Q2 2026 Derayah Financial CJSC Earnings Call
Speaker #2: Good afternoon, ladies and gentlemen. Welcome to Derayah Financial Companies H1 2026 results, and strategy 2030 call. Hosted by Arqam Capital. I am Hasan Safiuddin, and joining us from Derayah are Mr. Muhammad al-Shammasi, Chief Executive Officer; Mr. Bilal Bushnak, Chief Financial Officer; and Ms. Rida Abed, Investor Relations Officer.
Speaker #2: now hand over the call to management. In the meantime, if you have any questions, please feel free to submit them through the Q&A box, and following the presentation we will begin with the Q&A session.
Speaker #2: You may use the raise-hand feature, and we will open your line. Now, Rida, over to you please.
Speaker #3: thank you, Arqam Capital, for hosting our earnings call Thank you, Hasan, and this quarter. Good afternoon, everyone, and thank you for joining Derayah's financial second quarter and first half 2026 results call.
Speaker #3: Resilient performance despite the ongoing geopolitical situation and the more cautious risk-off market environment. Total operating income increased by 5% year-on-year for the first half, supported by continued client growth, higher platform assets, and strong expansion in recurring revenues.
Speaker #3: During the period, Derayah continued to invest for the future, which has caused a temporary spike in expenses as a percentage of revenue and has weighed slightly on our bottom line. Net profit for the period reached close to $200 million.
Speaker #3: Today's call will also include an overview of Derayah's strategy 2030, with a walkthrough of the ambitions that will guide the next phase of growth.
Speaker #3: We have therefore extended today's call by close to 30 minutes to accommodate the strategy section and allow sufficient time for Q&A. Our CEO, Mr. Muhammad Al-Shammasi, will begin with the key highlights, followed by our CFO, Bilal Bushnak, who will then review the financial performance in detail.
Speaker #3: Then Muhammad will present strategy 2030 before we open the floor for questions. Before we begin, please note the standard disclaimer, including the provisions relating to forward-looking statements.
Speaker #3: And as we have explained previously, Derayah's IFRS financial statements consolidate the trade finance fund to preserve transparency and comparability with the way management assesses the underlying business, the operating review in this presentation is based on supplementary managerial results.
Speaker #3: With that, I will hand over to Muhammad.
Speaker #4: Thank you, Hasan, and Arqam Capital for hosting our investor earnings call. This quarter marks the first time we are partnering with Arqam, and inshallah, there will be more to come in the future.
Speaker #4: Thanks, Rida, for the introduction. If you can move to the next slide, please. Thank you very much. Our customer acquisition continued to gain momentum, ending Q2 of this year.
Speaker #4: We have added more than 23,000 new accounts during this quarter. This brings the total customers acquired in the first half of this year to more than 40,000, reaching over 660,000 customers.
Speaker #4: This is very important figure as we really highlight customer acquisition is our starting point for our platform model. As more clients means that we are able to capture more assets, deepen more engagements, and introduce additional products to these customers.
Speaker #4: So we are, alhamdulillah, continuing to achieve this nicely, and I'll shed some more light on that in subsequent slides. Our assets under custody continue to show strong growth—more than 10% for the quarter—to reach around $37 billion of assets under custody.
Speaker #4: Our assets under management have remained almost flat for the quarter, at around 22 billion riyals. We believe this is very resilient given the risk environment and the composition of our AUMs, which are tilted more toward the riskier side of the business.
Speaker #4: Our operating profit has increased by 5%, reaching approximately 470 million reals. I would also like to highlight that the share of recurring revenue is around 40.7%, which is 8 percentage points higher on a year-over-year basis.
Speaker #4: During the same period of last year, we have posted around 30—sorry, 20—28 million reals of investment gains over the same period. So we believe this is more of a recurring nature of our revenue.
Speaker #4: Our overall net income comes slightly below R$200 million. This is really a small decline versus the same period of last year. This was really more planned, as we are investing heavily in digital marketing.
Speaker #4: We are investing heavily in technology to improve our platform and to ensure that we have the right investments done now to ensure that in the future we continue to expand and to acquire more customers.
Speaker #4: So we have to do more investments in the near term. Bilal will touch base into that in subsequent slides, but one thing we are mindful of is that this is more of a transitionary period.
Speaker #4: These are transitionary investments that we are making right now, and we expect this to normalize in years to come. With that, I will give the floor to Bilal to walk you through the financial results, and I'll come at the end of the presentation with more insights about our 2030 strategy.
Speaker #4: Bilal, to you, Abu Khalid.
Speaker #2: Thank you very much, Abu Abdallah, and thank you Arqam Capital for hosting us. Inshallah, Abu Abdallah said more to come in the future, and thank you all for attending this call.
Speaker #2: In this slide, we'll be talking about our total operating income, which has increased by 5% year-on-year, reaching $468 million compared to $444 million in the first half of the second of 2025.
Speaker #2: In the second quarter, our operating income reached $240 million with an increase of 2% year-on-year and 6% on the previous quarter. As you know, for those who are not attending, the main contributor of that has been contributing in the previous quarter, and this quarter in our increase in the overall operating income is the new products of the impact of the new products on the special commission.
Speaker #2: Which has offset a lower brokerage revenue software asset management fees and lower contribution from our investment scheme. However, in the second quarter, we have showed a healthier trend with a higher contribution from the special income as in the coming slide we'll speak more about our special income and the reason for the increase in the contribution.
Speaker #2: With an improved asset management revenue, however, the brokerage and due to the market situation in general, stayed resilient despite stayed resilient compared to the previous quarter.
Speaker #2: In general, Derayah has continued to deliver revenue growth. Despite the ongoing conflicts that we are experiencing in the region, especially with what's going on with Iran, we believe this speaks to our trust, reputation, and the brand that we have in the marketplace.
Speaker #2: In the coming slide, we'll go into the details about our trading activity, the recurring income part, and as Abu Abdallah said, this represents a very important KPI that we look at.
Speaker #2: Our recurring income in the first half has reached $44.7 with an increase of 8 points compared to the same period of last year, which was at 36.6.
Speaker #2: And in the second quarter, this we have hit the 46%, and this is a structural improvement on our business, which gives us a better earning feasibility and reduces the sensitivity to the market and the trading cycles in general.
Speaker #2: On the trading activity part—in the first, the next slide, please, leader. Yes. On the trading activity part, as everyone knows, this has been an impact or a story of the geopolitical uncertainty and the cautious investor sentiment, as this has resulted in a decline of 10% in trading activity year-on-year.
Speaker #2: Compared to where we are at $688, and we have reached $617, and everyone knows the impacts on the brokerage revenue from that part in general.
Speaker #2: However, on the international part, it remains strong, supported by the volatility that we have witnessed and the attraction that came for our investors. Speaking about this, this is which is a key strength for Derayah by offering a unified platform which allowed our investors to invest in whichever market they want using the same market with a easiness or seamless ability of transferring their purchasing power from market from one market to other.
Speaker #2: And this is which helped Derayah to be always resilient and able to take advantage of any volatility or any trading activity in any market in the world.
Speaker #2: So our clients are alhamdulillah so far, they're enjoying this, and that has proven by the increase of the number of clients which we have reached to.
Speaker #2: Next slide, please. For those who are attending our investor earnings call, we break down the brokerage revenue into non-margin trading and margin trading.
Speaker #2: In the non-margin trading, our traded value increased by $28% year-on-year, reaching to $249 billion. However, the non-margin broker, the net commission has declined from $13 to $10 to $10 best to $10 basis points, achieving a $2409 million.
Speaker #2: Of course, the decline was a result of the change in the mix of the trading security and the introduction of the zero commission, which we started on the 18th of January.
Speaker #2: So, of course, the major contribution is the change in the trading mix. However, despite the change and despite the introduction of a zero base, our non-margin revenue was almost flat compared to the same period last year.
Speaker #2: And compared to the previous quarter as well. On the margin, on the margin trading revenue, we have faced a major decline in the overall revenue from $17 million to $12 billion.
Speaker #2: There were a number of factors that contributed to that. Of course, due to the current market geopolitical situation, we have witnessed a cautious investors' appetite to go and invest in the market.
Speaker #2: And accordingly, overall, the fund size has declined from $1.4 billion to $1.2 billion. That declines mainly came with a lower demand from the investor.
Speaker #2: However, and we know how important that is. Therefore, Derayah has established a dedicated margin trading task force, which has so far built a pipeline of 300 to 350 million. Of course, we're going into continuous discussions with the investor.
Speaker #2: This will come with the improvement of the market or the geopolitical situation, which will enhance the investors to come and jump on and trade.
Speaker #2: And also, we are broadening our proposition for the margin business through the introducing of the IPO margin and as we have announced earlier this year, we have signed a margin facility with AMB Bank dedicated for the margin product in specific, which will enable Derayah to provide more competitive products going forward and attract more investors.
Speaker #2: However, as a disclaimer, we all live within the same situation, and we understand the geopolitical impact on trading activities in general. Next slide, please.
Speaker #2: In the asset management, in the overall, we are almost flat at the $22 billion. And however, we have increase of $27 billion compared to the same period of last year.
Speaker #2: Our revenue declined by 8%, reaching to $58 million. Again, as a cautious of the market suspicious situation, low appetite of the investor to go into a market as a result of what's going on in the geopolitical part.
Speaker #2: However, the recurring management fees remained resilient at $56 million. In the second quarter, with the introduction of a new fund, that has helped us in increasing the revenue compared to the previous quarter, from $27 million to $30 million.
Speaker #2: And over the coming 12 months, of course—again, it depends on the situation—we expect to launch approximately $1.5 billion of assets under management in the real estate fund, and $750 million out on the alternative investment.
Speaker #2: This will always reflect our ongoing strengths that we do believe in the Saudi real estate market, especially with the boost that was provided recently by the changes in the foreign ownership rules, the ongoing government encouragement of the mortgage business, and the continuously strong demand for commercial real estate.
Speaker #2: So, we understand that this assets under management business is not growing as per our target or according to our strategy, but that was mainly impacted by what's going on geopolitically, and therefore Derayah tried to hold on all the assets that were ready to be launched.
Speaker #2: So we understand the investors' cautious due to demand and their appetite to invest is not high enough for us to launch funds. However, now we're ready to launch a lot of funds and we are assessing when is the right timing to kick them off.
Speaker #2: On the strong on the stock yield enhancement program, our total assets under custody has reached to $37 billion with a growth of 10% compared to the same period of last year.
Speaker #2: This product or the contribution of that product has been materially important in increasing our recurring revenue and increasing the contribution of that business. For those who doesn't know, the actual launch for that product was in November 2028 and it started contributing materially on Derayah's profit starting from the first quarter of this year as the total assets lent compared to the assets under custody has reached to $8.7 compared to 5% or 6% during the same period of last year.
Speaker #2: The SYEP has created an income on ideal asset and that has been a good factor for attracting a lot of investors who has an ideal assets which is not been lent and that is contributing positively in increasing their revenue that comes from the markets and providing them with a better revenue screen revenue quality by being by having an assets lent to others while their assets are well protected.
Speaker #2: The revenue that come from the SYEP is divided into two factor part that comes from the local investors and the other parts that come from the international trading.
Speaker #2: On the local invest on the local part or the local assets under custody, as of now, we have signed with more prime broker which gives a Derayah a stronger position in negotiating the pricing, enhancing the return, and attracting better quality protecting the assets and being on a, let's say, on the best return that can be generated to our investors.
Speaker #2: Next slide, please. We have spoken about the special commission. Okay. On our operating expenses, it has increased by $22% reaching to $207 and our cost to income ratio has reached to 44% as Abu Abdullah has said.
Speaker #2: We have an intensive investments on our IT platform and intensive investment or increase in spending of the digital marketing so which will help us to attract more clients and position Derayah in the right place.
Speaker #2: Of course, the investment on the IT for enhancing our platform, enhancing the experience that our clients have which will help Derayah in retaining more clients and attracting more clients.
Speaker #2: The increase, of course, for the coming period which we expect this will continue to $26 and $27 and we will start the impact be reflected on the future and during that time we expect our cost to income ratio to go to the $40%.
Speaker #2: On the next slide, please, Lida. Our reported net income was $198, which is down 77% from the same period last year. However, compared to the previous quarter, we have increased our profit, reaching $101 from $97.
Speaker #2: Recently, our board has approved our dividend for the second half of 0.33, reaching a total of 0.66 for the first half, which is in compliance with our dividend policy that was announced post-IPO.
Speaker #2: And we will promise our investors to continue to provide a generous dividend going forward, inshallah. I will now hand back to Muhammad to reveal our market strategy for 2023 in detail.
Speaker #2: Back to you, Abu Abdullah.
Speaker #1: Thank you, thank you, Bilal. Thanks for walking us to through the financial slides. As highlighted, by Bilal, this is really a clear transition underway.
Speaker #1: More clients, more assets that are coming our way. Means a higher recurring revenue and a contribution to more broader engagement with our customers. And the coming few slides, we would like really to share our 2030 discussion and views of the business.
Speaker #1: We would really like to move this conversation from just a quarterly, quarterly discussion into a broader one—how the management and how the board of directors view the business, and how we really transition from 2025 into 2030, how we see the business.
Speaker #1: We would like really to bring our investors on board with this view and we share the way we are working toward a brighter future for this for this company.
Speaker #1: We believe the objective of this strategy is to achieve higher quality growth through the cycle, while preserving attractive returns and the capital discipline that we have demonstrated in the past.
Speaker #1: So we are working really actively with that. And I would like really to start my presentation if you can move, please. Basically, we are looking here at a sea change for the Saudi Saudi market.
Speaker #1: Retail portfolios back in 2022 were around 10 million portfolios. Today, we are talking about north of 14.6 million. The share of institutional clients back in the day was almost one third of the market.
Speaker #1: Today, we are talking about how 50% of the market is really institutionally driven. The number of listed companies in the local market also continues to increase.
Speaker #1: More important, the introduced by CMA earlier part of this year allowing for GCC residents to to own directly into the market and also opening the market by removing the QO5 regime and opening the market to global retail investors.
Speaker #1: These are really significant changes in the market. These reforms means that we have a very different target addressable market and we would like really to respond accordingly with that.
Speaker #1: Also, Derayah opportunity expands beyond domestic retail trading. And core Saudi population to include wider audiences of the market. Also international investors we have partnered with other brokers globally and would like really to to bring that overall addressable market to Saudi Arabia.
Speaker #1: The timing unfortunately, of these reforms was not very constructive as they coincided with with a wider geopolitical environment and and the war against against Iran.
Speaker #1: So we would like really to to highlight that we are expanding also across different segments beyond asset management to include wealth segment and from mass market through affluent and all the way up to higher net worth individuals.
Speaker #1: So overall, we are looking at a wider net of customers that we are we are targeting here. But what does that mean really from a business initiatives and priorities?
Speaker #1: We are highlighting four different priorities. Can you go to next slide, please? Four different strategic priorities that we are focusing to achieve to achieve that.
Speaker #1: And and the value creation that we we believe will result into better acquisition efficiency, more product penetration, and a much better client asset capture and higher live value for our customers and more recurring revenue and and of course the impact of operating leverage.
Speaker #1: These four pillars that we are working on is really to build a commercial engine as a core enabler for our business, strengthen our position in the brokerage business, and expand and scale up into asset management and wealth management proposition, develop and we continue to invest in that a lot and I cannot really emphasize this more, develop and integrated tech platform where we can really unlock the scalability without really in in increasing significantly our cost of acquisition and also maintaining a disciplined capital allocation for superior returns.
Speaker #1: In the next slide, we'll highlight and shed more light on each of these propositions, and we will go over each of these in detail.
Speaker #1: We are focusing on a commercial engine that combines value for our customers. So investing investing heavily in building a unified commercial engine that enables us really to connect with customers in a much better way we introduced a data warehouse that enables us really to target customers in terms of products and distribution.
Speaker #1: This also will help us in protecting and strengthening our brokerage franchise we have witnessed for example in in in last month our market share have restored to around 10% of the all online trading market share and we aspire really to do more our overall as of last quarter our market share in the brokerage business continue to expand to around 15 15%.
Speaker #1: Across both local and international market and this is really a very solid indication that whatever investments we are making is really working quite well here.
Speaker #1: Lastly, we. Also working on maintaining maintaining a disciplined capital allocation to deliver attractive returns for for our investors. Next slide. So our focus really in in the brokerage business is really protecting the franchise and expanding really by introducing new segments of the market like SYEP but also bringing new products to the to the market as we are venturing more into the institutional side of the business like low latency execution, targeting high frequency traders and and market makers.
Speaker #1: We are developing more work and more franchises on the institutional side and hiring more sales traders. Also, we have launched our sell-side initiative earlier this year. Currently, we are focusing our coverage on five stocks and are aiming to expand this to 10 stocks that we are covering in the market.
Speaker #1: All of this are quite unique coverage in the market that we believe will bring some significant value add to institutional investors these are stocks are not really widely covered by the market usually covered by one or even no no coverage by by anyone in the market.
Speaker #1: We are also beyond really the normal asset management activities. We are also building an entire wealth management proposition. Today we have our smart proposition.
Speaker #1: We are complementing this with more offerings to include other segments of the market like the upper affluent of the market and also targeting really to bring new products our overall aspirations within within asset management is to move from 22 billion reals of assets under management that we have today to around 60 billion of assets under management separated between direct asset management and wealth management.
Speaker #1: So, this is a significant growth of around 3x from where we are today, and we are really focusing on achieving that over the span of the next four years.
Speaker #1: Next please. Our technology platform is really a core pillar of our strategy and crucial element of of the strategy. We have been really investing a lot we have decided to front load these investments so we expect 2026 and 2027 to be the beak of these investments and to normalize thereafter.
Speaker #1: The reason for that is we believe it all starts really with a proper acquisition at the top of the funnel of our customers. Once we do this rightly, it's relatively easier for us, really, to cross-sell and to add more products to our customers.
Speaker #1: So we already seeing some positive results as a result of these investments that we started to make in the past 12 months. So our customer acquisition and activation has declined significantly to around few minutes.
Speaker #1: And we are really closing a lot of these by breaking down the squads and streams of acquisitions and focusing our surgeries in really looking at different parts of this journeys and really focusing how to optimize these journeys one by one and ensuring that faster execution all these journeys.
Speaker #1: This really enabled us really to fast track into customer acquisition. In June and in July of this year we have witnessed significant growth in in top of the funnel and we continue to see more activities through the KYC and through the through funding activities.
Speaker #1: We will be happy to highlight and shed more color into this in subsequent probably earning calls in the future. On the capital allocation we continue to to provide visibility with our dividends distribution.
Speaker #1: Minimum 60% through 2027 and we continue to distribute our dividends in a quarterly. We announced a similar distribution to what we have distributed last year so far we are in track of of what we have promised our investors in in last year when we announced our dividends policy.
Speaker #1: More important to us that we maintain the balance approach of distributing dividends investing in in the future. So we have announced an investment into bank D360 of around 100 million.
Speaker #1: And we continue to utilize the remaining returned earnings to to do CABEX OBEX yes but also we are seeding a lot of new investment products that we have launched in in the past.
Speaker #1: These are very important for the future. So we underwrite some investments especially in the alternative space before syndicating that to our valued customers. We continue also to invest selectively in our ecosystem so we have made as I highlighted investments in D360 we have made investments in other companies like Muyesser Alba Bawatic and others all of these are part of our wider investments in in ecosystem that really help Derayah in achieving more service excellence.
Speaker #1: If you move to the next slide. This is very important slide. As we continue really to expand our presence and preserve our presence in the retail segment.
Speaker #1: We are also introducing new parts to the equation is institutional clients where we are investing heavily there hiring more people expanding the coverage by sell side activation of SYEP and partnership with different prime brokers and also venturing into HFTs and market making activities.
Speaker #1: We talked in previously about the achievement of our partner company D360 acquiring significant customer base of of around 3 million users. We are really partnering them with them to to launch number of credit card initiatives saving accounts and also providing more secured lending to to our customers.
Speaker #1: To summarize on on our key objectives here next slide please. Our North Star matrix is really moving from around 600,000 customers to more than 1 million customers by 2030.
Speaker #1: A grow our AUMs by 3x to achieve around 60 billion reals the share of recurring revenue really to increase significantly from around 35% to 55 and what we mean by this is really changing our business model to be more in the recurring side contractual business.
Speaker #1: Our revenue is really to double from where we are from 900 million to around 2 billion. And maintain a very significant ROE targets of more than 40%.
Speaker #1: With this I would like really to close my my presentation and we are very excited about the future of the company and we believe all the plans that we have put in place are achievable.
Speaker #1: We are really investing in the building blocks of these strategic objectives and we look forward really to achieving these objectives in the future. I'll give the floor now to to the audience to ask questions.
Speaker #1: Rida Hussein to you.
Speaker #2: Thank you so much for the presentation. We will now begin with the Q&A session. If you'd like to ask a question please use the raise hand feature and we'll open your line.
Speaker #2: Okay. So our first question comes from Ibik Islamov. Please feel free to unmute yourself Ibik.
Speaker #1: Yes, thank you very much for the presentation. I'd like to ask the following two questions. The first one is on your latest reporting trends.
Speaker #1: Quite a strong performance in securities lending, right? So, I mean, definitely the thesis is delivering. On net special commission income, however, obviously we see that the brokerage revenues are declining, so...
Speaker #1: Where do you see the inflection point in brokerage such that it gets fully covered or compensated by your ancillary securities lending account from the custody revenues, right?
Speaker #1: Obviously, I—we need to look at it as a combo, right, when we think about your earnings model. That's my first question. And the second question is about your strategy, and thank you for announcing the 2030 targets. How do you see the asset management growth, right?
Speaker #1: I mean, I've seen your AUM ambition, right. To what extent will it be institutional versus retail money, and what will be the implications for asset management fees over the five-year period?
Speaker #3: Thank you Ibik for this questions. I would like really just to highlight a very important fact. So earlier this year that we we announced that we are moving to a a zero trading commission in the in the local market.
Speaker #3: And we highlighted that, as a result of this move, our revenue in the brokerage will change, and more emphasis will be driven here into more commission-based, interest-based commission.
Speaker #3: So we have achieved a flat performance in our brokerage business but we have witnessed a significant growth in in interest commission income. So this is really quite positive and really providing you with a clear guidance that we were able to change our pricing strategy challenging the overall market and bringing a new revenue streams that did not really exist in the past and changing the way we look at our revenue recognition from just a pure brokerage which we maintained quite well by introducing a new revenue stream in the brokerage business.
Speaker #3: So we continue really to see resilience on on the brokerage side of the business and we were able to more than compensate that by significant increase I think 70% increase in in the commission interest commission income.
Speaker #3: The the other question related to asset management yes we are really focusing onto asset management and bringing a lot of ambitious growth targets here.
Speaker #3: And we are separating this into two business lines. One is really the core asset management proposition where we are currently at around 22 billion reals we are really quite determined to increase this significantly to around 52 billion so more than double from where we are in the next four years.
Speaker #3: And the way we are planning to achieve this is by a mix of public and private markets. So we are really expanding our presence into real estate expanding our presence into venture capital growth equity internationally.
Speaker #3: So we have been really launching number of products and building a lot of partnerships with with managers in the local market sorry in the international market in across private credit across venture capital across private equity etc.
Speaker #3: to ensure that we have a much healthier pipeline. And building on the success of of that last year we have launched an international private credit that was received positively by the market.
Speaker #3: We have launched a venture late stage venture capital fund that invested in the names like SpaceX Anthropic etc. And we are doubling down into these relationships that we have we have built and continue to provide access to some growth opportunities in the local and international market.
Speaker #3: We are introducing a new wealth management segment to the equation and targeting around 8 billion reals of that. This is again not only looking at the mass segment through the smart Deraya smart initiative but also looking at other segments in the market in the affluent and high net worth individuals and the investment that we are making in the data warehouse and understanding the behavior of our customers will provide us more insights on how to target these segments what are the demands of these segments and we can tailor made investments to them more actively.
Speaker #1: Yes thank you.
Speaker #3: Thank you Ibik. Any other questions?
Speaker #2: Okay so I'll go with my questions. In the meanwhile if you want to ask your questions please raise your hand or add them to the Q&A box.
Speaker #2: Okay, so for the 2030 revenues target, the implied growth is around 15%. Which side of the business are you expecting to have most of the growth?
Speaker #2: So which are you expecting to be are you expecting it to be a broad based growth with the revenue?
Speaker #3: Thank you Hussein. As highlighted the asset management I think and the wealth management are the the biggest revenue sorry the biggest growth items in our strategy.
Speaker #3: So we are putting a lot of emphasis into that and bringing more AUMs means that we continue to to almost double from where we are today.
Speaker #3: In the asset and wealth management that's really a quite significant targets to to be delivered in the next in the next four years and it's quite challenging to to say the least.
Speaker #3: But I think we have the right formula for that. We have been investing into acquiring talents acquiring resources etc. that will enable us really to achieve that that growth.
Speaker #3: Having said that we we continue also to bring in new revenue streams we have demonstrated our ability in the brokerage business to to bring significant revenue growth evidenced by new programs like SYAB interest income etc.
Speaker #3: So, we continue to show very strong growth in that side of the business as well.
Speaker #2: Okay thank you so much. My next my next question is on the D360 bank. So I know the peak loss has passed so but are we still expecting 2027 to be a break even year?
Speaker #2: Or could Deraya could it require more capital from Deraya?
Speaker #3: From from the business plan and from our discussion with our colleagues at at the bank we have. Alhamdulillah continue to narrow the the losses.
Speaker #3: So, we are talking here about the bank really recovering from these losses gradually and moving into break-even by the end of 2027.
Speaker #3: And we expect really the 2028 to be the time when we are starting to to record profits. The bank had the bank capital raise has been perceived positively by a lot of institutional clients in the local side and in the international side.
Speaker #3: And they are in a track inshallah to raise 1.5 billion reals. The valuation of the bank in the post money once all all capital raising concluded we are talking about 6 billion reals of post money valuation.
Speaker #3: This creates a significant value for shareholders of of Deraya who invested in the bank back in the days as incubator and later continue to to inject capital as as the bank continues its growth journey.
Speaker #3: We are quite happy with with the operational side more than 3 million users. More than I think 3.5 billion in deposits. We are still in the very early stage of lending money and and this funding round has been really focused about getting more capital to fuel lending business which already started to to show some signs of positive momentum today.
Speaker #3: They are sitting around 500 million of loan books and as they conclude this funding round we expect really significant significant growth in the loan book of the bank.
Speaker #2: Okay so we have a question. Thank you so much. So we have a new question in the Q&A box. So how many customers of D360 are we already cross selling to now?
Speaker #2: Given they have 3 million clients already and there is a higher time from foreign residents in the GCC coming in. Is the 1 million target for clients by 2030 a more conservative target?
Speaker #3: The the simple answer to this today we don't have a cross selling happening between us and D360. We we launch an initial integration with the bank where clients now can fund their account through the omnibus account that we maintained with bank D360.
Speaker #3: This is really a beginning of a a bigger journey that we are looking to achieve by more integration with with the bank and cross selling both investment and banking products on both sides of of this partnership.
Speaker #3: Today we don't really have any and I think as we achieve more and more synergies and more and more integration with the bank we think that this will work quite well.
Speaker #3: We are also looking to partner with other partner brokers overseas that can bring a significant volume of customers to to Deraya. We are anticipating around 9 million users under these different platforms that hopefully will will bring.
Speaker #3: To to our total addressable market.
Speaker #2: Okay thank you. The next the next question is the H1 traded value increased 28% but the brokerage take rate fell to 10 bips. Do you see this rate as a floor or could it could the take rate go a bit lower in the in the future?
Speaker #3: Bilal can you answer this?
Speaker #4: Yes. As we have guided our investors throughout the introduction with Derayah and the roadshows, we have guided our investors that our net margin on the brokerage will be 9 to 10 bps, and we believe that going forward, this is going to be the floor post the launching of the zero-base trading.
Speaker #4: Can 9 to 10, so that's the range. What, what...
Speaker #3: I answered IBIC a few minutes ago. Yes we introduced zero commission which means that we are making less money in the commission side but also remember that this was compensated significantly by a strong growth on the other side of the business which is the commission based.
Speaker #3: The interest commission income or special commission income. So this is really a significant change from the way we operate our business and you can see that when the first half of this year we have recorded around 70% growth into the special commission income.
Speaker #2: Okay, our next question is from Metin Esendil. What is the expected non-margin trading and international brokerage revenue in 2030?
Speaker #4: On the international as we have guided our investors that our net margin on the non-margin trading is going to be 9 to 10 bips.
Speaker #4: And our indicative growth on the midterm strategy is a growth of 7%. So we do not distinguish between the local and international on the brokerage part.
Speaker #4: We divide the brokerage revenue into the margin and the non-margin.
Speaker #2: Okay thank you so much. Okay the next question given the current share price level would you consider a share buyback?
Speaker #3: Thanks for asking this question. We are looking at really different scenarios related to that. Including a share buyback once we we look at a final decision.
Speaker #3: This would be communicated to our investors but at the moment we haven't really taken that decision. We are evaluating different scenarios around that.
Speaker #2: Okay thank you so much. Our next question comes from IBIC. Please IBIC unmute yourself.
Speaker #3: Yeah yeah thank you. Just one follow-up question. On your international brokerage segment. Right. Can you broadly talk about the the concentration in international trading you know within the AI sector.
Speaker #3: Right. How significant it is and to what extent does it impact your take rates you know such concentration and do you do stress tests to your trading values?
Speaker #3: Should there be a rollover in the AI sector in the US? What would be the impact on your trading values? Is there such a stress test that you can kind of discuss with us?
Speaker #3: Thank you. We have not really provided an breakdown of our international versus local volumes. I think they come from from public public resources but we continue to see a very strong momentum of investors really looking at international markets.
Speaker #3: As the local trading volumes have been really muted in the past few quarters, we believe this is more of a platform advantage—that investors have the ability to move their buying power from local to international and vice versa.
Speaker #3: So in certain quarters in recent times we have seen emphasis in the international side. But in other scenarios we have seen a lot of also emphasis in the local side.
Speaker #3: So we haven't really provided any breakdown of where we see trading volume. In terms of investors picking some activity we have seen definitely around times of significant IPOs like SpaceX etc.
Speaker #3: ...to see strong activity happening in that segment of the market. But I wouldn't say that we have a high concentration in a specific sector of the market versus others.
Speaker #2: Thank you.
Speaker #3: Thank you IBIC. Do we have other questions same?
Speaker #2: No. I think we can conclude the call. If you want. I know pass back the call for your closing remarks.
Speaker #3: Thank you very much. Thank you very much for your time. We are super excited about the future of this business. We continue to stay quite resilient in light of all of the challenges surrounding the local markets and the geopolitical situation.
Speaker #3: We continue to show a very strong resilience of performance. We this really coupled with a significant shift in our pricing strategy and execution of that strategy really proved to be quite solid and correct.
Speaker #3: Reading off of the market. Our customer acquisition continues to increase. We have shared some initial signs of that happening in June and July of this year, and we continue to see, inshallah, more growth in the future.
Speaker #3: Thank you everyone for your participation and we we look forward to touching base with you in person or in future training call. Thank you very much.
