Q2 2026 The Saudi National Bank Earnings Call

August 5, 2026

Speaker #1: Invested, and she holds it only. Media, including social media, are requested to disconnect at this point. Today's speakers are: Mr. Targis Adhan, Group CEO; Mr. Hussein Eid, Group CFO; Mr. Raja S.

Speaker #1: Adhan, Group Chief Economist; and Mr. Abdulbadie Alyafi, Head of Investor Relations. I will start by handing over to the SMB Head of Investor Relations, Abdulbadie.

Speaker #1: Please go ahead.

Speaker #2: Good afternoon from Riyadh. We would like to thank SMB Capital for hosting today's call. Before we begin, a quick reminder that today's call includes forward-looking statements and discussions of financial performance.

Speaker #2: So I'll remind everyone to please refer to page 2 of the earnings presentation for the disclaimer notice, also included on this page are clarifications around reproduction of any SMB materials and today's discussions, in line with applicable laws and regulations.

Speaker #2: With that, I'll hand over to our Group CEO, Mr. Targis Adhan. Please go ahead.

Speaker #1: Ladies and gentlemen, good evening. I will now hand you over to your host, Mr. Eider Gülem. Mr. Eider, please go ahead.

Operator: Ladies and gentlemen, good evening. I will now hand you over to your host, Mr. Iyad Ghulam. Mr. Iyad, please go ahead.

Speaker #3: Thank you, Abdulbadie. And warm welcome to everyone. I'm very pleased to share our results for the first half of 2026. We delivered a strong balanced and carefully managed set of results for the group, leading to a record quarter for the bank.

Speaker #2: Good afternoon, everyone. On behalf of SMB Capital, I would like to welcome you to this conference call with SMB Management regarding the bank's Q2 2026 results.

Iyad Ghulam: Good afternoon, everyone. On behalf of SNB Capital, I would like to welcome you to this conference call with SNB Management regarding the bank's Q2 2026 results. Today's call is being recorded. Please note that this call is open for analysts, investors, and shareholders only. Media, including social media, are requested to disconnect at this point. Today's speakers are Mr. Tareq Al-Sadhan, Group CEO; Mr. Hussein Eid, Group CFO; Mr. Raja Asad Khan, Group Chief Economist; and Mr. Abdulbadie Alyafi, Head of Investor Relations. I will start by handing over to the SNB Head of Investor Relations. Abdelbadi, please go ahead.

Speaker #2: Today's call is being recorded. Please note that this call is open for analysts, investors, and shareholders only. Media, including social media, are requested to disconnect at this point.

Speaker #3: As always, we are guided by our strategy, focused on maximizing value for our shareholders, while taking a long-term view. Regarding the operating environment, it is encouraging to see that Saudi Arabia continues to demonstrate real resilience; we are now entering the final phase of Vision 2030, and the diversification journey that begins 10 years ago is progressing very well.

Speaker #2: Today's speakers are Mr. Tiger Sethan, Group CEO; Mr. Hasan Aid, Group CFO; Mr. Raja Asad Khan, Group Chief Economist; and Mr. Abdulladi Alyafi, Head of Investor Relations.

Speaker #2: I will start by handing over to the SNB Head of Investor Relations, Abdulladi. Please go ahead.

Speaker #3: The non-oil economy now contributes to around 55% of GDP, and non-oil activity continues to grow at a healthy pace. At the same time, inflation continues to be tame, deposit growth is on the upswing, and credit to the private sector across the system has reached record levels.

Speaker #3: Good afternoon from Riyadh. We would like to thank SMB Capital for hosting today's call. Before we begin, a quick reminder that today's call includes forward-looking statements and discussions of financial performance.

Abdulbadie Alyafi: Good afternoon from Riyadh. We would like to thank SNB Capital for hosting today's call. Before we begin, a quick reminder that today's call includes forward-looking statements and discussions of financial performance. I'll remind everyone to please refer to page two of the earnings presentation for the disclaimer notice. Also included on this page are clarifications around reproduction of any SNB materials and today's discussions in line with applicable laws and regulations. With that, I'll hand over to our Group CEO, Mr. Tareq Al-Sadhan. Please go ahead.

Speaker #3: So I'll remind everyone to please refer to page 2 of the earnings presentation for the disclaimer notice, also included on this page are clarifications around reproduction of any SMB materials and today's discussions, in line with applicable laws and regulations.

Speaker #3: So the picture is one of an economy that is prudent, broad-based supported by strong fundamentals, a business-friendly ecosystem, and very favorable demographics. Yes, the global and regional backdrop remains challenging, and this is why we are maintaining and remaining vigilant and taking a prudent balanced approach.

Speaker #3: With that, I'll hand over to our Group CEO, Mr. Tiger Sethan. Please go ahead.

Speaker #4: Thank you, Abdulladi, and a warm welcome to everyone. I'm very pleased to share our results for the first half of 2026. We delivered a strong balanced and carefully managed set of results for the group, leading to a record quarter for the bank.

Tareq Al-Sadhan: Thank you, Abdelbadi, warm welcome to everyone. I'm very pleased to share our results for the H1 of 2026. We delivered a strong, balanced, and carefully managed set of results for the group, leading to a record quarter for the bank. As always, we are guided by our strategy focused on maximizing value for our shareholders while taking a long-term view. Regarding the operating environment, it is encouraging to see that Saudi Arabia continues to demonstrate real resilience. We are now entering the final phase of Vision 2030, the diversification journey that begins 10 years ago is progressing very well. The non-oil economy now contributes to around 55% of GDP, and non-oil activity continues to grow at a healthy pace.

Tareq Al-Sadhan: Thank you, Abdulbadie, warm welcome to everyone. I'm very pleased to share our results for the H1 of 2026. We delivered a strong, balanced, and carefully managed set of results for the group, leading to a record quarter for the bank. As always, we are guided by our strategy focused on maximizing value for our shareholders while taking a long-term view. Regarding the operating environment, it is encouraging to see that Saudi Arabia continues to demonstrate real resilience. We are now entering the final phase of Vision 2030, the diversification journey that begins 10 years ago is progressing very well. The non-oil economy now contributes to around 55% of GDP, and non-oil activity continues to grow at a healthy pace.

Speaker #3: I'll share a few key highlights of the financial performance for the quarter and my colleague Hussein will give you more details as well. For the first time, net income attributable to the shareholders reached 6.6 billion riyals in a single quarter, and for the first half, net income came in at 13 billion Saudi riyals.

Speaker #4: As always, we are guided by our strategy, focused on maximizing value for our shareholders, while taking a long-term view. Regarding the operating environment, it is encouraging to see that Saudi Arabia continues to demonstrate real resilience; we are now entering the final phase of Vision 2030, and the diversification journey that begins 10 years ago is progressing very well.

Speaker #3: Up 7% year on year, also the nature of this growth is encouraging, total operating income from the first half exceeded 20 billion riyals, up 6% with growth in both net special commission income and fee and other income.

Speaker #4: The non-oil economy now contributes to around 55% of GDP, and non-oil activity continues to grow at a healthy pace. At the same time, inflation continues to be tame, deposit growth is on the upswing, and credit to the private sector across the system has reached record levels.

Speaker #3: In the second quarter alone, operating income was up 11% year on year. We continue to pursue profitable growth, coupled with careful management of our funding costs and expansion of ancillary revenue stream to diversify our revenue base.

Tareq Al-Sadhan: The same time, inflation continues to be tame, deposit growth is on the upswing, and credit to the private sector across the system has reached record levels. The picture is one of an economy that is broad-based, supported by strong fundamentals, a business-friendly ecosystem, and very favorable demographics. The global and regional backdrop remains challenging, and this is why we are maintaining and remaining vigilant and taking a prudent balanced approach. I will share a few key highlights of the financial performance for the quarter, and my colleague, Hussein, will give you more details as well. For the first time, net income attributable to the shareholders reached SAR 6.6 billion in a single quarter. For H1, net income came in at SAR 13 billion, up 7% year on year. The nature of this growth is encouraging.

Speaker #4: So the picture is one of an economy that is broad-based supported by strong fundamentals, a business-friendly ecosystem, and very favorable demographics. Yes, the global and regional backdrop remains challenging, and this is why we are maintaining and remaining vigilant and taking a prudent balanced approach.

Speaker #3: As we pursue this growth, we are doing so prudently in line with our risk appetite, maintaining the quality of our portfolios. CRIS quality is further supported by our effective collection efforts and supported by the judicial ecosystem in the Kingdom of Saudi Arabia.

Speaker #3: On cost management, our cost-to-income ratio continues to place SMB among the most cost-efficient banks globally, which is a reflection of sustained discipline even as we keep investing on our businesses.

Speaker #4: I'll share a few key highlights of the financial performance for the quarter and my colleague Hussein will give you more details as well. For the first time, net income attributable to the shareholders reached 6.6 billion riyals in a single quarter, and for the first half, net income came in at 13 billion Saudi riyals.

Speaker #3: Our balance sheet is both larger and stronger, total asset reach a record of 1.24 trillion Saudi riyals, our diversified financing portfolio has reached the 740 billion riyals mark, supported by our expceptional funding franchise and all of this sits on the top of a very robust capital and liquidity position.

Speaker #4: Up 7% year on year. Also, the nature of this growth is encouraging, total operating income from the first half exceeded 20 billion riyals, up 6% with growth in both net special commission income and fee and other income.

Tareq Al-Sadhan: Total operating income from H1 exceeded SAR 20 billion, up 6%, with growth in both Net Special Commission Income and fee and other income. The Q2 alone, operating income was up 11% year on year. We continue to pursue profitable growth, coupled with careful management of our funding cost and expansion of ancillary revenue stream to diversify our revenue base. We pursue this growth, we are doing so prudently in line with our risk appetite, maintaining the quality of our portfolios. Credit quality is further supported by our effective collection efforts and supported by the judicial ecosystem in the Kingdom of Saudi Arabia. Cost management, our cost-to-income ratio continues to place SNB among the most cost-efficient banks globally, which is a reflection of sustained discipline, even as we keep investing on our businesses. Our balance sheet is both larger and stronger.

Speaker #3: Providing us a headroom to keep supporting our clients and participating in the Kingdom's opportunities while continuing to deliver for our shareholders. Looking next at our strategic KPIs, I'm pleased to highlight that our progress on the targets is the opportunity—sorry, is the outcome of consistent execution where we continue to capture the many Vision 2030-driven opportunities across the SMB group.

Speaker #4: In the second quarter alone, operating income was up 11% year on year. We continue to pursue profitable growth, coupled with careful management of our funding costs and expansion of ancillary revenue stream to diversify our revenue base.

Speaker #4: As we pursue this growth, we are doing so prudently in line with our risk appetite, maintaining the quality of our portfolios. Credit quality is further supported by our effective collection efforts and supported by the judicial ecosystem in the Kingdom of Saudi Arabia.

Speaker #3: In wholesale, we are growing with a focus in the local KSA market, and where it creates sustainable value. We are leveraging our scale and strong partnership with public entities and large projects also as a part of being the biggest enabler for small and medium enterprises in the Kingdom.

Speaker #4: On cost management, our cost-to-income ratio continues to place SMB among the most cost-efficient banks globally, which is a reflection of sustained discipline even as we keep investing on our businesses.

Speaker #3: We are successfully expanded our SME business, upgrading our differentiation services model and deepening our relationship in key segments. In retail, we continue to grow and serve Saudi Arabia's energized and ambitious population, our attractive mortgage business remains central to the mission as we work closely alongside our partners in the housing ecosystem.

Speaker #4: Our balance sheet is both large and stronger, total asset reach a record of 1.24 trillion Saudi riyals, our diversified financing portfolio has reached the 740 billion riyals mark, supported by our expceptional funding franchise and all of this sits on the top of a very robust capital and liquidity position.

Tareq Al-Sadhan: Total assets reach a record of SAR 1.24 trillion. Our diversified financing portfolio has reached the SAR 740 billion mark, supported by our exceptional funding franchise. All of this sits on the top of a very robust capital and liquidity position, providing us the headroom to keep supporting our clients and participating in the kingdom's opportunities while continuing to deliver for our shareholders. Looking next at our strategic KPIs, I am pleased to highlight that our progress on the targets is the outcome of consistent execution, where we continue to capture the many Vision 2030 driven opportunities across the SNB group. In wholesale, we are growing with a focus in the local KSA market and where it creates sustainable value. We are leveraging our scale and strong partnership with public entities and large projects.

Speaker #3: Also, we continue to invest in our service proposition for all client segments, including SMB leading high net worth franchise. As we pursue our growth, we will continue to be selective and prudent balancing our aspirations around both value and volume.

Speaker #4: Providing us a headroom to keep supporting our clients and participating in the kingdom's opportunities while continuing to deliver for our shareholders. Looking next at our strategic KPIs, I'm pleased to highlight that our progress on the targets is the opportunity sorry, is the outcome of consistent execution where we continue to capture the many Vision 2030-driven opportunities across the SMB group.

Speaker #3: To achieve this, we will aggressively pursue attractive opportunities aligned to our strategic priorities and risk appetite. And rest assured that our focus remains squarely on delivering this profitable growth and maintaining a customer-centric approach, supported by our investment in innovation, and efficiency in order to deliver sustainable value to our shareholders and attractive return on tangible equity profile.

Speaker #4: In wholesale, we are growing with a focus in the local KSA market, and where it creates sustainable value. We are leveraging our scale and strong partnership with public entities and large projects also as a part of being the biggest enabler for small and medium enterprises in the kingdom.

Tareq Al-Sadhan: As a part of being the biggest enabler for small and medium enterprises in the kingdom, we have successfully expanded our SME business, upgrading our differentiation services model and deepening our relationship in key segments. We continue to grow and serve Saudi Arabia's energized and ambitious population. Our attractive mortgage business remains central to the mission as we work closely alongside our partners in the housing ecosystem. We continue to invest in our service proposition for all client segments, including SNB leading high net worth franchise. We pursue our growth, we will continue to be selective and prudent, balancing our aspirations around both value and volume. To achieve this, we will aggressively pursue attractive opportunities aligned to our strategic priorities and risk appetite.

Speaker #3: As you can see, progress on our strategic priorities is ongoing. For example, the share of our sales that is fully digital keeps climbing, and through SMB capital, we remain the leading capital market house in the Kingdom, supporting the deepening of KSA equity and debt market in line with the financial sector development program, all areas in which SMB capital shines.

Speaker #4: We are successfully expanded our SME business, upgrading our differentiation services model and deepening our relationship in key segments. In retail, we continue to grow and serve Saudi Arabia's energized and ambitious population, our attractive mortgage business remains central to the mission as we work closely alongside our partners in the housing ecosystem.

Speaker #3: One element which I would like to highlight is our accelerating investment in data and artificial intelligence, building on the strong foundations we have established through our advanced analytical programs, and the recognized and recognizing the generative AI and agentic AI, we are taking the next step in SMB's AI journey by scaling our enterprise AI program in order to accelerate AI adoption across the bank.

Speaker #4: Also, we continue to invest in our service proposition for all client segments, including SMB leading high-net-worth franchise. As we pursue our growth, we will continue to be selective and prudent balancing our aspirations around both value and volume.

Speaker #4: To achieve this, we will aggressively pursue attractive opportunities aligned to our strategic priorities and risk appetite. And rest assured that our focus remains squarely on delivering this profitable growth and maintaining a customer-centric approach supported by our investment in innovation, and efficiency, in order to deliver sustainable value to our shareholders and attractive return on tangible equity profile.

Speaker #3: Our approach builds on the AI capabilities already in place, and goes beyond deploying individual AI use cases; we are building a capabilities required to scale AI responsibly across the organization, through a comprehensive AI operating model, scalable data, and technology foundations.

Tareq Al-Sadhan: Rest assured that our focus remains squarely on delivering this profitable growth and maintaining a customer-centric approach supported by our investment in innovation and efficiency in order to deliver sustainable value to our shareholders and attractive return on tangible equity profile. As you can see, progress on our strategic priority is ongoing. For example, the share of our sales that is fully digital keeps climbing. Through SNB Capital, we remain the leading capital market house in the kingdom, supporting the deepening of KSA equity and debt market in line with the Financial Sector Development Program, all areas in which SNB Capital shines. One element which I would like to highlight is our accelerating investment in data and artificial intelligence.

Speaker #3: Responsible AI governance and disciplined value realization. This will enable us to embed AI securely and efficiently effectively across customers' journey, employee workforce, workforce, workflows, and core operations.

Speaker #4: As you can see, progress on our strategic priority is ongoing. For example, the share of our sales that is fully digital keeps climbing, and through SMB capital, we remain the leading capital market house in the kingdom, supporting the deepening of KSA equity and debt market in line with the financial sector development program, all areas in which SMB capital shines.

Speaker #3: These initiatives will progressively enhance customer experience, empower our employees with AI-enabled capabilities, and enhance our commercial effectiveness and deepening automation in our operations. We are optimistic about the promising benefits these technologies will bring, to the organization and to our key lever to grow in order to support delivery of sustainable long-term value creation.

Speaker #4: One element which I would like to highlight is our accelerating investment in data and artificial intelligence, building on the strong foundations we have established through our advanced analytical programs, and the recognized and recognizing the rapid pace of innovation in generative AI and agentic AI, we are taking the next step in SMB's AI journey by scaling our enterprise AI program in order to accelerate AI adoption across the bank.

Tareq Al-Sadhan: Building on the strong foundations we have established through our advanced analytical programs and recognizing the rapid pace of innovation in generative AI and agentic AI, we are taking the next step in SNB's AI journey by scaling our enterprise AI program in order to accelerate AI adoption across the bank. Our approach builds on the AI capabilities already in place and goes beyond deploying individual AI use cases. We are building a capabilities required to scale our AI responsibly across the organization through a comprehensive AI operating model, scalable data and technology foundations, responsible AI governance, and disciplined value realization. This will enable us to embed AI securely and efficiently, effectively across customer journey, employee workforce, workflows, and core operations. These initiatives will progressively enhance customer experience, empower our employees with AI-enabled capabilities, and enhance our commercial effectiveness and deepening automation in our operations.

Speaker #3: Let me close where I began. These results reflect the strength of our franchise, our discipline, and consistency of execution, and the resilience of the Saudi economy.

Speaker #4: Our approach builds on the AI capabilities already in place and goes beyond deploying individual AI use cases. We are building the capabilities required to scale AI responsibly across the organization, through a comprehensive AI operating model, and scalable data and technology foundations.

Speaker #3: Each day, our efforts are compounded and getting us closer to our aspirations. We are investing in the right things, in serving our customer, in empowering our people, in innovation, in efficiency, and we are very grateful for the trust of our customers and our shareholders, who support holds their support remains an essential part of our successful journey.

Speaker #4: Responsible AI governance and disciplined value realization. This will enable us to embed AI securely and efficiently effectively across customers' journey, employee workforce, workflows, and core operations.

Speaker #3: Thank you, and with that, I'll hand over to my colleague Hussein for more details on the financial performance and guidance. Hussein, mic to you.

Speaker #2: Thank you, Abu Khalid. As-salamu alaykum wa rahmatullah. I'm greetings to everyone. Let me begin with our outlook and guidance. Saudi Arabia can be continuous to demonstrate resilience against a challenging external backdrop.

Speaker #4: These initiatives will progressively enhance customer experience, empower our employees with AI-enabled capabilities, and enhance our commercial effectiveness and deepening automation in our operations. We are optimistic about the promising benefits these technologies will bring, to the organization and to our key lever to grow in order to support delivery of sustainable long-term value creation.

Tareq Al-Sadhan: We are optimistic about the promising benefits these technologies will bring to the organization and to our key lever to grow in order to support delivery of sustainable long-term value creation. Let me close where I begin. These results reflect the strength of our franchise, our discipline and consistency of execution, and the resilience of the Saudi economy. Each day, our efforts are compounded and getting us closer to our aspirations. We are investing in the right things, in serving our customer, in empowering our people, in innovation, in efficiency, and we are very grateful for the trust of our customers and our shareholders, whose support remains an essential part of our successful journey. Thank you. With that, I'll hand over to my colleague, Hussein, for more details on the financial performance and guidance. Hussein, mic to you.

Speaker #2: And the first half of 2026, the non-oil economy expanded by 1.8% year over year. Underscoring the underlying strength and resilience of the most demand despite regional geopolitical disruptions.

Speaker #4: Let me close where I began. These results reflect the strength of our franchise our discipline and consistency of execution and the resilience of the Saudi economy.

Speaker #2: Turning to interest rates. Our best case remains that the US Federal Reserve will leave policy rates unchanged through the year end. However, given recent inflation dynamics, we continue to see a credible possibility of one additional rate hike before the year end of the year.

Speaker #4: Each day, our efforts are compounded and getting us closer to our aspirations. We are investing in the right things: in serving our customers, in empowering our people, in innovation, in efficiency, and we are very grateful for the trust of our customers and our shareholders.

Speaker #2: Against this backdrop and having more visibility into the second half, we are making two adjustments to our guidance. First, we are revising financing growth down to mid-signal digits, because we continue to be focused on value-driven growth.

Speaker #4: Who support holds their support remains an essential part of our successful journey. Thank you, and with that, I'll hand over to my colleague Hussein for more details on the financial performance and guidance.

Speaker #2: And also reflecting the current operating environment. It is important to highlight that despite more moderate financing growth, we are preserving our high guidance. Second, we are upgrading cost of risk guidance to 20 basis points, thanks to SMB's strong credit risk management, recoveries, and continued economic resilience leading to a supportive business environment in the Kingdom of Saudi Arabia.

Speaker #4: Hussein, mic to you.

Speaker #2: Thank you, Abu Khalid. As-salamu alaykum wa rahmatullah, and greetings to everyone. Let me begin with our outlook and guidance. Saudi Arabia can be continuous to demonstrate resilience against a challenging external backdrop.

Hussein Eid: Thank you, Abu Khalid. As-salamu alaykum wa rahmatullahi and greetings to everyone. Let me begin with our outlook and guidance. Saudi Arabia economy continues to demonstrate resilience against a challenging external backdrop. In the H1 of 2026, the non-oil economy expanded by 1.8% year over year, underscoring the underlying strength and resilience of domestic demand despite regional geopolitical disruptions. Turning to interest rates, our best case remains that the U.S. Federal Reserve will leave policy rates unchanged through the year-end. However, given recent inflation dynamics, we continue to see a credible possibility of one additional rate hike before the year-end of the year. Against this backdrop and having more visibility into the H2, we are making two adjustments to our guidance. First, we are revising financing growth down to mid-single digit because we continue to be focused on value-driven growth and also reflecting the current operating environment.

Speaker #2: All of other guidance remain unchanged, including profitability ratios, and return on tangible equity of 16 to 17%, and adjusted return on tangible equity of 17 to 18%.

Speaker #2: Next page, please. Now turning to our first half, financial performance. I will highlight what matters most. First, our measured financing growth did not translate into weaker earnings.

Speaker #2: Turning to interest rates. Our best case remains that the US Federal Reserve will lead policy rates and change through the year end. However, given recent inflation dynamics, we continue to see a credible possibility of one additional rate hike before the year end of the year.

Speaker #2: We successfully grew profitability while shifting the financing mix toward retail and MSME. And with moderation in the FI books as we continue to focus on attractive opportunities in the domestic markets.

Speaker #2: Against this backdrop and having more visibility into the second half, we are making two adjustments to our guidance. First, we are revising financing growth down to mid-signal digit.

Speaker #2: Second, the funding position is materially stronger. Customer deposits grew by 64 billion riyals year to year. More than six times in increase in the financing.

Speaker #2: Because we continue to be focused on value-driven growth. And also reflecting the current operating environment. It is important to highlight that despite more moderate financing growth, we are preserving our NSI guidance.

Hussein Eid: It is important to highlight that despite more moderate financing growth, we are reserving on our NII guidance. Second, we are upgrading cost of risk guidance to 10 to 20 basis points, thanks to SNB's strong credit risk management, recoveries, and continued economic resilience, leading to a supportive business environment in the Kingdom of Saudi Arabia. All of other guidance remain unchanged, including profitability ratios and return on tangible equity of 16% to 18%, and adjusted return on tangible equity of 17% to 18%. Next page, please. Now turning to our H1 financial performance. I will highlight what matters most. First, our measured financing growth did not translate into weaker earnings. We successfully grew profitability while shifting the financing mix toward retail and SME. With moderation in the FI books as we continue to focus on attractive opportunities in the domestic market.

Speaker #2: This allowed us to strengthen customer deposit funding the lower cash ratio should be viewed in the overall context. Cash balances actually increased. While time deposit grew even faster as replaced as we replaced interbank funding with domestic customer deposits.

Speaker #2: Second, we are upgrading our cost of risk guidance to 20 basis points, thanks to SMB with strong credit risk management, recoveries, and continued economic resilience, leading to a supportive business environment in the Kingdom of Saudi Arabia.

Speaker #2: The results is more resilient balance sheet overall and improved regulatory risk. We achieved this together with ongoing repricing efforts and active balance sheet management supporting 7% year-on-year NSA growth.

Speaker #2: All of other guidance remain unchanged, including profitability ratios and return on tangible equity of 16 to 17% and adjusted return on tangible equity of 17 to 18%.

Speaker #2: And lifting the current quarter margin to over 3%. However, we expect this to slightly moderate going forward as we are aiming to balance between volume and value.

Speaker #2: Next page, please. Now, turning to our first-half financial performance, I will highlight what matters most. First, our major financing growth did not translate into weaker earnings.

Speaker #2: Nevertheless, as we see things currently, we still expect second half an M to remain uplifted above the Q1 levels. Third, we maintain positive operating leverage.

Speaker #2: We successfully grew profitability while shifting the financing mix toward retail and MSME, and with moderation in the FI books as we continue to focus on attractive opportunities in the domestic markets.

Speaker #2: Operating income grew 6% year-on-year while operating expense increased by only 2%. Despite continued investment in technology, talents, and growth initiatives. This combination is improving efficiency, which resulted in a cost-to-income ratio of 25.6% without compromising on our transformation initiatives.

Speaker #2: Second, the funding position is materially stronger. Customer deposit grew by 64 billion reals year to year. More than six times in increase in the financing.

Hussein Eid: Second, the funding position is materially stronger. Customer deposits grew by SAR 64 billion year to year, more than six times in increase in the financing. This allowed us to strengthen customer deposit funding. The lower cash ratio should be viewed in the overall context. Cash balances actually increased, while time deposit grew even faster as we replaced interbank funding with domestic customer deposits. The result is more resilient balance sheet overall and improved regulatory ratio. We achieved this together with ongoing repricing of efforts and active balance sheet management supporting 7% year-on-year NII growth and lifting the current quarter margin to over 3%. However, we expect this to slightly moderate going forward as we are aiming to balance between volume and value. Nevertheless, as we see things currently, we still expect H2 NIM to remain uplifted above the Q1 levels. Third, we maintain positive operating leverage.

Speaker #2: Finally, the cost of risk at negative 9 basis point and impaired ratio below percentage basis points confirmed that the earnings improvement was achieved with a strong creative quality.

Speaker #2: Showing case SMB's prudent risk management and Saudi Arabia economic resilience in a challenging first half. Taken together, these drafts are supported 7% net income growth over the same period last year.

Speaker #2: The result is a more resilient balance sheet overall, and improved regulatory ratios. We achieved this together with ongoing repricing efforts and active balance sheet management, supporting 7% year-on-year NSI growth.

Speaker #2: A return on tangible equity of 16.9%. The first half performance, therefore, gives us confidence to return capital to our shareholder. With an attractive first half dividend of 1.15 riyals per share.

Speaker #2: And lifting the current quarter margin to over 3%. However, we expect this to slightly moderate going forward as we are aiming to balance between volume and value.

Speaker #2: And maintain a dividend payout ratio above 50%. Let's now go through the rest of the presentation focusing on the most important updates. Next, please.

Speaker #2: Nevertheless, as we see things currently, we still expect second half an M to remain uplifted above the Q1 levels. Third, we maintain positive operating leverage.

Hussein Eid: Operating income grew 6% year on year, while operating expense increased by only 2%, despite continued investment in technology, talents, and growth initiatives. This combination is improving efficiency, which resulted in a cost-to-income ratio of 25.6% without compromising on our transformation initiatives. Finally, the cost of risk at negative nine basis points and NPL ratio below 20 basis points confirm that the earnings improvement was achieved with a strong credit quality, showing SNB's prudent risk management and Saudi Arabia economic resilience in a challenging H1. Taken together, this growth has supported 7% net income growth over the same period last year, a return on tangible equity of 16.9%. The H1 performance therefore gives us confidence to return capital to our shareholders with an attractive H1 dividend of SAR 1.15 per share and maintain a dividend payout ratio above 50%.

Speaker #2: The balance sheet expanded 3% year to date, where total assets reach almost 1.25 trillion riyals. Strong customer deposit growth. Together with issuance of debt securities allowed us to enhance our funding base and liquidity position.

Speaker #2: The reduction in other liabilities mainly reflects the cash payments and normal business transactions. Overall, we are closing the first half of 2026 with stronger balance sheet footing enjoying stronger liquidity profile and improved position to support profitable growth.

Speaker #2: Finally, the cost of risk at negative 9 basis point and impaired ratio below percent basis points confirmed that the earnings improvement was achieved with a strong grade of quality.

Speaker #2: Showing case SMB's prudent risk management and Saudi Arabia economic resilience in a challenging first half. Taken together, these drivers supported 7% net income growth over the same period last year.

Speaker #2: Next. The most relevant point on financing is the improvement in the composition year to date. Retail grew across mortgages and high net worth. We continue to meet mortgage demand but we are also exploring expanding the growth through deeper relationship in our high net worth segments.

Speaker #2: A return on tangible equity of 16.9%. The first half performance therefore gives us confidence to return capital to our shareholder. With an attractive first half dividend of 1.15 reals per share.

Speaker #2: With wholesale within wholesale, MSME financing increased 17% or almost 14 billion riyals year to date, while FI exposure declined 26%, representing an almost 10 billion riyals of offset.

Speaker #2: And maintain a dividend payout ratio above 50%. Let's now go through the rest of the presentation focusing on the most important updates. Next, please.

Hussein Eid: Let's now go through the rest of the presentation, focusing on the most important updates. Next, please. The balance sheet expanded 3% year to date, where total assets reach almost SAR 1.25 trillion. Strong customer deposit growth, together with issuance of debt securities, allowed us to enhance our funding base and liquidity position. The reduction in other liabilities mainly reflect the Zakat payments and normal business transactions. Overall, we are closing the H1 2026 with a stronger balance sheet footing, enjoying stronger liquidity profile and improved position to support profitable growth. Next. The most relevant point on financing is the improvement in the composition year to date. Retail grew across mortgages and high net worth. We continue to meet mortgage demand, but we are also expanding the growth through deeper relationships in our high net worth segments.

Speaker #2: Financial institutions remain a high-quality business but as always, it is more opportunistic in nature. In line with our strategy, we are focusing on lucrative segments in the local market.

Speaker #2: The balance sheet expanded 3% year to date. Where total assets reach almost 1.25 trillion reals. Strong customer deposit growth. Together with issuance of debt securities allowed us to enhance our funding base and liquidity position.

Speaker #2: Our expanding MSME relationship have supported improved margins and revenue pools in deposits payments foreign exchange and transaction banking. If we look at corporate lending excluding MSME and FI, we see a slight moderation of around 50 basis points year to date.

Speaker #2: As we continue to highlight our focus remains on focusing on value and we will target growth opportunities that are aligned to our strategy. Here it is worth repeating that the financing guidance update reflects few key factors.

Speaker #2: Next, the most relevant point on financing is the improvement in the composition year to date. Retail grew across mortgages and high net worth. We continue to meet mortgage demand, but we are also exploring expanding the growth through deeper relationships in our high net worth segments.

Speaker #2: Our disciplined approach to achieving measured growth with a continued focus on value. We are continuing to deliver a strong and diversified financing mix and finally our pricing discipline which will continue to support income and returns.

Speaker #2: With wholesale within wholesale MSME financing increased 17%. Or almost 14 billion reals year to date. While FI exposure declined 26%. Representing an almost 10 billion 10 billion reals of of set.

Hussein Eid: Within wholesale, MSME financing increased 17% or almost SAR 14 billion year-to-date, while FI exposure declined 26%, representing an almost SAR 10 billion offset. Financial institutions remain a high-quality business, but as always, it is more opportunistic in nature. In line with our strategy, we are focusing on lucrative segments in the local market. Our expanding MSME relationships have supported improved margins and revenue pools in deposits, payments, foreign exchange, and transaction banking. If we look at corporate lending, excluding MSME and FI, we see a slight moderation of around 50 basis points year-to-date. As we continue to highlight, our focus remains on focusing on value, and we will target growth opportunities that are aligned to our strategy. Here, it is worth repeating that the financing guidance update reflects a few key factors. Our disciplined approach to achieving measured growth with a continued focus on value.

Speaker #2: Next page. The investment portfolio increased by 1% year to date. And was relatively stable quarter over quarter at 322 billion riyals. This is another example of active balance sheet We selectively grew across other fixed income instruments funds and equity.

Speaker #2: Financial institutions remain a high quality business but as always it is more opportunistic in nature. In line with our strategy we are focusing on lucrative segments in the local market.

Speaker #2: Our expanding MSME relationship have supported improved margins and revenue pools in deposits payments foreign exchange and transaction banking. If we look at corporate lending excluding MSME and FI we see a slight moderation of around 50 basis points year to date.

Speaker #2: Carefully balancing overall portfolio quality with the risk adjusted returns. The portfolio therefore remains high quality and liquid while its diversity helps us to manage rate exposure and support NSI through the cycle.

Speaker #2: Next page. There are two key messages on deposits. First, the overall funding base continue to be very healthy. And has been strengthened further by the 10% expansion in customer deposit year to date.

Speaker #2: Second, the substantial time deposit growth has led to year to date moderation in the casa ratio. But it's important to note that casa balances has grown year to date.

Hussein Eid: We are continuing to deliver a strong and diversified financing mix. Finally, our pricing discipline, which will continue to support income and returns. Next page. The investment portfolio increased by 1% year-to-date and was relatively stable quarter-over-quarter at SAR 322 billion. This is another example of active balance sheet management supporting returns. We selectively grew across other fixed income investment funds and equity, carefully balancing overall portfolio quality with risk-adjusted returns. The portfolio, therefore, remains high quality and liquid, while its diversity helps us to manage rate exposure and support NII through the cycle. Next page. There are two key messages on deposits. First, the overall funding base continued to be very healthy and has been strengthened further by the 10% expansion in customer deposits year-to-date.

Speaker #2: There are few additional highlights that I would like to share on our success in customer deposits. The most casa balances increased by 8 billion riyals.

Speaker #2: Next page. The investment portfolio increased by 1% year to date. And was relatively stable quarter over quarter at 322 billion reals this is another example of active balance sheet management supporting retails.

Speaker #2: And the most time and other deposit grew even faster by 53 billion riyals. As mentioned, we took advantage of the strong growth in customer deposits to improve our funding profile and liquidity.

Speaker #2: Most important, the resulting impact on funding cost has remained contained despite the competitive environment and the ongoing system shift in the mixed world cost-paying funding.

Speaker #2: We selectively grew across other fixed income instrument funds and equity, carefully balancing overall portfolio quality with the risk-adjusted returns. The portfolio, therefore, remains high quality and liquid, while its diversity helps us to manage rate exposure and support NSI through the cycle.

Speaker #2: Next page, please. Moving to the income statement, the largest contribution to our record profitability in the first half was stronger NSI positive operating leverage and continued OBEX discipline and lower risk cost.

Speaker #2: Next page. There are two key messages on deposits. First, the overall funding base continues to be very healthy, and has been strengthened further by the 10% expansion in customer deposits year to date.

Speaker #2: Via another income for the group was also up by 1% year to date overall supported by international and down slightly within domestic. We will explain that later.

Speaker #2: Second, the substantial time deposit growth has led to year to date moderation in the case ratio but it's important to note that case balances has grown year to date.

Hussein Eid: Second, the substantial time deposit growth has led to year-to-date moderation in the CASA ratio, but it is important to note that CASA balances has grown year-to-date. There are few additional highlights that I would like to share on our success in customer deposits. Domestic CASA balances increased by SAR 8 billion and domestic time and other deposits grew even faster by SAR 53 billion. As mentioned, we took advantage of the strong growth in customer deposits to improve our funding profile and liquidity. Most important, the resulting impact on funding costs has remained contained despite the competitive environment and ongoing system shift in the mix towards cost bearing funding. Next page, please. Moving to the income statement. The largest contribution to our record profitability in the H1 was stronger NII, positive operating leverage and continued OpEx discipline and lower risk costs.

Speaker #2: In line with our strategy, we continue our key focus on returns and deriving sustainable shareholder value. Where we delivered return on tangible equity of almost 17% and adjusted return on tangible equity of 18%.

Speaker #2: There are few additional highlights that I would like to share on our success in customer deposits. The most case balances increased by 8 billion reals and the most time and other deposit grew even faster by 50 53 billion reals as mentioned we took advantage of this strong growth in customer deposits to improve our funding profile and liquidity.

Speaker #2: Both closer to our end of the guidance range. Next page. NSI increased 7% in the first half and accelerated to 11% in the second quarter year over year.

Speaker #2: The growth came from several levels. Discipline repricing in return on wholesale active hedging alongside careful assets and liability management efficient management of funding cost and the deployment of the liquidity into attractive opportunities.

Speaker #2: Most important the resulting impact on funding cost has remained contained despite the competitive environment and ongoing system shift in the mixed world cost paying funding.

Speaker #2: Next page please. Moving to the income statement. The largest contribution to the our record profitability in the first half was stronger stronger NSI positive operating leverage and continued OBEX discipline and lower risk cost.

Speaker #2: Together these factors lifted the quarterly margin to 3.02%. Higher by 23 basis points compared to the same quarter last year and uplifted by 17 basis points quarter over quarter.

Speaker #2: While the margin is expected to remain healthy in 2026, it should not be treated as the new run rate as we are balancing between value and growth going forward to ensure attractive returns to our shareholders.

Speaker #2: Via another income for the group was also up by 1% year to date overall supported by international and down slightly within the most. We will explain that later.

Hussein Eid: Fee and other income for the group was also up by 1% year-to-date overall supported by international and down slightly within domestic. We will explain that better. In line with our strategy, we continue our key focus on returns and driving sustainable shareholder value, where we delivered return on tangible equity of almost 17% and adjusted return on tangible equity of 15%, both closer to the lower end of the guidance range. Next page. NII increased 7% in the H1 and accelerated to 11% in the Q2 year-over-year. The growth came from several levels. Disciplined re-pricing in retail and wholesale, active hedging alongside careful assets and liability management, efficient management of funding costs, and the deployment of the liquidity into attractive opportunities.

Speaker #2: In line with our strategy we continue our key focus on retails and driving sustainable shareholder value. Where we delivered return on tangible equity of almost 17% and adjusted return on tangible equity of 18% both closer to our end of the guidance range.

Speaker #2: Considering how things looks at the moment, we expect the margin in the second half to remain above the Q1 levels. As our effort on NSI and SCE continue to deliver the benefits.

Speaker #2: On rate sensitivity of the margins, it is returned approximately at 2 to 3 basis points in case of 25 basis points cuts. And of course this would require between 2 to 3 quarters to be fully reflected.

Speaker #2: Next page. NSI increased 7% in the first half and accelerated to 11% in the second quarter year over year. The growth the growth came from several levels.

Speaker #2: However, the outcome also depends on multiple factors including the rate environment and the balance sheet mix at that time. Clearly our forecast is on the NSI engine as being a key success factor when it comes to the margin.

Speaker #2: Discipline repassing in retail and wholesale active hedging alongside careful assets and liability management efficient management of funding cost and the deployment of the liquidity into attractive opportunities.

Speaker #2: Therefore we are preserving our mid single digit NSI growth guidance. Next page, please. Fee is another income for the first half was up 1% overall.

Speaker #2: Together, these factors lifted the quarterly margin to 3.02%, higher by 23 basis points compared to the same quarter last year and uplifted by 17 basis points quarter over quarter.

Hussein Eid: Together, these factors lifted the quarterly margin to 3.02%, higher by 23 basis points compared to the same quarter last year and uplifted by 17 basis points quarter-over-quarter. While the margin is expected to remain healthy in 2026, it should not be treated as the new run rate as we are balancing between value and growth going forward to ensure attractive returns to our shareholders. Considering how things look at the moment, we expect the margin in the H2 to remain above the Q1 levels as our effort on NII and NSCI continue to deliver the benefits. On rate sensitivity of the margin, it is retained approximately at 2 to 3 basis points in case of 25 basis point cuts. Of course, this would require between 2 to 3 quarters to be fully reflected.

Speaker #2: Supported by several key lines including international, domestic financing and cards, investment related income, FX and others. Looking at the quarterly view, fee is another income improved strongly by 11% year over year.

Speaker #2: While the margin is expected to remain healthy in 2026 it should not be treated as the new run rate as we are balancing between value and growth going forward to ensure attractive returns to our shareholders.

Speaker #2: And up 25% quarter over quarter. Focusing on the second quarter, the most in performance financing and cards investment related income, FX and other banking services fees such as cash management and bond to sell all supported the quarterly growth.

Speaker #2: Considering how things looks at the moment we expect the margin in the second half to remain above the Q1 levels. As our effort on SCI and and SCE continue to deliver the benefits.

Speaker #2: On rate sensitivity of the margin it is returned approximately at 2 to 3 basis points in case of 25 basis points cuts. And of course this would require between 2 to 3 quarters to be fully inflated.

Speaker #2: That's progress was offset by softer market activities as we are seeing lower volumes and softer brokerage activities in the system. The lower trade finance fees affected by the global challenges this year.

Speaker #2: However, the outcome also depends on multiple factors, including the rate environment and the balance sheet mix at that time. Clearly, our forecast is that the NSI engine has been a key success factor when it comes to the margin.

Hussein Eid: However, the outcome also depends on multiple factors, including the rate environment and the balance sheet mix at that time. Clearly, our focus is on the NII engine as being a key success factor when it comes to the margin. Therefore, we are reconfirming our mid-single digit NII growth guidance. Next page, please. Fees and other income for the H1 was up 1% overall, supported by several key lines, including international, domestic financing and cards, investment-related income, FX, and others. Looking at the quarterly view, fees and other income improved strongly by 11% year-over-year and up 25% quarter-over-quarter. Focusing on the Q2, domestic performance, financing and cards, investment-related income, FX, and other banking services fees, such as cash management and loan to sale, all supported the quarterly growth.

Speaker #2: On the fee is another income front. We will continue to target profitable field channels development alongside improving fees expenses efficiency. Next page. Operating space is growth was contained to 2% year on year.

Speaker #2: Therefore we are reserving our mid single digit NSI growth guidance. Next page please. Fees another income for the first half was up 1% overall.

Speaker #2: And improved by 0.4% sequentially over the last quarter. Employee related cost rose due to annual selling increments business growth and targeted hiring in specialized areas.

Speaker #2: Supported by several key lines including international the most financing and cards investment related income FX and others. Looking at the quarterly view fees another income improved strongly by 11% year over year.

Speaker #2: We largely offset that increases through savings in premises procurement and other non-FTE cost. Our objective is cost efficiency. Where we will continue to invest in technology data AI controls and customer facing growth where we believe those investments strengthen future revenues and productivity.

Speaker #2: And up 25% quarter over quarter. Focusing on the second quarter the most in performance financing and cards investment related income FX and other banking services fees such as cash management and bond sale all supported the quarterly growth.

Speaker #2: At the same time, we are challenging the existing cost base renegotiating vendor arrangements optimizing our premises simplifying processes and increasing digitalization and automation. The first half cost to income ratio came at 25.6% for the group and 23.1% for the domestic.

Speaker #2: This progress was offset by softer market activities, as we are seeing lower volumes and softer brokerage activities in the system. The lower trade finance fees were affected by the global challenges this year.

Hussein Eid: That progress was offset by softer market activities as we are seeing lower volumes and softer brokerage activities in the system. The lower trade finance fees affected by the global challenges this year. On the fees and other income front, we will continue to target profitable fee channels development alongside improving fees expense efficiency. Next page. Operating expenses growth was contained to 2% year-on-year and improved by 0.4% sequentially over the last quarter. Employee-related costs rose due to annual salary increments, business growth, and targeted hiring in specialized areas. We largely offset that increases through savings in premises, procurement, and other non-FTE costs. Our objective is cost efficiency, where we will continue to invest in technology, data, AI controls, and customer-facing growth where we believe those investments strengthen future revenues and productivity.

Speaker #2: On the fees another income front we will continue to target profitable field channels development alongside improving fees expenses efficiency. Next page operating spaces growth growth was contained to 2% year on year.

Speaker #2: We continue to target bringing these ratios to below 25 and 22.5% by year end. As mentioned, we are achieving this improvements from both sides.

Speaker #2: Targeting profitable growth, opportunities aligned with our strategy complemented by continued cost discipline. Next page, please. The cost of risk came at negative 9 basis point when a net recovery of 320 million reals worth noting that the net charge for the first half of 2026 came at 1.4 billion reals across both wholesale and retail at 35% year over year.

Speaker #2: And improved by 0.4% sequentially over the last quarter. Employee related cost rose due to hand or selling increments business growth and targeted hiring in specialized areas.

Speaker #2: We large we largely offset that increases through savings in premises procurement and other nonf cost. Our our objective is cost efficiency. Where where we will continue to invest in technology data AI controls and customer facing growth where we believe those investment strengthen future revenues and productivity.

Speaker #2: Demonstrating that we are applying prudent proactive provisioning more than offset by strong recoveries. Also as you will see shortly we are maintaining very healthy provision coverage levels.

Speaker #2: At the same time, we are challenging the existing cost base, renegotiating vendor arrangements, optimizing our premises, simplifying processes, and increasing digitalization and automation. The first-half cost-to-income ratio came in at 25.6% for the Group and 23.1% for the domestic.

Hussein Eid: At the same time, we are challenging the existing cost base, renegotiating vendor arrangements, optimizing our premises, simplifying processes, and increasing digitalization and automation. The H1 cost-to-income ratio came at 25.6% for the group and 23.1% for the domestic. We continue to target bringing these ratios to below 25% and 22.5% by year-end. As mentioned, we are achieving these improvements from both sides, targeting profitable growth opportunities aligned with our strategy, complemented by continued cost discipline. Next page, please. The cost of risk came at -9 basis points with a net recovery of SAR 320 million. Worth noting that the net charge for the H1 of 2026 came at SAR 1.4 billion across both wholesale and retail, up 35% year-over-year, demonstrating that we are applying prudent, proactive provisioning more than offset by strong recoveries.

Speaker #2: Looking at the second quarter it is worth highlighting that in the second quarter the impairment outcome was more normalized with the cost of risk at 14 basis point.

Speaker #2: Given the first half results and the continued strength of the portfolio we have upgraded full year cost of risk guidance to be between 10 and 20 basis points.

Speaker #2: We continue to target bringing these ratios to below 25 and 22.5% by year end. As mentioned we are achieving this improvements from both sides.

Speaker #2: We will continue to be vigilant and adhere to our prudent risk management discipline. Move to the next page, please. Great quality indicator support the improved cost of risk outlook.

Speaker #2: Targeting profitable growth opportunities aligned with our strategy complemented by continued cost. Next page please. The cost of risk came at negative nine basis point when a with a net recovery of three 320 million worth noting that the net charge for the first half of 2026 came at 1.4 million across both wholesale and retail at 35% year over year demonstrating that we are applying prudent proactive provisioning more than offset by strong recoveries.

Speaker #2: The MB ratio improved year over year to 0.67% and was stable sequentially. While the absolute number forming balance balances was broadly stable year to date.

Speaker #2: We continue to maintain strong provisioning discipline. The overall impaired coverage ratio stands now at 150%. And as you can see the stage wise coverages are also very healthy.

Speaker #2: The combination of low impaired ratio, strong coverage and stable forward indicators give us confidence that our earnings are being delivered on a solid and sustainable basis.

Speaker #2: Also as you will see shortly we are maintaining very healthy provision coverage levels. Looking at the second quarter it is worth highlighting that in the second quarter the impairment outcome was more normalized with the cost of risk at 14 basis point.

Hussein Eid: Also, as you will see shortly, we are maintaining very healthy provisioning coverage levels. Looking at Q2, it is worth highlighting that in Q2, the impairment outcome was more normalized with the cost of risk at 14 basis points. Given the H1 results and the continued strength of the portfolio, we have upgraded full-year cost of risk guidance to be between 10 and 20 basis points. We will continue to be vigilant and adhere to our prudent risk management discipline. Move to the next page, please. Credit quality indicators support the improved cost of risk outlook. The NPL ratio improved year-over-year 2.67% and was stable sequentially, while the absolute number performing balances was broadly stable year to date. We continue to maintain strong provisioning discipline. The overall impaired coverage ratio stands now at 150%.

Speaker #2: Next page, please. CT1 ended the period at a robust 18%. Tier 1 at 20.6% and total capital at 22%. RWA density was broadly stable year to date.

Speaker #2: Given the first half results and the continued strength of of the portfolio we have upgraded full year cost of risk guidance to be between 10 and 20 basis points.

Speaker #2: Eligible capital increased 6% year to date as returned earnings and the 81 issuance more than offset dividend payment and balance sheet growth. Liquidity is equally strong with all ratios comfortably above regulatory ratios.

Speaker #2: We will continue to be vigilant and adhere to our prudent risk management discipline. Move to the next page please. Great quality indicator support the improved cost of risk outlook.

Speaker #2: During the first half we distributed 6.9 billion reals in dividends more recently announced an interim dividend of the same amount of 1.15 per share also totaling 6.9 billion reals as we target attractive distributions balanced against retaining sufficient capital to cater to growth opportunities and meet regulatory requirements.

Speaker #2: The embarrass improved year over year to 0.67% and was stable sequentially. While the absolute number forming balance balances was broadly stable year to date.

Speaker #2: We continue to maintain strong provisioning discipline. The overall impaired coverage ratio stands now at 150%. And as you can see the stage wise coverages are also very healthy.

Hussein Eid: As you can see, the stage-wise coverages are also very healthy. The combination of low NPL ratio, strong coverage, and stable forward indicators give us confidence that our earnings are being delivered on a solid and sustainable basis. Next page, please. CET1 ended the period at a robust 18%, Tier 1 at 20.6%, and total capital at 22%. RWA density was broadly stable year to date. Eligible capital increased 6% year to date as retained earnings and AT1 issuance more than offset dividend payment and balance sheet growth. Liquidity is equally strong with all ratios comfortably above regulatory ratios. During H1, we distributed SAR 6.9 billion in dividends, more recently announced an interim dividend of the same amount of SAR 1.15 per share, also totaling SAR 6.9 billion as we target attractive distributions balanced against retaining sufficient capital to cater to growth opportunities and meet regulatory requirements.

Speaker #2: We are very pleased with the financial performance for the first half and continue to target profitable growth opportunities aligned with our strategy in order to sustain shareholders value creation.

Speaker #2: The combination of low impair ratio strong coverage and stable forward indicators give us confidence that our earnings are being delivered on a solid and sustainable basis.

Speaker #2: With that we are ready to take your questions. Thank you so much.

Speaker #2: Next page please. CT1 ended the period at a robust 18% T1 at 20.6% and total capital at 22%. RWA density was broadly stable year to date.

Speaker #1: Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand through the webcast so we can unmute you.

Speaker #1: Thank you for not exceeding one to two questions per caller. Please stand by until we have our first question. Our first question today come from Reem Al-Khulafi from Riyadh Capital.

Speaker #2: Eligible capital increased 6% year to date, as retained earnings and Tier 1 issuance more than offset dividend payment and balance sheet growth. Liquidity is equally strong, with all issues comfortably above regulatory ratios.

Speaker #1: Reem, please unmute your line locally and proceed with your question.

Speaker #3: Assalamualaikum. Am I audible?

Speaker #2: During the first half we distributed 6.9 billion in dividends more recently announced an interim dividend of the same amount of 1.15 per share also totaling 6.9 billion as we target attracted distributions balanced against retaining sufficient capital to cater to growth opportunities and meet regulatory requirements.

Speaker #1: Yes, you are loud and clear.

Speaker #3: Thank you, Mohammed, for the presentation. I have two questions. The first one is regarding your nones outlook. Could you please shed some light on the interest rate assumption behind your forecast, specifically what policy rate path is assumed in your model?

Speaker #3: And the second one is regarding the ESL, could you please elaborate on any changes to your ESL model or macroeconomics assumptions given the softer GDP outlook and volatility in oil prices?

Hussein Eid: We are very pleased with the financial performance for H1 and continue to target profitable growth opportunities aligned with our strategy in order to sustain shareholder value creation. With that, we are ready to take your questions. Thank you so much.

Speaker #3: Have you updated your assumption to introduce any management overlays or taken any additional provisions? Thank you.

Speaker #2: With that we are ready to take your questions. Thank you so much.

Speaker #1: Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand through the webcast so we can unmute you.

Operator: Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand through the webcast so we can unmute you. Thank you for not exceeding one to two questions per caller. Please stand by until we have our first question. Our first question today comes from Reem Al Kulafi from Riyad Capital. Reem, please unmute your line locally and proceed with your question.

Speaker #1: Thank you. Thank you, Reem. Abu Diana, do you want to take these questions?

Speaker #2: Yes, Abu Khalid. Thank you, Reem, for the questions. When it regards to name outlook, our assumption in the model basically we are assuming no rate cuts.

Speaker #1: Thank you for not exceeding one to two questions per caller. Please stand by until we have our first question. Our first question today come from Reem Alkulafi from Riyadh Capital.

Speaker #2: But actually we believe that we might that we might place a rate hikes during the year end which has no impact on the financial results or guidance and the forecast we are providing.

Speaker #1: Reem please unmute your line locally and proceed with your question.

Speaker #3: Assalamualaikum. Am I audible?

Reem Al Kulafi: As-salamu alaykum. Am I audible?

Speaker #1: Yes, you are loud and clear.

Operator: Yes, you are loud and clear.

Speaker #2: As we believe that the market is already pricing this expected rate hikes you know and therefore we don't see any impact in case it happens.

Speaker #3: thank you for the presentation. I have two question. the first the first one is regarding your non outlook. Could you please shed some light on the interest rate assumption behind your forecast specifically what policy rate path is assumed in your model and so the second one is regarding the ESL could you please elaborate on any changes to your ESL model or macroeconomic assumptions given the softer GDP outlook and volatility in oil prices have you update your assumption tone to introduce any management overlays or taken any additional provisions thank you thank you thank you Reem Abu do you want to take these questions yes thank you Reem for the questions when it regards to name outlook our assumption in the model basically we are assuming no rate cuts but actually we believe that we might that we might face a rate hike during the event which has no impact on the financial results so guidance and the forecast were provided as we believe that the market is already pricing this expected rate hikes you know and therefore we don't see any material impact in case it happens when it comes to the ACL model yes definitely we always review our model to make sure that it's up to date but you know the official review usually happen at the end and we don't expect any material changes in the in the assumptions and when it comes to overlays there is no overlays we have sufficient coverage resulted from our prudent provisioning we believe that we have enough coverage and all exposures are are covered and we don't see really negative or unfair impact that you know might face in future due to model changes or anything like that I hope this answer your questions

Reem Al Kulafi: Thank you, management, for the presentation. I have two questions. The first one is regarding your NIM's outlook. Could you please shed some light on the interest rate assumption behind your forecast? Specifically, what policy rate path is assumed in your model? The second one is regarding the ECL. Could you please elaborate on any changes to your ECL model or macroeconomic assumptions, given the softer GDP outlook and volatility in oil prices? Have you updated your assumption to introduce any management overlays or taken any additional provisions? Thank you.

Speaker #2: When it comes to the ESL model, yes, definitely we always review ESL our ESL model to make sure that it's up to date. But you know the official review usually happen at the year end and we don't expect any material changes in the in the assumptions and when it comes to overlays there is no overlays we have sufficient coverage resulted from our prudent provisioning we believe that we have enough coverage and all exposures are covered and we don't see any really negative or adverse impact that you know we might face in future.

Tareq Al-Sadhan: Thank you, Reem. Abdu, do you want to take these questions?

Hussein Eid: Yes, Sohar. Thank you, Reem, for the questions. With regards to the NIM outlook, our assumption in the model, basically, we are assuming no rate cuts. Actually, we believe that we might face a rate hike during the year-end, which has no impact on the financial results or guidance and the forecast we are providing. We believe that the market is already pricing these expected rate hikes, therefore, we don't see any material impact in case it happens. When it comes to the ECL model, yes, definitely, we always review ECL, our ECL model to make sure that it's up to date. The official review usually happens at the end, and we don't expect any material changes in the assumptions. When it comes to overlays, there is no overlays. We have sufficient coverage, resulted from our prudent provisioning.

Speaker #2: Due to model changes or anything like that. I hope this answer your questions.

Speaker #1: Thank you. Our next question comes from the line of Mohammed Al-Rasheed from Hassana. Mohammed, please unmute locally and proceed with your question.

Speaker #4: Assalamualaikum. Am I audible?

Speaker #1: Yes, you are loud and clear.

Speaker #4: Yeah, thank you. Thank you, gentlemen, for your time and for the presentation. Congratulations. The results two questions from my side. The first question is regarding the increase in the domestic name that we witnessed in the course of the quarter basis.

Speaker #4: Of around 15 basis points. It seems to be driven from the repricing for corporate stock. So your corporate stock net yield has increased by more than 50 basis points.

Speaker #4: My question is how much of the repricing initiatives has been reflected on the second quarter results and how much is left that we might expect to see in the second half of this year?

Hussein Eid: We believe that we have enough coverage and all exposures are covered, and we don't see any really negative or adverse impact that might face in future due to model changes or anything like that. I hope this answered your questions.

Speaker #4: My second question is regarding your loan book growth guidance for both this year and 2027. So if I take the missing digits growth target for this year then the implicit assumption is you will achieve 13 to 14% loan book growth in 2027 in order to achieve the low teens growth target by 2027.

Speaker #1: Thank you. Our next question comes from the line of Mohammed Al-Rashid from Hassana. Mohammed please unmute locally and proceed with your question.

Operator: Thank you. Our next question comes from the line of Mohammed Al Rasheed from Hassana. Mohammed, please unmute locally and proceed with your question.

Speaker #4: So my question is what are your corporating for the year 2027? Is it a recovery in the overall market loans growth or are you expect a continuous massive gain of market share in 2027?

Speaker #4: Assalamualaikum. Am I audible?

Mohammed Al Rasheed: As-salamu alaykum. Am I audible?

Speaker #1: Yes you are loud and clear.

Operator: Yes, you are loud and clear.

Speaker #4: Yeah. Thank you. Thank you gentlemen for your time and for the presentation. Congratulations. The results two questions from my side. the first question is regarding the increase in the domestic name that we witness in basis.

Mohammed Al Rasheed: Thank you. Thank you, gentlemen, for your time and for the presentation. Congratulations on the results. Two questions from my side. The first question is regarding the increase in the domestic NIM that we witnessed in the quarter-over-quarter basis of around 15 basis points. It seems to be driven from the repricing through your corporate POCI. Your corporate POCI this year it has increased by more than 50 basis points. My question is, how much of the repricing initiatives has been reflected on the Q2 results, and how much is left that we might expect to see in the H2 of this year? My second question is regarding your loan POCI growth guidance for both this year and 2027.

Speaker #4: These are my question. Thank you.

Speaker #1: Thank you, Mohammed. I'll answer and Hussein, please feel free to add after after I finish. On the on the NIM and the repricing exercise if you recall that from the second half of last year we start talking about the repricing exercise and and to ensure that we we take the cost of funding in consideration and we start repricing to maintain our margins and increase our NIM.

Speaker #4: of around 15 basis points. It seems to be driven from the repricing fuel corporate book. So your corporate book net yield has increased by more than 50 basis point.

Speaker #4: My question is how much of the repricing initiatives has been reflected on the second quarter results and how much is left that we might expect to see in the second half of this year?

Speaker #1: And that really helped in in the beginning of this year and and let's say the first half of this year. Today we we are looking at that in also in line with our loan growth.

Speaker #4: my second question is regarding your loan book growth guidance for both this year and 2027. So if I take the mid single digit growth target for this year then the implicit assumption is you will achieve 13 to 14% loan book growth in 2027 in order to achieve the low teens growth target by 2027.

Mohammed Al Rasheed: If I take the mid-single digits growth target for this year, then the implicit assumption is you will achieve 13% to 14% loan POCI growth in 2027 in order to achieve the low teens growth target by 2027. My question is, what are you incorporating for the year 2027? Is it a recovery in the overall market loan growth, or do you expect a continuous massive gain of market share in 2027? These are my questions. Thank you.

Speaker #1: So we don't want we don't want to be non-competitive when it comes to the market but we want also to between volume and value.

Speaker #1: So if you ask me do you expect to see the same incremental repricing exercise I don't think that it will continue the same what we saw in the last three quarters.

Speaker #4: So my question is what are your corporating for the year 2027? Is it a recovery in the overall market loan growth or are you expect a continuous massive gain of market share in 2027?

Speaker #1: Or four quarters but we will ensure that the contribution to the bottom line is is happening and that's what we do the calculation to achieve we grow our loans in a profitable way to achieve the the bottom line impact.

Speaker #4: These are my question. Thank you.

Tareq Al-Sadhan: Thank you, Mohammed. I'll answer and, Hussein, please feel free to add after I finish. On the NIM and the repricing exercise, if you recall that from the H2 of last year, we start talking about the repricing exercise and to ensure that we take the cost of funding into consideration and we start repricing to maintain our margins and increase our NIM. That really helped in the beginning of this year and then, let's say, the H1 of this year. Today, we are looking at that and also in line with our loan growth. We don't want to be non-competitive when it comes to the market, but we want also to achieve the right balance between volume and value. If you ask me, do you expect to see the same incremental repricing exercise?

Speaker #1: Hussein, you can add if you want but let me answer the second question on the loan growth. I think when we when we came up with the the strategy two years ago or less than two two years ago and our assumptions of the growth of the loans there was a lot of dynamics change in the market and we continue evaluating that as long as we are achieving our return on tangible equity what we promised to our shareholders and we do what it what whatever it takes to maintain that return on tangible equity by let's say growing value rather than growing volume then then that's that's a case that that doesn't mean that we will grow mid single digit this year and we have to grow significantly higher next year to achieve our aspiration that we we had in in the initial strategy communication.

Tareq Al-Sadhan: I don't think that will continue the same what we saw in the last three quarters. Or four quarters, we will ensure that the contribution to the bottom line is happening, and that's what we do the calculation to achieve. We grow our loans in a profitable way to achieve the bottom line impact. Hussein, you can add if you want, but let me answer the second question on the loan growth. I think when we came up with the strategy two years ago, or less than two years ago, our assumptions of the growth of the loans, there was a lot of dynamics change in the market and we continue evaluating that.

Speaker #1: What we care about is creating value making sure that we achieve our return on tangible equity to our shareholders. And if if the opportunity is there to grow with a value we will definitely do that.

Speaker #1: Hussein, please feel free to add if you want.

Speaker #2: Was said Abu Khalid I have nothing to add.

Speaker #1: Allah very clear. Thank you. Thank you. Our next question comes from the line of Shabir Malik from Morgan Stanley. Shabir, please unmute locally and proceed with your question.

Speaker #5: Thank you very much for the presentation and congratulations on a good second quarter. I have two questions please. The first one is I want to hear your thoughts on liquidity this the central bank data suggests that liquidity has improved what is your sense in terms of this durability of this liquidity you think this this kind of dynamic is likely to continue playing out in the second half as well and so if any comments on that would be pretty helpful.

Tareq Al-Sadhan: As long as we are achieving our return on tangible equity, what we promised our shareholders, we do whatever it takes to maintain that return on tangible equity by, let's say, growing value rather than growing volume, that's the case. That doesn't mean that we will grow mid-single digit this year, we have to grow significantly higher next year to achieve our aspiration that we had in the initial strategy communication. What we care about is creating value, making sure that we achieve our return on tangible equity to our shareholders. If the opportunity is there to grow with a value, we will definitely do that. Hussein, please feel free to add if you want.

Speaker #5: Secondly you you made a very good point about return on equity that seems to be a priority the cost of risk trend that we're seeing this year probably are low compared to historical levels and you've also indicated that that's recoveries have been quite helpful.

Speaker #5: But assuming cost of risk normalizes a bit next year do you think there are enough levers available let's say in terms of cost efficiency or growth and fee income to kind of offset that impact and still ensure that your ROE levels are maintained or your ROE target is still achieved.

Hussein Eid: Well said, Abu Khalid. I have nothing to add.

Tareq Al-Sadhan: Allah Thank you. Our next question comes from the line of Shabbir Malik from Morgan Stanley. Shabbir, please unmute locally and proceed with your question.

Speaker #5: So so yes more of a question around your ability to maintain ROE assuming cost of risk normalizes and the first one is about system liquidity how do you see that playing out.

Speaker #5: Thank you.

Shabbir Malik: Thank you very much for the presentation, and congratulations on a good Q2. I have two questions, please. The first one is I want to hear your thoughts on liquidity. The central bank data suggests that liquidity has improved. What is your sense in terms of this durability of this liquidity? You think this kind of dynamic is likely to continue playing out in the H2 as well? If any comments on that would be pretty helpful. Secondly, you made a very good point about return on equity. That seems to be a priority. The cost of risk trend that we're seeing this year probably are low compared to historical levels, and you've also indicated that recoveries have been quite helpful.

Speaker #1: Thank you Shabir. I'll I'll I'll take these questions and again Hussein feel free ree to to jump in if you need. I think liquidity for the first half of this year came very strong and also we've witnessed a slower growth on on loans which again it it was obvious in the first six months we've seen a a a significant I wouldn't say significant a good improvement on the pipeline of of loan demand and and we expect the second half to witness an improvement on the growth of loans compared to the first half.

Speaker #1: That will will definitely impact the liquidity situation. So the the expectation my expectation for for that and and Hussein feel free to jump in and and give your view on it is is that we will see continuous healthy liquidity situation and and a better growth in in the loan side.

Shabbir Malik: Assuming cost of risk normalizes a bit next year, do you think there are enough levers available, let's say, in terms of cost efficiency or growth in fee income to offset that impact, and still ensure that your ROE levels are maintained or your ROE target is still achieved? It's more of a question around your ability to maintain ROE, assuming cost of risk normalizes. The first one is about system liquidity. How do you see that playing out? Thank you.

Speaker #1: On the the question of the cost of risk that has helped in in the previous quarters and whether that is continuing or how we mitigate that I think the the cost of risk and the recovery exercise in SMBs became business as usual if you recall Shabir in previous calls we kept saying with this will normalize and and we in in 2024 we said we expect this quarter to be good but the next one this should be normalizing and and we continue collect and and recover good good collection that that really helps the improvement.

Tareq Al-Sadhan: Thank you, Shabbir. I'll take these questions and again, Hussein, feel free to jump in if you need. I think liquidity for the H1 of this year came very strong. We've witnessed a slower growth on loans, which again, it was obvious in the first 6 months. We've seen a good improvement on the pipeline of loan demand, and we expect the H2 to witness an improvement on the growth of loans compared to the H1. That will definitely impact the liquidity situation. My expectation for that, and Hussein, feel free to jump in and give your view on it, is that we will see a continuous healthy liquidity situation, and a better growth in the loan side.

Speaker #1: Definitely our focus on AI will will enable us to to win faster in terms of cost aspects and we take that seriously in in capitalizing on on technology and innovation to continue our efficiency operation while we are investing in other areas that will enable us to capture more of a top line as well.

Speaker #1: So capitalizing on all that and hopefully continuously seeing a very healthy cost of risk in the coming year as well that will will enable us to maintain our return of equity or what we promised in in in our strategy in in February 2025.

Speaker #1: Hussein if you want to add anything please. Thank you Shabir.

Tareq Al-Sadhan: On the question of the cost of risk that has helped in the previous quarters and whether that is continuing or how we mitigate that, I think the cost of risk and the recovery exercise in SNB became business as usual. If you recall, Shabbir, in previous calls, we kept saying, This will normalize. In 2024, we said we expect this quarter to be good, but the next one, this should be normalizing. We continue collect and recover good collection that really helps the improvement. Definitely, our focus on AI will enable us to win faster in terms of cost aspects. We take that seriously in capitalizing on technology and innovation to continue our efficiency operation, while we are investing in other areas that will enable us to capture more of a top line as well.

Speaker #3: Thank you. Our next question today comes from the line of Junzhu Liu from CSC. Your line is now open. Please go ahead.

Speaker #4: Hello I have two question. First about the deposit. The pan deposit increased quickly in the second quarter while the cash flow ratio declined. Was the main mainly because the customers shift into the pan deposit for the risk management reasons or what is driven by competition with other banks or other sectors what what were the average cost and the maturity of the new time time deposits and how does the management expect the cash flow ratio trend going forward and another question about the international business.

Tareq Al-Sadhan: Capitalizing on all that and hopefully continuously seeing a very healthy cost of risk in the coming year as well. That will enable us to maintain our return of equity or what we promised in our strategy in February 2025. Hussein, if you want to add anything, please.

Speaker #4: The international segment delivered a stronger revenue in the first half what was the import improvement mainly driven by Turkey Pakistan or other overseas branches how did this regions perform in terms of the revenue profit profit and credit cost excluding accounting effects can the international business deliver sustainable profit profitability thank you.

Hussein Eid: Thank you.

Tareq Al-Sadhan: Thank you, Shabbir. Thank you. Our next question today comes from the line of Junzhu Liu from CSC. Your line is now open. Please go ahead.

Tareq Al-Sadhan: Thank you, Shabbir.

Operator: Thank you. Our next question today comes from the line of Junzhu Liu from CSC. Your line is now open. Please go ahead.

Junzhu Liu: Hello. I have two questions. First, about the deposit. The time deposit increased quickly in Q2, while the CASA ratio declined. Was it mainly because the customers are shifting to time deposit for the risk management reasons, or was it driven by competition with other banks or other factors? What was the average cost and the maturity of the new time deposits, and how does management expect the CASA ratio to trend going forward? Another question about the international business. The international segment delivered a stronger revenue in H1. Was the improvement mainly driven by Turkey, Pakistan, or other overseas branches? How did these branches perform in terms of the revenue, profit, and credit cost? Excluding accounting effects, can the international businesses deliver sustainable profitability? Thank you.

Speaker #1: Thank you very much. I'll I'll answer part of your first question on the on the cash then Hussein please you can take the the rest.

Speaker #1: I I think we are growing our deposit and and we are growing our cash but the faster growth in in time deposit is is is impacting the the cash ratio.

Speaker #1: I think many attribute to that. I think the the higher interest rate makes an impact on people not keeping their money in in in call or current account.

Speaker #1: Adding to that the innovation so it is very easy for people now with a retailer or corporate customers to to transfer digitally between their time deposits call account saving account and current account.

Hello, I have a 2 question. Uh, first about the college uh, the pipeline is increased quickly, uh, in the 7 quarter. While the carer ratio depend was a ma'am. Mainly, because the customers, uh, shift into the time politics for the risk management reasons of what is driven by competition with other Banks or other factors um, what what, what was the average cost and the majority of the new time and time deposits and how does the management expect, the cut, the ratios Trend going forward. And another question about the international business,

Speaker #1: So it is much easier and the accessibility has enabled the the retail customer to move gradually from the the current account or or the call account to to more time deposit activities.

Speaker #1: That's very easy. Can be done in in in one minute through the mobile application here in Saudi. And that's definitely has an impact on the on the growth of the appetite of people having their money in a time deposit rather than keeping it in in current account.

Uh, the international assignment to deliver a stronger Revenue in the first half. Uh what the import uh Improvement manage driven by turkey, Pakistan or other overseas branches. Um how did this regions perform in terms of the revenue profit uh profit and credit cost?

um, uh, excluding uh

Speaker #1: Saying that we and when we mentioned that in our strategy back in 2025 we we keep focusing on attracting lower cost funding focusing on the right segment SMEs private banking affluent to ensure that we we capture the the current account the low call accounts to ensure that we always have the lower cost of funding that will enable us to be very competitive in the market and and win Hussein for you to take the the remaining of this question and the others please.

Uh, accounting effects. Uh can the international business deliver sustainable profitability? Thank you.

Tareq Al-Sadhan: Thank you very much. I'll answer part of your first question on the CASA, then Hussein, please, you can take the rest. I think we are growing our deposit and we are growing our CASA, but the faster growth in time deposit is impacting the CASA ratio. I think many attribute to that. I think the higher interest rate makes an impact on people not keeping their money in call or current account. Adding to that, the innovation. It is very easy for people now, whether retail or corporate customers, to transfer digitally between their time deposits, call account, saving account, and current account. It is much easier, and the accessibility has enabled the retail customer to move gradually from the current account or the call account to more time deposit activities. That's very easy, can be done in one minute through the mobile application here in Saudi.

Thank you very much. I'll I'll answer part of your first question on the on the Kaza. Then saying please you can take the the rest.

Speaker #4: Thank you Abu Khalid. And Junzhu I as you see you know we we have a very strong funding franchise strong ability you know to diversify our funding sources.

Is impacting, the, the Kaza, uh, ratio. I think many attribute to that. I think the the higher interest rate makes, uh, an impact on people, not keeping their money in in, in call or current account. Adding to that the innovation,

So it is very easy for people now, whether they are retail or corporate customers, to

Speaker #4: And if you see there is you know a decline in interbanks you know due to to banks and increase in timing deposit well we know that timing time deposit are more expensive and if you look at the cost of funds it remain contained despite that move however that change to customer to time deposits it's really improving you know the overall liquidity profile regulatory ratio the stickiness of these funding is much better from the interbank with very competitive cost of fund and efficient management of cost of fund.

Tareq Al-Sadhan: That definitely has an impact on the growth of the appetite of people having their money in a time deposit rather than keeping it in current account. Saying that, and when we mentioned that in our strategy back in 2025, we keep focusing on attracting lower cost funding, focusing on the right segment, SMEs, private banking, affluent, to ensure that we capture the current account, the low call accounts to ensure that we always have the lower cost of funding that will enable us to be very competitive in the market and win. Hussein, for you to take the remaining of this question and the others, please.

To transfer digitally between the time deposits, call Accounts saving account and current account. So it is much easier and the accessibility has enabled the, the retail customer to move, uh, gradually from the C, the current account or, or the call account to, to more time deposit, uh, activities. That's very easy. It can be done in in, in 1 minute through the mobile application here in Saudi. And that's definitely has an impact on the, on the growth of the, uh, appetite of people having, uh, their money in a time deposit rather than keeping it in, in current account, saying that

Speaker #4: For all all in all you know this is a win-win situation for us despite you know having the the the ratio declining which is mainly mathematically you know impact not really the performance driven.

Speaker #4: Otherwise you know in terms of performance you know despite that move you can see a very contained cost of fund ratio. Now when it comes to stronger revenue you know I think the delivers are mainly coming from stronger NCR which is resulted from as I said just now efficient management of funding cost.

We and when we mentioned that in our strategy, back in 2025, we, we keep focusing on attracting lower cost funding focusing on the right segment. SMS, private banking, affluent to ensure that we we capture the, uh, the current account, the low, uh, call accounts to ensure that we always have the lower cost of funding that will enable us to be very competitive in the market and and win. Um, same for you to take the

The remainder of this question, on the others, please.

Hussein Eid: Thank you, Abu Khalid. James, as you see, we have a very strong funding franchise, strong ability to diversify our funding sources. If you see there is a decline in interbanks, due to banks, an increase in time deposits. Well, we know that time deposits are more expensive, and if you look at the cost of funds, it remains contained despite that move. However, that change to time deposits, it's really improving the overall liquidity profile, regulatory ratio. The stickiness of this funding is much better from the interbank with very competitive cost of funding and efficient management of cost of funds. All in all, this is a win-win situation for us despite having the ratio declining, which is mainly mathematically impact, not really the performance driven. Otherwise, in term of performance, despite that move, you can see a very contained cost of fund ratio.

Thank you.

And as you see, you know, we have a very strong funding, uh, franchise.

Speaker #4: Second the repricing activities you can see a really significant significant improvement in the yields you know we have a better investment income rebound of of of you know the negative movement we we witnessed during the the quarter one sustainable fees income despite you know the change in the fees structure despite all challenges and lower and lower growth in financing we still were able to maintain a sustainable fees level contained OBEX that's all helped us.

Uh, and if you see, there is, you know, a decline in banks, you know, uh, due to banks and an increase in timing to work deposit. Well, we know that timing time deposits are...

more expensive.

And if you look at the cost of funds, it remained contained despite that move. However, that changed to customer to time deposit. It's really improving. You know, the overall uh, liquidity profile regulatory ratio, the stickiness of these funding is much better from the inter Bank.

With.

Speaker #4: On top of that you know our international subsidiary FQB they made a you know a great contribution also to the to the result this year as the you know have significant improvement from last year where that previously that you have a new strategy new board and I think they are that started to to to show the positive results and continue inshallah to to to to provide more and more.

Uh, very competitive cost of funding, the patient management, of course. But all in all, you know, this is a win-win situation for us, despite, you know, having the ratio declining, which is mainly, mathematically, you know,

Uh, impact, uh, not really the performance of—otherwise, you know, in terms of performance.

You know, it's bad. That move, you can't see a very content uh cost of funds.

Hussein Eid: Now, when it comes to stronger revenue, I think the levers are mainly coming from stronger NSCI, which has resulted from, as I said just now, efficient management of funding cost. Second, the repricing activities, you can see a really significant improvement in the yields. We have a better investment income rebound of the negative movement we witnessed during the Q1. Sustainable fees income, despite the change in the fees structure, despite all challenges and lower growth in financing, we still were able to maintain a sustainable fees level, contained OpEx. That's all helped us. On top of that, our international subsidiary, TKD, they made a great contribution also to the result this year as they have significant improvement from last year.

Uh, uh, ratio. Uh, now, when it comes to stronger revenue,

Uh, you know, I think the Believers are mainly coming from stronger NSA.

Speaker #4: And you know to be specific the major improvements coming from fees and from the FX transaction within the FQB subsidiary. I hope this answer your questions thank you.

Which is a result of, as I said just now, patient management of funding cost. Second, they're replacing activities. You can see a really significant break over in the years.

Speaker #2: Thank you our next question today come from Naresh Bilandani from Jefferies Naresh please unmute locally and proceed with your question.

Speaker #1: Thank you. Hi Tareq and Hussein. It's Naresh from Jefferies. Tareq you mentioned that the second half loan growth is likely to be better should we see the large corporate loan book revert back to growth in the second half after a steady decline in the past few quarters or do you feel that the growth will be more driven by the MSME portfolio which has continued to stay quite strong in the first half.

uh, you know, we have a better investment income rebound of of of uh, you know, the negative movement to witness during the the quarter 1, uh, sustainable fees income despite, you know, the change in the fees of structure, despite all challenges and lower, uh, and lower growth in financial, we still

were able to maintain a sustainable fees level.

Content. Uh,

Uh OBEX.

Speaker #1: So whether it's going to be large corporate or MSMEs that would be super helpful. And my second question is on liquidity. There is a significant drop in the LCR in this quarter.

Uh, that's all helped us on top of that. You know, our uh, International subsidiary TV, they made a, you know, a great

Uh contribution also to the to the result this year.

Speaker #1: Could you please share some thought process on what's driving that and also just while we are on liquidity I know you focused less on the headline LD ratio but this is actually quite important for our modeling.

Hussein Eid: We had asked previously that we have a new strategy, a new board, and I think that started to show the positive results, and continue, Inshallah, to provide more and more. To be specific, the measure in growth must come from fees and from the FX transaction within the Khazfki subsidiary. I hope this answered your questions.

Speaker #1: And in the second this is the second quarter that we are seeing roughly about a four to five percentage points drop in the LD is this a new base that we should work off in our models or will the franchise revert back to the levels over 110 percent.

As the, you know, have significant improvement from from last year, we had a briefly that you have a new strategy new board. And I think they are, uh, that started to to to show the positive results and continue inshallah to to, to, to provide more and more. And, you know, to be specific. Uh, the measuring improvements coming from peace, and from the FX transaction within the C,

Speaker #1: So just on liquidity once again the this drop in the LCR and how should we think of the LD ratio which has been dropping for the past two quarters.

I hope this answer your questions.

Junzhu Liu: Thank you.

Thank you.

Operator: Thank you. Our next question today comes from Naresh Falani from Jefferies. Naresh, please unmute locally and proceed with your question.

Speaker #1: Thank you.

Speaker #3: Hi Naresh. Naresh I think the what we've seen what we see in the in the pipeline is both the the large corporate the the the mega projects you know the Saudi has the expo and the World Cup and time is running and and we started meeting with contractors for the stadium built and and for exco sorry expo so we we see both the continuous SME and middle market activities and but also the the big projects that complement division 2030 is accelerating in the second half more than than the first half.

Please proceed with your question.

Naresh Falani: Thank you. Hi, Tareq and Hussein. It's Naresh from Jefferies. Tareq, you mentioned that the H2 loan growth is likely to be better. Should we see the large corporate loan POCI revert back to growth in the H2 after a steady decline in the past few quarters? Or do you feel that the growth will be more driven by the MSME portfolio, which has continued to stay quite strong in the H1? Whether it's going to be large corporate or MSMEs, that would be super helpful. My second question is on liquidity. There is a significant drop in the LCR in this quarter. Also, just while we are on liquidity, I know you focus less on the headline LD ratio, but this is actually quite important for our modeling.

Speaker #3: I'll leave the liquidity question to to Hussein.

Um, thank you. Hi Derek Anderson. It's a Nesh from Jeffrey's. Um, direct you mentioned that the second half loan growth is likely to be better. Um, should we see the large corporate loan book revert? Back to growth in the second half after a steady decline in the past few quarters? Or do you feel that the growth will be uh more driven by the msme portfolio which has continued to stay quite strong in the first half. So whether it's going to be large corporate or Ms. That would be super helpful. And my second question is on liquidity. Uh, there is a significant drop in the LCR in this quarter. Could you please share some thought process on what's driving? That and also um just while we are on liquidity I know you

Speaker #4: See you know the LCR is basically it's it's coming from the dynamics of the balance sheet management. As you see you know we are way above the minimum.

Naresh Falani: This is the Q2 that we are seeing roughly about a 4 to 5 percentage points drop in the LD. Is this a new base that we should work off in our models, or will the franchise revert back to the levels over 110%? Just on liquidity once again, this drop in the LCR and how should we think of the LD ratio, which has been dropping for the past 2 quarters? Thank you.

Speaker #4: We have enough room to to reallocate funding between different you know funding sources. Which by default in these ratios however give us better value better profitability.

Focused Less on the uh, headline LD ratio, uh, but this is actually quite important for our modeling. And in the second, this is the second quarter that we are seeing roughly about a 4 to 5 percentage points drop in the LD. Uh is this a new base that we should work off in our models or will the franchise uh revert back to the levels over uh 110%. Uh so just on liquidity once again, uh, the this drop in the LCR and uh how should we think of the LD ratio which has been dropping for the past 2 quarters? Thank you.

Tareq Al-Sadhan: Hi, Naresh. Naresh, I think what we see in the pipeline is both. The large corporate, the mega projects. You know, The Saudi has the Expo and the World Cup, and time is running, and we started meeting with contractors for the stadium build and for Expo. We see both the continuous SME and middle market activities, but also the big projects that complement the Vision 2030 is accelerating in the H2 more than the H1. I'll leave the liquidity question to Hussein.

Speaker #4: You know as long as we are way above regulatory ratio I think we have that let's say room really to benefit and generate more value while in the same time we are maintaining still strong LCR liquidity ratios you know that is way above the minimum regulatory.

Speaker #1: Okay and any color on the LD ratio Hussein which has been dropping in the past two quarters is this a new base or should we see this yeah yeah.

Speaker #4: We have a faster growth you know in the in the deposits than the loans and that's you know that's basically the reason. We expect this to increase you know as we are really today we are around 1.3 percent growth in financing.

Hi, Nish Nish. I think the, what we've seen what we see in the in the pipeline is both the, the large corporate, the, the make a projects, you know, the Saudi has the Expo and the World Cup and time is running. And and we started meeting with contractors for The Stadium built and, and for xco, uh, sorry Expo. Um, so we we see both the continuous SME and Middle Market activities, and but also the uh, the big projects, uh, that complement the vision. 2030 is accelerating uh, uh, in the second half more than than the the first half. I'll leave the liquidity question to, to think,

Hussein Eid: The LCR is basically coming from the dynamics of the balance sheet management. As you see, we are way above the minimum. We have enough room to reallocate funding between different funding sources, which by default impact these ratios, however, give us better value, better profitability. As long as we are way above regulatory ratio, I think we have that, let's say, room really to benefit and generate more value, while at the same time, we are maintaining still strong LCR liquidity ratios that is way above the minimum regulatory.

see, you know, uh, the S is basically

Speaker #4: But our guidance is mid single digit. So you know by default growing your financing portfolio in the second half that will slightly increase you know the headline LDR ratios but will still will have way big room to even go further when it comes to regulatory LDR ratio.

coming from the Dynamics of the balance sheet management. As you see, you know, we are way above the minimum, we have enough room,

uh, to to reallocate funding between different, you know? Uh,

Funding sources.

Which, by default, is in. But these ratios, however,

Speaker #1: Okay thank you very much.

Speaker #4: Thank you.

Speaker #2: Thank you our next question come from the line of Aybek Islamov from HSBC. Aybek please unmute locally and proceed with your question.

Give us better value, better profitability. You know, as long as we are way above the regulatory ratio, I think we have that. Let's say, um...

Room really to benefit and generate more value, while at the same time, we are maintaining skills strong.

Speaker #1: Yes thank you for the conference call. Just one question on your asset quality. Right so you did upgrade the guidance on the cost of risk that's very helpful thank you.

Uh, LCR liquidity ratios, uh, you know, that is way above the minimum regulation.

Naresh Falani: Okay. Any color on the LD ratio, Hussein, which has been dropping in the past 2 quarters? Is this a new base or should we see the

Speaker #1: I mean to what extent this upgrade driven by your views about provision write backs you know in 2026 and and to what extent is provision write backs are coming from the fair value reserve for POKI assets which were booked during the M&A and how should we think about the through the cycle cost of risk what do you think is the to give us an idea stripping out this write backs and recoveries etc.

Hussein Eid: We have a faster growth in the deposits than the loans, that's basically the reason. We expect this to increase as we are. Today, we are around 1.3% growth in financing, our guidance is mid-single digit. By default, growing your financing portfolio in the H2, that will slightly increase the headline LDR ratios, but we'll have way big room to even go further when it comes to regulatory LDR ratio.

Okay. Um and any color on the LD ratio uh Hussein which has been dropping in the past 2 quarters. Uh, so should we see that? Yeah.

Growth.

Loans. And that's, you know, that's basically the reason we expect this to increase, you know? As we are really today, we are around 1.3% growth in financing, but our guidance is let's single digit.

Speaker #1: What were the real cost of risk is? Thank you.

so you know, by default growing your financing portfolio on this second half that will slightly increase, you know, the headline and their ratios but will still

Speaker #3: Thank you Aybek. I think we alluded to that in in a previous question and Hussein mentioned how much we booked in the first half of of loan of provisioning.

I will halfway, uh,

Speaker #3: So we are taking a prudent Hussein do you want to comment?

Uh, a big room to even go further when it comes to regulatory ldr ratio.

Naresh Falani: Okay. Thank you very much.

Tareq Al-Sadhan: Thank you.

Speaker #4: Yes Abu Khalid Aybek you know we still continue to provide provision every quarter and increasing our coverage ratio over time and even stage wise coverage.

Okay, thank you very much.

Thank you.

Operator: Thank you. Our next question comes from the line of Aybek Islamov from HSBC. Aybek, please unmute locally and proceed with your question.

Thank you. Our next question comes from the line of Abec Islamov from HSBC. Abec, please unmute locally and proceed with your question.

Speaker #4: Honestly write back is nothing material if you if you look at the financial disclosures it's mainly net charge. And even higher than the last year.

Aybek Islamov: Yes. Thank you for the conference call. Just one question on your asset quality. You did upgrade the guidance on the cost of risk. That's very helpful. Thank you. To what extent this upgrade driven by your views about provision write-backs in 2026? To what extent is provision write-backs are coming from the fair value reserve for PPA assets which were booked during the M&A? How should we think about the through the cycle cost of risk? Could you give us an idea with stripping out this write-backs and recoveries, et cetera, where the real cost of risk is? Thank you.

Um yes, thank you uh, for the conference call.

Uh, just one question on your, um, asset policy.

Speaker #4: You know again strong recoveries sustainable recoveries you know in in retail you know month over month we see very good improvement in the recoveries.

Right? Uh, so you did upgrade the guidance on the cost of risk, um, that's very helpful. Thank you. Um, I mean to what extent uh this upgrade driven by your views about provision, right backs? Um, you know, in 2000?

Speaker #4: We have a very strong and efficient engine in in in retail. That reduce business as usual recoveries great efforts when it comes to to corporate also recoveries.

Uh, 26, and to what extent is provision, right? Backs are coming from the...

Speaker #4: So the recoveries is the main driver to be honest. Plus again we are prudent when it comes to our how we deal with our risk management.

To give us an idea of the stripping out this right backs and recoveries Etc. What were the real cost of risk is

Tareq Al-Sadhan: Thank you, Aybek. I think we alluded to that in a previous question, Hussein mentioned how much we booked in H1 a lot of provisioning. We are taking a prudent. Hussein, do you want to comment?

thank you.

Speaker #4: So we are always providing you know and being conservative and prudent in our provisioning and we always provide and make sure we have the right coverage.

Speaker #4: So honestly nothing really resulted from say provision write backs. It's basically real cash recoveries. And POKI is the same because POKI it's impaired loans if you get a settlement if you get something that's again it's a recovery.

Hussein Eid: Yes, Abu Khalid. Aybek, we still continue to provide provision every quarter and increasing our coverage ratio over time and giving stage-wise coverage. Honestly, write-back is nothing material. If you look at the financial disclosures, it's mainly net charge and even higher than the last year. Again, strong recoveries, sustainable recoveries in retail. Month-over-month, we see very good improvement in the recoveries. We have a very strong and efficient engine in retail that will reduce business as usual recoveries. Great efforts when it comes to core, but also recoveries. The recovery is the main driver, to be honest. Plus, again, we are prudent when it comes to how we deal with our risk management. We are always providing, and being conservative and prudent in our provisioning, and we always provide and make sure we have the right coverage.

Thank you. I think we alluded to that in a previous question, and Hussein mentioned how much we booked in the first half of the year and what's the provisioning. So, we are taking a prudent approach. Hussein, do you want to comment?

You know, we still continue to provide provisions every quarter.

And increasing our coverage ratio over time, and even stage-wise coverage.

Uh,

Speaker #4: So it's it's it's just an accounting classification but you should see it you know in the same manner as your written of portfolio or embedded.

Speaker #1: Thank you. And just one question follow up. I know you elaborated already on margins in the previous Q&A. I just want to confirm are there any transitory items components in the second quarter NIM quite impressive performance.

honestly, uh, right back is nothing material. If you, if you look at the financial disclosures, it's mainly net charge and even higher than the last year. You know, again, strong, recoveries sustainable, recoveries, you know, in the in retail, you know, month over month, we see very

Speaker #1: By the way thank you.

Speaker #4: Abu Khalid do you want me to take that?

Speaker #3: Yeah yeah go ahead go ahead.

Good improvement in the recoveries. We have a very strong and impatient engine, and retail that produce businesses usually recoveries.

Speaker #4: Actually you know mostly majority is really coming from the repricing exercise and efforts we are doing. There is immaterial part coming from collection of suspended commission income.

Uh, great efforts when it comes to corporate, also recoveries. So the recovery is the main driver, to be honest. Plus, again, we are prudent.

Speaker #4: And by the way this special commission income that were suspended now they paid back and this is having by the way every every month every quarter is business and as usual it might not happen next quarter but happen again the quarter after that but anyway it's immaterial overall this is really coming from the repricing exercise.

Hussein Eid: Honestly, nothing really resulted from, say, provision write-backs. It's basically real cash recoveries. POCI is the same, because POCI is embedded loans. If you get a settlement, if you get something, that's again, it's a recovery. It's just an accounting classification, but you should see it in the same manner as your written-off portfolio or embedded loans.

When it comes to how we deal with our risk management, we are always providing, you know, uh, and being conservative from broad, uh, in our professional, and we all provide and make sure we, uh, have the right coverage. So honestly, nothing really, uh, resulted from...

Say Professor, right? But it's basically real cash. Recoveries and book is the same because book is embedded loans.

Speaker #1: Thank you very much.

Speaker #2: Thank you our next question come from John Pierce from UBS. John your line is now open please go ahead. Thank you. Can you hear me okay?

If you get a settlement, if you get something that's, again, it's recovery. So it's just an accounting classification, but you should see it in the same manner as, you know, a written-off portfolio or in...

Aybek Islamov: Thank you. Just one question follow-up. I know you elaborated already on margins in the previous Q&A. I just want to confirm, are there any transitory items components in the Q2 NIM? Quite impressive performance, by the way. Thank you.

Speaker #2: Yes loud and clear. Great. Thank you. So first question please is on the NSCI margin. Do you think we should see that fairly stable in 2027 compared with the second half of this year even if we see rate hikes in order to still hit your KPI of high single digit NSCI revenue growth even if loan growth is a little slower than we first thought.

Oh, thank you. And just 1, uh, question, follow up. I know you elaborated already on margins. Um, in the previous Q&A, I just want to confirm, are there any transitory items components in the second quarter? Nim.

Quite impressive performance, by the way. Thank you.

Hussein Eid: Abu Khalid, do you want me to take that?

Tareq Al-Sadhan: Yeah. Go ahead.

Hussein Eid: Actually, mostly, majority is really coming from the repricing exercise and efforts we are doing. There is a material part coming from collection of suspended commission income. By the way, this special commission income that we have suspended, now they paid back. This is happening by the way, every month, every quarter. It's business as usual. It might not happen next quarter, but happen again the quarter after that. Anyway, it's immaterial. Overall, this is really coming from the repricing exercise.

Want me to take that? Yeah. Yeah, go ahead. Go ahead.

Uh, actually, you know, mostly...

The majority is really coming from the repricing exercise and the efforts you are undertaking.

Speaker #2: The second question please is on the banking fees. You've got that helpful bridge from last year to this year but what was the main driver of the decline in banking fees between the first quarter and the second quarter of this year and to get back to your target run rate for 2027 of mid-teens banking fee growth which line items do you think will really accelerate to deliver that.

Uh, there is a material bar coming from collection of suspended commission income. And, by the way, uh, this bishop commissioning—

Speaker #2: And then just a final quick one please on cost of risk. Obviously a very good number but do you see any pressure relating to giga projects and developers for giga projects.

That we are suspended. Now, the way back. And this is happening, by the way, every month, every quarter—it's business as usual. It might not happen next quarter, but it could happen again the quarter after that. But anyway, it's immaterial overall. This is really coming from the repressing success.

Aybek Islamov: Thank you very much.

Thank you very much.

Operator: Thank you. Our next question come from Jon Peace from UBS. Jon, your line is now open. Please go ahead.

Speaker #2: Thank you.

Thank you. Our next question comes from John Pierce from UBS. John, your line is now open. Please go ahead.

Jon Peace: Oh, thank you. Can you hear me okay?

Thank you. Can you hear me? Okay.

Operator: Yes, loud and clear.

Jon Peace: Great. Thank you. First question, please, is on the NSCI margin. Do you think we should see that fairly stable in 2027 compared with H2 of this year, even if we see rate hikes, in order to still hit your KPI of high single digit NSCI revenue growth, even if loan growth is a little slower than we first thought? The second question please, is on the banking fees. You've got that helpful bridge from last year to this year, but what was the main driver of the decline in banking fees between Q1 and Q2 of this year? To get back to your target run rate for 2027 of mid-teens banking fee growth, which line items do you think will really accelerate to deliver that? Just a final quick one, please, on cost of risk.

Speaker #1: Abu Khalid do you want me to take that?

Speaker #4: Thank you John. On the NIM question I think you know that's healthy level I think should continue as as we manage both assets you know and liabilities to generate the maximum value.

Yes, louder and clearer. Great, thank you. Um, so first question, please, is on the, um, NSCI margin. Do you think we should see that fairly stable in 2027 compared with the second half of this year, even if we see rate hikes in order?

Speaker #4: And we are trying also to balance between value and and pricing and the growth while our treasury team is efficiently managing the cost of risk related to maintain that healthy level of the NIM.

To still hit your KPI of high single-digit NSDI revenue growth, even if loan growth is a little slower than we first thought.

Speaker #4: As we said before this will moderate slightly due to the reason that we are really trying now to balance and have the right balance between pricing or value and the volume so we can really generate you know the desired NSCI guidance for this year and for the next year inshallah.

The second question, please is on the banking fees. Um, you've got that helpful Bridge from last year to this year, but what was the main driver of the decline in banking fees between the first quarter and the second quarter of this year? Um, and to get back to your target, run rate for 2027 of mid-, teens banking fee growth. Um, which line items do you think will really accelerate to deliver that?

Jon Peace: Obviously a very good number, do you see any pressure relating to gigaprojects and developers for gigaprojects? Thank you.

Speaker #4: And if there's any changes to you know to the guidance for for 2027 this is definitely will be updated by by year end but as of now we see that healthy level will continue.

And then just a final quick one, please, on cost of risk. Obviously, a very good number. But do you see any pressure related to giga projects and developers for giga projects? Thank you.

Speaker #4: But we'll we'll moderate slightly due to the reason I just mentioned. Before. Now when when when when when it come to banking fees you know it's mostly linked to the long growth in retail you can see a slight decrease in retail when compared to last year that's drive some of the you know impact again some some of the changes in the fees structure or regulatory fees structure you know the impact of them had started in February in March so we didn't observe the full impact during Q1 and now we are realizing that.

Hussein Eid: Abu Khalid, do you want me to take that? Thank you, Jon. On the NIM question, I think that healthy level, I think should continue as we manage both assets and liabilities to generate the maximum value. We are trying also to balance between value and pricing and the growth, while our treasury team is efficiently managing the cost of risk, really to maintain that healthy level of the NIM. As we said before, this will moderate slightly due to the reason that we are really trying now to balance and have the right balance between pricing or value and the volume, so we can really generate the desired NSCI guidance for this year and for the next year, Inshallah. If there's any changes to the guidance for 2027, this definitely will be updated by year-end.

Do you want me to take that?

Um, thank you, John.

Uh, on the name question.

I think, you know that healthy level I think should continue as as we manage both assets, you know, and liabilities to generate the maximum value and we have trying also to balance between value and and uh, pricing and the growth while our treasury team is sufficiently managing the cost of risk related to maintain that healthy level of DNA.

As we said before,

Speaker #4: But that's you know to the to the large extent was a offset by other sources. You know of of of fees generation coming from other services as an example you know the bank assurance business other products we are offering that is generating you know additional fees and on top of that we are really we are working not only on optimizing OPEX but there are heading cost within the fees related to these fees that we are hardly working to optimize and also this is supporting that that fees line.

This will moderate slightly due to the reason that we are really trying now to balance and have the right balance between...

Pricing or value and the volume. So, we can really generate, you know, the desired NCI guidance.

Hussein Eid: As of now, we see that healthy level will continue, will moderate slightly due to the reason I just mentioned before. When it comes to banking fees, it's mostly linked to the loan growth in retail. You can see a slight decrease in retail when compared to last year. That drives some of the impact. Again, some of the changes in the fees structure or regulatory fees structure, the impact of them had started in February and March. We didn't absorb the falling back during Q1, now we are realizing that. That, to the large extent, was offset by other sources of fees generation coming from other services. As an example, the bank assurance business, other products we are offering that's generating additional fees.

uh, for this year and for the, and if there's any changes to, you know, to the guidance for for 2027, this is definitely will be updated by by year end, but as of now we see that healthy level will continue but will similar will moderate slightly due to the reason I just mentioned

uh, before

Speaker #4: Now the last question was about cost of cost of risk. See we are a large bank we have a strong wholesale franchise definitely will have exposures you know whether it's direct to these projects or through you know the supply chain all in all that exposure is immaterial you know at all to the wholesale book and to the entire financing book this is number one.

uh, now when when, when when, when it comes to banking fees,

you know, uh, uh, it's mostly linked to the wrong growth. Uh, in retail, you can see a slight decrease in retail,

When compared to last year, that's

Speaker #4: Then nothing really majority of it it's not related to any project that is really part of the recalibration or representation plus you know immaterial exposure to some of the project that may be delayed however still we are receiving payments and they are performing very well so all in all nothing really material we're experiencing and everything is really covered through our current provision coverage.

The drive, some of the, you know, impact, uh, again, it's, uh, some, some of the changes and the fees structure or regulatory fees structure, you know, the impact of them had started in February and March, so we didn't absorb the falling back during q1. And now we are realizing that but that's, you know, to the to the large extent was it was set by other sources.

You know, of of of of uh, piece generation coming from other services as an example. You know, the bank Assurance business other, uh,

Hussein Eid: On top of that, we are working not only on optimizing OpEx, but there are hidden costs within the fees related to these fees that we are hardly working to optimize, and also this is supporting that fees line. Now, the last question was about cost of risk. See, we are a large bank. We have a strong wholesale franchise, definitely will have exposures, whether it is direct to these projects or through the supply chain. All in all, that exposure is immaterial at all to the wholesale POCI and to the entire financing POCI. This is number one. Then nothing really, majority of it is not related to any project that is really part of the recalibration or representation. Plus, immaterial exposure to some of the projects that may be delayed. However, still, we are receiving payments, and they are performing very well.

products we're offering that are generating, you know, uh, additional fees and

On top of that, we are really...

Speaker #4: So we don't expect any future advancements.

Speaker #2: Thank you. Just a very quick follow up on fees if I may. On on SMEs have they been a strong contributor to fee income to offset retail and is is that part of the growth going forward.

We are working, not only on optimizing topics, but there are heading costs within the fees related to these fees that we are hardly working to optimize. And also this is supporting that, uh, that is life.

uh,

Now, uh, the last question was about cost of, uh,

Cost of rest.

Speaker #2: Thank you.

Speaker #4: Definitely. MSME business is both transaction banking point of sale payments so it's not only you know the NSCI or the or the SCI support.

See, we're a large bank. We have a strong wholesale franchise and definitely will have fixed budgets.

You know, whether it's, uh, direct to these projects or through, you know.

Speaker #4: They are a strong source of you know cross sell and other fees income.

Uh, the supply chain.

Uh, all in all, that exposure is IM material.

Speaker #2: Got it. Thank you.

Speaker #4: Thank you so much.

Speaker #2: And we have now reached the end of our call. For any further questions please forward these on to the IR team. Mr. Iyad Ghulam back to you for the conclusion.

Speaker #3: It can be capital. I would like to thank SMB management for taking the time to conduct this call. We would like also to thank all participants for attending.

You know, at all to the wholesale book and to the entire financing book, this is number 1. Then uh, nothing really. Uh, majority of it. It's not related to any project that is really part of the recalibration or representation plus, you know, um a material.

Speaker #3: Please note that for any remaining questions you may kindly reach out to SMB IR team. We wish you a pleasant day. Thank you.

Uh, exposure to some of the projects that may be delayed.

However,

Hussein Eid: All in all, nothing really material we are experiencing, and everything is really covered through our current provision coverage. We do not expect any future adverse impact.

Speaker #2: This concludes today's webinar. Thank you all for joining. You may now disconnect from the

Still, we are receiving payments and they are performing very well. So, all in all, nothing really material we’re experiencing, and everything is really covered through our current propagation coverage. So we don’t expect any future at first, not—

Jon Peace: Thank you. Just a very quick follow-up on fees, if I may. On SMEs, have they been a strong contributor to fee income to offset retail, and is that part of the growth going forward? Thank you.

Hussein Eid: Definitely. MSME business is both transaction banking, point of sale, payments. So it is not only the MSCI or the NCI support. They are a strong source of cross-sell and other fee income.

Thank you, just a very quick um, follow-up on fees. If I met um on onemesh, definitely transaction banking

Payments. Uh,

so not only, you know, the NCI or the or the ACI support, they are a strong source of, you know, Crossing

Jon Peace: Got it. Thank you.

Hussein Eid: Thank you so much.

Got it. Thank you.

Thank you so much.

Abdulbadie Alyafi: We have now reached the end of our call. For any further questions, please forward these on to the IR team. Mr. Iyad Ghulam, back to you for the conclusion.

Iyad Ghulam: SNB Capital would like to thank SNB management for taking the time to conduct this call. We would like also to thank all participants for attending. Please note that for any remaining questions, you may kindly reach out to SNB IR team. We wish you a pleasant day. Thank you.

It can be competitive. We would like to thank SMB management for taking the time to conduct this call. We would like also to thank all participants for attending

Please note that for any remaining questions, you may kindly reach out to the SMB team. Thank you and wish you a pleasant day.

Operator: This concludes today's webinar. Thank you all for joining. You may now disconnect from the call.

Today's webinar, thank you all for joining. You may now disconnect from the call

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Q2 2026 The Saudi National Bank Earnings Call

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The Saudi National Bank

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