Good afternoon, everybody. Thank you very much for taking the time to be with us here today. Personally, I also want to thank MSX for providing us this opportunity to be interacting with you today and talk about our results for the first half year of 2025. I have with me here today, myself, I am Waleed Al Hashar. I am the CEO of Bank Muscat . I have with me Ahmed Faqir Al Balushi, Deputy CEO of Banking, Ganesh, our Deputy CEO of Finance and Investment Banking, and Sheikha Al Farsi, Deputy CEO of Operations. First, I think it is just the regular disclaimer that we have. This presentation contains different statements relating to Bank Muscat and has been prepared based on publicly available information. As usual, it is not an invitation to invest or a recommendation to invest, but more of a discussion section between us.
[Non-English content] In terms of today's outline, I will be going through the operating environment of Oman and the economy, the banking sector, and then I will focus in on Bank Muscat's strategy and business line. And then I will move to the key financial highlights for the six months ending in June 2025. [Non-English content].
In terms of the operating environment, the economic activity, in fact, had continued to expand in 2025, with the real GDP growing by about 2.5% and nominal GDP by 4.7% in the first quarter of 2025. This was primarily due to higher contribution from the non-hydrocarbon sector. Also, according to the IMF, as of June 2025, the Oman economy is set to expand even at a faster pace over the medium term. This expected performance is mainly driven by strong non-hydrocarbon growth and also underpinned by ongoing investments in logistics, manufacturing, renewable energies, and tourism. Moreover, I think also the favorable oil prices, and increasing the non-oil contributions, the public finance management efforts that were done, and the declining debt levels have all contributed to Oman's fiscal and external position.
As you have seen before, and this continues, the government has taken quite a few steps to improve the business environment, allocating budgets to strategic projects, supporting SMEs, accelerating investments in renewable energies and green hydrogen. Also, importantly, inflation has remained subdued, averaging by about 0.6% between January to May 2025. In July 2025, Moody's has upgraded Oman's sovereign rating to investment grade, and this is obviously a reflection on the stronger debt metrics and the greater resilience to the economic shocks that we have seen in the past few years. Public debt management initiatives have contributed to lower debt to GDP ratio. Generally, also, the government anticipates about 13% reduction in debt servicing costs this year, which is obviously complementing the emphasis of Oman's leadership efforts in preserving financial stability and fiscal sustainability.
There were also plans announced last year to expand Oman's LNG production capacity by a third by 2030, which could further contribute to the economy positively. The 2025 budget also continues to focus on strategic developments and social sector spendings. As you already know, under Vision 2040, Oman is progressing with many initiatives, and all are aimed at fostering the public and private sector and sustainable growth, as well as stability and fiscal prudence, which all actually positions Oman well amid any of these recent and previous global macroeconomic volatilities. [Non-English content].
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[Non-English content] In terms of the banking sector overview, it has continued to grow steadily and remains a pillar of support to the national economy. In 2025, the Oman banking sector continued to show growth, show strong fundamentals, and steady momentum, which is reflecting a broader economic recovery and performance. The growth in private sector credit, healthy deposit inflows, expanding also some of the Islamic banking, Islamic finance activities, it shows the sector's depth and diversity. As you have seen, banks have remained well-capitalized, sound asset quality metrics, and ample liquidity. This, of course, is all supported by quite effective regulatory supervision. As everybody knows, in recent years, Oman's banks have always invested significantly in technology and digitization while also continuing to expand their physical footprint.
Between January to May 2025, the sectoral credit reached above OMR 33 billion, that is about 8% year-on-year growth. Deposits increased by also a little over OMR 32 billion, which is also almost 8% over the previous year. Islamic finance and deposits grew by 12.3% and 16.6%, respectively, and they are contributing to 21% of the sector. The budget of 2025, which is also driven by the elevated oil prices, have an expansionary focus and a strong momentum. All these factors we expect are going to support sectoral growth and improving the financial performance of the Omani banks in the near future, in the medium term. Banks are also adopting ESG principles and continue to enhance their risk frameworks to align with the international best practices. [Non-English content].
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[Non-English content]. This slide talks about the consistent performance and stability in the banking sector key parameters. Sectoral credit portfolio registered 5% compounded annual growth over the past five years. Customer deposits also registered 5.9% compounded growth during the same period, and the top seven Omani banks reported a 7.7% net profit increase in the first half of 2025. Obviously, looking ahead, the sector is expected to continue mid-single-digit growth while also needing to proactively manage any short-term pressures on asset quality or liquidity due to the global factors that we all know about.
Nevertheless, medium-term performance is projected to remain stable and sustainable. The strong fundamentals and the forward-looking regulatory oversight provide us confidence that the sector's long-term growth trajectory is going to be a positive one. [Non-English content].
[Non-English content] In terms of the bank, Bank Muscat continues to focus on a strategic framework on four key pillars, which are customer centricity, market leadership, efficiency, productivity, and innovation. These are all aligned for the purpose of delivering sustainable value for all our stakeholders. We definitely do continue to leverage our strong branch network, sound financial position, and most importantly, our highly skilled colleagues to improve the outcomes and drive continuous improvement across the entire front, both financial and operational. We are always embedding digital transformation and customer experience enhancement as well as responsible banking practices across our operations. [Non-English content].
[Non-English content] . In terms of Bank Muscat business line, the bank operates across multiple business lines, whether it's in corporate banking, personal and retail banking, wholesale banking, and Islamic banking. All of these verticals have performed quite well and have consistently contributed to earnings performance. The corporate banking, personal banking, and wholesale banking contributed around 23% - 33% of the bank's net profit during the first half of 2025. Islamic banking contributed about 4% - 5%, while international operations added 8% to our bottom line.
Islamic banking continues to have the highest market share in terms of total assets in Oman and has shown quite healthy growth since its inception. The loan portfolio, as you can see from the pie charts, continues to be well-diversified. Deposits are largely retail-driven and also quite diversified, both in terms of retail, government deposits, and private sector deposits. [Non-English content] .
[Non-English content] . Now, I will move on to our financial highlights for the six months ended June 30, 2025. It has been quite a good six months. As you can see, the bank's top-line performance was strong despite the continuing global and regional challenges. Bank's net profit increased by 12.2% compared to the level in the first half of 2024. This was mainly driven by robust business growth as well as prudent credit cost management.
The net interest income rose by 8.3% due to an increase in our business volumes as well as our active balance sheet and liquidity management and optimization. Our agile approach in balance sheet management as well as the funding dynamics helped us maintain a healthy net interest income during this period. The non-funded income has also improved by 8.7% during the first half, and that is also due to growth across all the business lines and higher investment income. During the period, operating expenses also increased by 5.8%, and that is a reflection of the business activities as well as the infrastructure investments done by the bank. You see that the loan portfolio, and that is on quite a large base, grew by 5.1% year-on-year, and the deposit portfolio, also on a large base, showed a growth of 3.3% during the first half.
In terms of asset quality, total provisions were about 1.7 x our non-performing loans, reflecting strong asset quality buffers and metrics maintained by the bank. This consistent operational execution, robust and balanced growth, income streams actually provide us a strong foundation for sustaining our profitability moving forward. [Non-English content].
[Non-English content] . This slide highlights the operating trends over the last five years. As you can see, net interest margins have remained stable and have shown consistent improvement.
Bank Muscat has been able to manage the yield and funding costs to maintain NIMs, and that is through the efficient balance sheet and liquidity management, as well as deploying agile hedging strategies. You will see that the bank fee-based income has held consistently around 28%-32% of total income throughout this period. Cost-to-income ratio further improved to 37.5% in the first half versus 38.6% in December 2024. The ROE of the bank has also shown quite a good improvement from the lower levels of 10% in 2021 to reach 13.4% in the first half of 2025. Bank ROA also continued a healthy momentum and reached 1.79%, the highest when compared to levels seen in the last five years after reaching a low of 1.32% in 2020. This trajectory highlights the bank's operational resilience, profitability, and disciplined cost management.
[Non-English content] . In terms of asset quality, this slide also provides a trend of our asset quality performance.
As you can see, Bank Muscat has been able to maintain a stable NPL ratio between 3%-4% over the past five years. Our provision coverage ratio also remains strong between 145%-170%, reflecting the bank's prudent approach. As I mentioned earlier, the bank's loan portfolio is well-diversified across different economic sectors and industries within the countries. Gross loans portfolio increased 4.3% since December and 4.4% growth in 2024. We continue our prudent credit policy to ensure stable performance. Actually, maintaining our robust asset quality metrics remains a core part of the bank's strategy to ensure that the credit resilience remains during the different economic cycles. [Non-English content].
[Non-English content] . In this slide, we talk about funding and liquidity. Bank Muscat maintains, as you can see, and as has been our trend in the past, a well-balanced funding mix. Around 70% - 73% is from customer deposits.
The balance is supplemented by interbank deposits and capital. We continue to hold high-quality liquid assets. As I mentioned earlier, the bank's capital position is one of the highest among its Omani peers and one of the strongest among its GCC peers as well. The capital position is also largely driven by core equity capital, along with retained profits after a good history of paying healthy dividends over the last many years. [Non-English content] .
[Non-English content] . I have reached my final stage, and we can take your questions after this. Please raise your hand if you can. Thank you. We start with Manar. Yeah, that's the sequence. Okay. Hi, Manar. Please go ahead.
Good afternoon. Thank you for this call. I have just a few questions if I can continue.
Yeah, please.
Okay. I have a question regarding the asset yield. It has been declining in the first and second quarters.
I'm sorry?
Hello?
Asset yield. Okay.
Asset yield. Yeah. We noticed that it's been declining in the first and the second quarter. It has reached 5.3%, and the cost of funds are also going up, effectively tightening the spreads. Where do you see the spreads and the margin by the end of the year?
Hello. Thank you for that question. This is Ganesh here. Asset yield going down, in line with the Fed rate changes happening over the last one year and also the moderation in the cost of funding in Oman market. Our focus is on the net interest margin, which has improved over the last one year. We are hovering around 2.7%, 2.76% level. The function of market interest rate will impact both yield and the cost in a similar direction. If you look at the last five years, our ability to manage the margins at the similar level, about 2.6%-2.7%, that shows our dynamic activity on balance sheet management. We don't expect any material changes on the margins going forward in spite of Fed rate cuts expected.
Okay. You had another question, Manar?
Yes. Thank you for the answer. The ROE has also improved to 13.4%. What would be Bank Muscat's long-term target for ROE?
This is a function of both the profitability and the capital base. I think the profits level have grown and also capital adequacy has moderated. As a result, it has reached 13.4%. I think our medium-term outlook is between 13% - 14% range. If there are further optimization, it can improve beyond 14%.
What is the outlook for loan demand for the second half of 2025? Where do you see this incremental growth coming from?
We expect to be sustaining this single mid digits growth, we hope. I don't want to be giving many forward-looking statements, but single mid digits. The growth is coming from a number of different areas. In terms of loan demand, retail, for example, the young demography, new job creations, the salaries.
Hello?
Lending to public sector projects and petroleum related ventures. Mid to large corporates are also investing in new and ongoing projects, and so we expect to be taking a share of their business loans and working capital needs. Renewable energy projects tied to green hydrogen, solar related infrastructure, logistics. You have seen Etihad Rail and road network upgrade. Real estate, Sultan Haitham City and other satellite towns around the country actually, and tourism-related infrastructure development. A number of different areas, and all these projects are either on the planning stage or in terms of the financial, some of them are already on the financial closure stage. Power sector is also showing growth in terms of power supply and the need for new power capacity. So there are a number of areas that we expect growth to be coming from.
Understood. Regarding the NPL ratio, where do you expect the ratio to trend for the remainder of the year?
We have been showing this, we have been maintaining it at this level, between 3%-4%, and we do not have any reason to see it moving anything above that.
Okay. Just want to know your thought-
I will give you the last question, Manar.
Yes.
Because I have to move to others. This is your second.
Yes, I understand. Thank you. I just want to understand your thoughts on this. Do you expect the competition in the Oman banking sector to put pressure on the lending standards?
The lending standards?
Yes.
Well, we have been navigating through competition myself for the last 28 years in banking. I know this bank, and I know the culture here. I will answer it in two ways. I do not think, because the regulator is quite strong. Lending standards, I do not think, are going to be a factor of deterioration due to competition. I think margins may be impacted, and that will depend on those individual banks' cost of funds and how they manage their liquidity. We believe that we are quite well-positioned as a bank to actually take advantage of how we manage our cost of funds. Therefore, be able to compete on different lending opportunities. Okay, Sumaya. Sumaya, you are on mute if you are trying to.
[Non-English content] Good afternoon to you and to Ganesh and the Bank Muscat management. Thank you for the presentation. I will ask my questions in English. There was a question in the chat, which I shared the same. I am going to start with that on the liquidity, and even throughout the presentation, we have noticed that the liquid assets have dropped to 17%. With LDR at 109%, sharing the same question as Shahrukh. What are your plans for increasing your liquid assets or term funding? Where do you see deposit growth coming from, in the second half, especially in going forward? That is my first question. My second question is, regarding just generally on the corporate lending side. There are other banks that are more corporate-focused, in the competition. Obviously Bank Muscat still stands well above.
You have mentioned a number of projects now, but are you focusing on certain sectors? To what extent will you be increasing your exposure to the mid corporates and the SMEs in that regard?
Okay. Is there a third question or you want to?
I always have a lot of questions, but we can go with those two questions.
No, give me the third one.
Third one is regarding fee income. Fee income has been growing, and last time we spoken as well, there was a mention in the cap on retail lending. Some fees that were imposed by the CBO have been removed. If you could just share more insight into that, and where do you see the fee income generation coming from? Is it just purely from organic lending, or are there other avenues of fee income that you are seeing?
You take the first one.
Sure. Thank you, Sumaya. I'll go with the liquidity first, and then I'll talk about the other two. On the liquid assets, yes, these are particular point-in-time ratios. But if you see the trend from December to now, there has been a decline in the liquid assets stock that was more structural. If you look at our deposit growth, we focused on CASA growth. We didn't grow on term deposits during the first six months of even year-on-year comparison. That is to enhance the margin perspective. But from a total liquid assets positioning, we are quite well liquid. There is no declining trend to mobilize funding. Depending on the asset growth in the second half, we will focus on funding, which will include customer deposits and interbank, as well as any bond issuances. Overall on liquidity, we are quite comfortable. We don't expect any material change from now.
I will take the question on the corporate lending. We look at it, Sumaya, yes, we will be focusing on a number of different sectors. You've seen our portfolio is quite well diversified. Whether it's in logistics, in tourism, in GREs, in the power sector, in the renewable energy sector, in hydrogen projects. More importantly, you touch on mid to large corporates. That's a part of our strategy and a very clear focus for a particular team within our corporate banking group. We see because of the growth and the economic activity in Oman that there will be good growth in that sector. Some of that has already come into the balance sheet in the first half, and we expect more in the pipeline. I'm talking about mid to large corporate. We expect more in the pipeline coming as well in the second half.
Our growth trajectory, we expect it to continue within the same momentum. In terms of the fee income growing and where it's actually coming from, it's coming from all business lines. If we're talking the retail side, yes, there was an impact on the caps on the fees and so on. But we have been focusing on our organic growth opportunities in the retail side, and we have grown significantly our customer base and retail side, and that's coming mainly from our good strategy on branch locations and sound branch expansion, as well as our digital solutions. So that has helped us bring in a large customer base, and today we are able to monetize on that, and we continue to be monetizing on that larger customer base. So retail has a number of different initiatives to continue the trajectory of the fee-based income. Corporate banking as well.
The growth in corporate loans has helped us also get certain fees on that front. Investment banking, our investment activities, our investment books have also yielded good results in that area. All of these, all our business lines, have helped us grow our fee-based income.
Perfect. [Non-English content] Thank you.
Thank you. Okay. Shaul. Shaul, please.
Yes. Hi. Thank you for the opportunity. I hope I am audible.
Your voice is a little low, Shaul. If you don't mind just raising it a bit.
Yes, sir. Is it better now?
No, I can't hear you.
Okay. How about now?
Now, yes. Now we can hear you, good.
Perfect. Thank you. Thank you, and apologies for the technical issue, sir. I will start my question with the interest rate and your view on NIMs. As you mentioned, that with the expected decrease in interest rates, you expect the yield on advances to go down, but you expect that Bank Muscat, with management, will be able to maintain the NIM. My question is that with the decrease in interest rates, obviously, your yield on advances and interbank lending income will not go down. What is your view on the yield on your advances? Sorry. So investments in interbank income might go down, but do you expect a decline on the yield on advances as well?
We are going to have to manage. That is a part of our business, is managing the yields and the costs. Yes, there could be, due to different factors, whether it is competition or the drop in the different benchmark rates globally, a drop in the yields. That will also reflect on our cost of funds in terms of deposits, and which we have been managing quite well. From that perspective, we believe that we are quite well-positioned to manage both, and hence our expectations of the sustainability of the NIMs for the near future.
Right. That is helpful. My second question is regarding your deposit number. We have seen a slight decline in the quarter-over-quarter deposits. Bank Muscat's book now, I understand that this is a balance sheet number, but, do you expect the year-end number to maintain the mid-single digit growth rate that you guys are expecting?
For deposits, we manage this quite with an agile posture. We manage it quite well because we need to make sure that through deposit management, we manage our NIMs. Therefore, the growth numbers in deposits for us is not the function. The function for us is actually making sure that we have the deposits at the right time for the right deployment. We are going to continue to manage it agilely. We have seen us, for example, in the previous years. In some years, we may have dropped overall deposit or even lower single digits growth, but it was intentional. Because it is very important for us to make sure that the NIMs are well maintained while also making sure that our liquidity is quite strong and quite robust. When I talk about deposits, in this particular fashion, I am talking about term deposits.
Now, in terms of CASA, you would note that we have quite a high ratio of CASA to the overall deposits. That is going to be a continued focus for us, especially on the retail side and savings. That is why we continue to make sure that we onboard new customers, a major part of our strategy, and making sure that our branches are in the right locations. Where we need to increase branches, we continue to do so, and we continue to invest.
Perfect. Thank you, sir. My final question is regarding your cost to income. We have seen some improvement in your cost- to- income ratio during the second quarter-
Yeah.
-to 36% from previously, ratio of some 40%. Is this a new norm? Is Bank Muscat targeting now this?
You and my board. You are talking the same language.
Thank you.
Everybody wishes that. No, listen, it is a function of two things. One, the top line and the cost. So, if the income goes up, then the cost- to- income ratio drops. What is for sure, the sweet spot is between 38%-40%, generally speaking. We endeavor to actually keep it at the lower part of that. But then, we do not want to deprive ourselves of the opportunity to invest the right investments that is going to give us multiples in terms of top line. So we continue to watch costs. We continue to make sure that we are quite agile there and make sure that we spend them in the right projects. But we are also not going to be-
But with maintaining that drive to remain within the 38%-40% range. Because as you know, investment in technology is important for the future, and we focus on that. Investment in footprint of branches and customer acquisition is important, and we focus on that. Investments in efficiency within the organization and operational efficiency, and we continue to do that. So, all in all, we are going to definitely be prudent on costs, but we are also going to make sure that we invest wisely.
Perfect. Thank you, sir. Thank you very much.
You're welcome. Mr. Dan Mikhailov.
Hi. Thank you so much for taking my questions, and congratulations on a great set of results. My first question relates to the investment and dividend income. We've seen notable year-on-year increases in both of those revenue streams. I was wondering if you could provide some commentary around what has been driving it. Is that a structural shift with Bank Muscat targeting higher dividend- yielding securities in its mix, or on the securities with high cap where you can realize high capital gains, some more trading securities? That would be really helpful to understand. Then my second question relates to the credit risk weighted density, which has been coming down year to date quite substantially, as a percentage of loans from about 99% to now 95%. I was wondering what has been driving it.
Is that a structural trend that as we see more corporate lending growth, RWA density more broadly should decline? Or does it have to do with lending to the specific sectors, which, under new CBO rules, have lower risk charges attached to them? Thank you.
Sure. Dan, thank you for those questions. In terms of dividend income, yes, year-on-year, there has been good growth. This is a reflection of the investment activities I've taken over the last one year, including the local IPOs and also our investments outside. The focus is largely on having sustainable income model. It's not anything speculative for a period of time. That's why the reflection is more on the dividend rather than the gain. This type of an approach will continue to follow. That is from our investment book and the dividend income behavior perspective. In terms of credit risk weight to the total asset, yes, it depends on the function of sector we grow. If, let's say, retail mortgage grows, it has a lower risk weight, which is 35%.
If we do a growth on GRE with the government guarantee, then it has a 0% risk weight. So it's a function of the credit growth in a particular quarter or a year, and which has an impact on the credit risk in proportion to the total risk-weighted assets. There is no structural changes, but it could be transaction-based impact, but it will hover around 95%-98% of the total asset.
Thank you.
Sunder.
Hi. Good afternoon, Waleed and Ganesh. Nice to hear you after a long time.
Thank you.
Three questions from my end. Just want to understand this countercyclical buffer in terms of because the regional central banks have started having this countercyclical capital buffer starting from 2026. Any indications on the Central Bank of Oman side in terms of because we are still having this as a zero at this moment. How do you see this coming up in the coming years? Do you have any kind of indications from the Central Bank or because I've been missing out few of the calls earlier? Just want to understand on that perspective from the capital adequacy perspective. That's my first question. My second question is on the because I asked this question earlier to Ganesh, also, I lost my memory now. Because there was a large transfer of this, the transfer to the memorandum portfolio, correct?
In the first half, you've done almost OMR 58.56 million transfer to the memorandum portfolio. I forgot. I think it's always some reason, you say, I think. Can you elaborate the reason for this transfer of this bank to the memorandum portfolio? My last question also is international operations. International operations, especially in international banking, the commission fee and income has grown, and also the profitability of the segment has substantially moved up from last year. Any specific reason, or this is also going to be a sustainable trend for Bank Muscat in the coming period? Thanks. I think that's it as of now.
Thank you. Sunder, on the countercyclical buffer, I think the Basel III regulations, Central Bank is very clear. The CBO kicks in only when we have excessive credit growth in the domestic market. The U.A.E. and Saudi markets have seen very excessive credit growth over the last two, three years. We are talking about 10%-20% credit growth happening year-on-year. As a result, these regulators are introducing, whereas in Oman, Central Bank of Oman has a framework already in place. If they find excessive credit growth in relation to the GDP growth.
The level of CBO will kick in. I do not think anything expected unless the banking industry go into a double-digit sort of a credit growth, there could be a possibility of CBO kicking in.
In terms of memorandum accounts and move, this is a regular activity that we do as a bank, and all banks do it. They move all the accounts to different buckets while still continue to focus on collections so that we make sure that the numbers reflect the reality for Bank Muscat in terms of NPAs and so on. So these would be very old accounts that are there, and it is just a clean-up exercise. We do it on a regular basis. All banks do it.
In terms of international, our Saudi branch has, and as has been in the past few quarters, have shown quite good performance and continues to contribute quite well. Our associates also are doing quite well, whether it is CECO or Alizz Islamic Bank. Our SIP is doing well. So a number of different factors when it comes to international that has helped us move in a positive trajectory, and we expect that to, Inshallah, continue also for the future. Right. I do not see any. Who?
Chat. The chat has got questions.
There are chat questions? Okay.
For Shahrukh started. Maybe some of the questions have already been answered.
Yeah, whatever has been answered, remove please.
Yeah. Number one, two, answered. One and two are answered. Number three-
What will you see in stage two inflows restructuring? Do you expect the quarterly ECL run rate at OMR to hold, and where do you see the gross NPL ratio by year-end? We have answered the gross NPL ratio already. In terms of stage two, I will talk about that a little bit. About 12% of our gross loans in 2022 were restructured. It reduced to 8.5% now. Of course, more than 75% of these have already resumed repayment. The remaining 25% still have their cash flows deferred. Overall, the health of the portfolio is quite satisfactory, and our focus will always continue to be trying to work with our clients, collaborating closely, monitoring their cash flows, and making sure that those are realistic in terms of cycles. Each restructuring is actually tailored to the borrower's business model.
We are quite comfortable and quite confident, or quite comfortable, when it comes to our perception of these. In terms of the ECL run rate, you have seen it moderating over the last two quarters compared to the previous year. Yes, we do expect it to continue to moderate compared to the previous year. I think one important factor to highlight here when it comes to provisioning. I answered the short answer, which is, yes, that we believe is going to continue the same level of moderation moving forward. I think it is very important for a large bank like Bank Muscat, it is very important to also see the different dynamics when it comes to its credit portfolio. One, while it is diversified, there are also a number of different clients. The ticket sizes are larger than some of the other banks in Oman.
The credit parameters that are looked at the beginning are very important. That is what we focus on. These buffers that we create when it comes to ECLs are important for any, God forbid, future shocks that we do not anticipate. It is important to make sure that we have the right level of provisions moving forward. That is that answer. In terms of what are I have finished that. "What are the transaction banking payments initiative that can sustain the 28%-30% non-interest? I have already answered that."
CASA income also answered.
CASA income, Ahlam. Assalamualaikum. "Islamic financing income rose in the first half of 2025. How does management see growth trends in Islamic banking relative to conventional?" Islamic banking growth, we expect it to continue its momentum. Of course, it will also depend on growth in the financing side of it, and most importantly, growth in its funding side, the deposit side, and especially retail deposits. Impairment charges contained, referring to the NPL. Does management expect provisioning pressure? No, we don't, but I've already answered that. Is Bank Muscat targeting a stable dividend payout ratio? Well, Inshallah, we work hard to please all stakeholders of the bank, including, most importantly, our shareholders, and including looking after the dividend payout ratio, but I cannot really project how stable or otherwise it will be. But we will make our best to have the same story as in our financials, which is sustainability.
We will work hard to do that. What percentage of GRE exposure is GRE loan with the government guarantee? As the government's balance, this is a bit, it's a client-based question, so I think what matters is that in terms of the risk-weighted assets perspective, it's quite well diversified. I think what Ganesh had mentioned there was just giving an example. But nevertheless, government guarantees are not necessarily a main function of our credit parameters that we look at. Ahmed, you wanted to say something?
Whether the credit is with a guarantee or not, guarantees are assessed differently. The risk-weighted average is just a technical, I would call, methodologies. But if they don't have a government guarantee, then the assessment, and the pricing, and credit terms of condition, and covenants will be different.
Okay, I have one final question, and one final question verbally, because otherwise we have one from the chat. Contribution of wholesale banking, which is corporate finance, asset management, and finance and investment banking, has witnessed a marginal drop in its share of assets as well as share of profit. Could you kindly explain the reason?
Yeah, I will take that question. It is in proportion. They have grown, but in proportion to how the other businesses have grown. That is the difference. Share of profit has not reduced in the sense, but it is in proportion to the total. If you see year-on-year, wholesale banking would have grown.
Final question from Varuna.
Hi, good afternoon. Am I audible?
Yes, you are audible.
Yeah. Thank you very much for this opportunity. I am sorry I joined a bit late, so apologies if I am asking something that you already answered. I am sorry, I have three questions. Really quickly, if I am to ask, first thing is on loan growth. Loan growth has been very strong in the first half, but do you expect this to slow down in the second half? Because I do not think you will expect a similar run rate quarter- to- quarter. So I just want to understand that. Secondly, on the deposit side, going forward, do you expect deposit growth to support this loan growth? The third question is on the fee income. Fee and commission income, which is on net basis, still relatively weak.
Relatively what? I am sorry. I cannot hear you.
I mean, how do you-
Sorry, I did not hear. Relatively what?
No, I mean, it's not as strong as what is indicated in the loan.
Oh, weak. Okay. It's relatively weak. Okay.
Yeah. Fee and commission income, what is your expectation going forward? Because I know that there are a lot of initiatives that you are taking, especially on the retail side.
Yeah.
I just want to understand when we can see this reflected in the financials.
Yeah, Varuna, I think we've answered all of those, but I will answer them again. Loan growth, as we have said, we expect mid-single digits, hopefully. We hope, and we are going to work towards that. There are a number of projects, as I have explained before. You could probably also see the video of this subsequent to this. Deposit side, yes, we have also talked about that. Like we said, deposit is going to be a function of how we manage our deployment and growth on the other side, and also, most importantly, our net interest income and margins. Also that you will find the answer to if you go through the video subsequent to this meeting. In terms of fee income, I've looked at the numbers myself, and in terms of volume, there's been growth.
In terms of fee income to total income, it's between about 28%-30%. I'm not sure how you characterize it as not strong or weak. Nevertheless, of course, I respect and appreciate your opinion. Therefore, I will say this, that it comes from a number of different success that we have been able to achieve in fee income, comes from a number of different initiatives that we have taken. As I said, you will see the video also. In terms of our retail base and monetizing, growth in our customer numbers and onboarding of new customers, our investment banking side, our loan growth, and the associated fees coming from that. Even despite the caps on fees and so on that are there, we're still able to grow our fee-based income.
That's really the answer, but you can find even more elaborate answers in the video, Varuna.
Right. Okay. That's clear. Thank you very much. Yeah. What I meant to say was that, it's not that weak. I thought, given the initiatives-
No, no, no. No problem. It is okay. We respect everybody's impression of our performance. Whoever thinks it is strong, we thank them. Whoever thinks it is weak, we also thank them. Truly. So much appreciated. It is fine. Thanks, everybody.
Thanks.
I take this opportunity to thank all of you for being with us this afternoon. I hope we have been able to shed some light on our performance for the first half. Inshallah, we will see you after, we will have another session like this after the year-end or the 2025 results. I wish to thank MSX for giving us this opportunity.