we had a amortization of our...

Amortization of intangible of PKR 4.6 billion.

Yes, amortization of intangible when we acquired silk, we have to -- you can amortize it over a period of time. So last year, we did it in December. So again, this is expense whether we do it monthly or we do it one time in a year -- so that was something like -- how much Manzoor it was last quarter, 2020?

It was PKR 4.6 billion because we amortized it onetime for the entire 10 months period.

Yes. So it was because we acquired Silk in the March, so the amortization period was something like 10 months and few days. So it was PKR 4.6 billion. The charge would come up something like PKR 5.5 billion or so for the entire 12 months. So probably, we would be charging it out in 2026 last quarter, as we did last year. But at the same time, I can say, the costs are increasing generally because there is a high inflation in the country, and the costs have gone up, and this is one area where we are concerned -- but frankly, we can't help much.

Sure. With regards to dividend payout and dividend sustainability, there's a question on guidance of payouts going forward, particularly in a rising interest environment.

So I think probably I will give you an answer in 2 ways. First of all, I mean, even before this situation happened in Pakistan, a lot of people were talking about our dividend policy and whether when we would be increasing the dividends. So I think you have to see from our dividend. You have to see what kind of dividend we used to pay in 2021. And then you saw a significant jump in 2023, and then there was a wait we did increase in 2025. So I think now any increase that has to take place will be sometime in 2027 [Foreign Language] if all things remain in control, nothing something significant and worse happens. So that would be the time you would be looking to either we don't know whether we would consider it early part of 2027 or we'll do it in the middle of depending on what the situation. We plan to maintain this dividend even as I have explained to you, even with the rising interest rate environment, our net interest income is fairly production, number one for 2026. And in 2027, our current account would be higher than the fixed income portfolio. So actually, if the interest rates were to rise, we would expect our earnings to be higher in 2027. So I think on that count, we do not see any issue at this point in time with our maintaining our dividends, capital adequacy, I think we have addressed that we do not see any significant pressure. And again, the one thing which is missing link is whether we have to make -- take any provision onto the GCC portfolio, so that would be another thing. So at this point in time, I do not see any significant provision. But if there were to be province, we are also going to see a lot more recoveries from our segment portfolio as well. We are expecting one fair large recovery on the silk portfolio. So that may be cushioning us a little bit if some to be made into the GCC. And so I think, to be honest, I do not see any issue with maintaining our payout or even say at this point in time -- at this point in time, based on information, all information I have got -- and depending on the, you can say, the situation, I'm comfortable at this point in time, but all I'm talking about that if the is remain very reasonable. And a reasonable means will remain in the limit, which could be -- can we sustain $100 a barrel oil. I think the answer is yes. So at this point of time, our inflation forecast with $100 a barrel oil is, I think we consider it to be a very tolerable and we think situation to be managing.

Sure. Okay. There is one question which referred to, I think, something that you mentioned on the slide around floaters that there's an PKR 8 billion loss on floater in P&L in case interest rates go up. The question is, is it for a 1% increase, the PKR 8 billion, I think you mentioned that twice speaking.

Yes, I think for 1% if the rate were to go, again, it depends how the rate quickly move up. So if the rates move up in one go, rates will move up in which you can say point in time, as I have told you that our portfolio is quite standard. So if the rate 1% rate goes up, which means that our repricing will take time. And then when the other, you can say exactly what's the time when the other 1% goes up, so it will all depend on what kind of time. But I think the maximum impact on this. If the ratio go 3%, so it will be, say, PKR 24 billion. So -- but I think that's fine. That's the number again, we have generated capital gain of, say, PKR 30 billion. So I think those kind of PKR 30 billion -- I think it was even higher PKR 31 billion. So PKR 31 billion is working as a cushion. So if we have 2, you can say, save the rationale say 3% in the worst-case scenario or some scenario. So if the rates were to go 4% even, so I think we have again created a capital gain enough to protect our earnings. So I think we have taken a proactive measure already in this regard.

Okay. I think most of the questions have been answered that I have been receiving. I think around the interest rate impacts, the UAE operations as well and the domestic operations as well. And I think we're almost approaching -- we have 5, 7, 8 mines left to the hour. Jawaid, would you have any concluding remarks before we...

Yes, I think I would like to see in a few aspects. We are satisfied on the capital adequacy because there is a huge cushion of 4.6% at this point in time, number one. Number two, we are seeing that our total revenues are going to be there, which we expect to be higher than last year, and our net interest income is going to be there. We have created a capital gain of PKR 31 billion to have a buffer in case we have to make some losses on the floaters. So looking into everything, I think we are quite comfortable. Our priority order is to protect the bank capital. So that is our #1 goal. So that the capital is compliant. We meet all the regulatory requirements so that we are -- everyone in the Board and the management is very, very mindful that we have to manage this, number one. Number two, our major goal is to focusing on our core business. With the core business as a growth in Pakistan. So that's our core business. GCC, we are -- you can say we want to grow over there. But again, it will all depend how the situation unfolds when the war ends. So our focus is on the growth in GCC, but it will also depend when the war closes. And GCC is about 12% of our operations. So that's area of focus. And then -- we want to maintain the payout at this point in time. We are not looking for any dividend step-up or any dividend reduction at this point in time. We are comfortable with the capital, and we would like to create more buffer in our capital. So I think 2027 would be the right time when we would be considering any change in our dividend. And we are focusing on the -- on our customers. I think you might have seen the which came in newspapers today. And I would say I'm personally truly proud of our, you can say, our hiring of a lot of people. Our average age of our permanent employee is just 32 years -- 32 years in the bank, and we have hired 6,000 people from -- and these are people who have joined without any degree whether -- I mean, just a or intermediate qualification. These are people which have come up with lot a energy and lot of hunger. And these people have done a great show. They're doing a great job, and we are very proud on this thing. So this is, I think, more than numbers or more than anything else, I think as I look at the past 3 years, so this is -- these are the achievements which I'm truly proud of. Truly proud of, you can say, our entire team that we have been able to make a difference in our society. Our outreach has increased through new branches. We have invested a lot of money. And I think indirectly, we have also generated a lot of jobs as well. So we are very, very proud of our this work. Thank you, very much. Thank you very much.

Just we have a couple of minutes. I just got this question from actually 2 analysts, so I thought I'll just ask it of you. The view on interest rates, any view on interest rates that you would like to share.

Again, it will all depend if the war to close too soon. I think there may be a very little increase in the interest rate, if there is to be an interest rate change, right? If there war to increase -- if the war to end fast, right. But if the war lengthens, definitely, the rate would increase. But again, it would -- monetary policy, I think committee would decide that how they want to, you can say, take it forward. So I think that at this point in time, whatever we are statistics, I think you and I are looking at -- everyone is looking at the same data. We are all hoping that war will end soon especially the midterm election and the U.S. are there. So I think there is a win on the point of U.S.A. as well, there appears to be with on the Iran side, but again, I'm not an expert, and I cannot really forecast these kind of events. So I think my hope is that war would end. And then I think there may not be potentially any significant increase in the interest rates. So I don't know if that's my wish or that's my analysis. So only the time is going to tell what happens on that side, right? So my bet at this point in time, if there is a rate increase, it is going to be somewhere around 50 basis to somewhere 100 basis points initially. I think the Central Bank probably would be mindful of the supply shock.

Sure. Sure. I think that covers most of the questions that we received. Thank you, Jawaid, for that very comprehensive presentation as well as Q&A and thank you, Manzoor and Munawar as well for joining us. And thank you to our audience, the analysts and the fund managers and the investors. If there are any questions which you further have based on our results, just feel free to contact our Investor Relations team for that. Thank you, everyone.

Thank you, and have a great day.