I welcome you to The Commercial Bank's H1 2022 Results Call. Joining on the call to my far left is Joseph Abraham, the Group Chief Executive Officer, and to my left is Rehan Khan, CFO. We are also joined by Kaan Gür, CEO of Alternatif Bank, who's on the call. During the speakers' presentation, you'll all be put on mute, and I'll join you just before the Q&A. I now hand you over to Joseph Abraham, the Group Chief Executive. Joseph.
Thank you, Zubair, and welcome to everyone. Thank you for joining us today. As you saw, we announced a positive set of results. Our net profit is up 7.9%, and also our operating income and operating profit are also up, respectively by 12% and almost 16%. I think one of the features which people will obviously have questions about is the relatively muted loan growth, 0.6%. As we had guided earlier and signaled that the government, because of its strong fiscal position, was paying down a lot of its overdraft from the banking system. That obviously did happen, but the majority of that has been done.
We would expect that effect will have been fully absorbed, so the second half will revert back to more normalized loan growth, which we see as a 3%-5% annualized rate. If it had not been for the government overdraft, our repayments, our loan growth would have been over 7%. Apart from that, W e are generally in line with our guidance. Our total capital at 17.5% is slightly below our 18% guidance. This is because of the volatility in the bond markets, which obviously have had some impacts. Some of our HTM bonds are obviously having some impacts. We remain comfortable with the underlying credit risk. Apart from that, the outlook for the second half of the year remains positive.
We have the World Cup coming, which will add to a boost in terms of, I'd say more retail sort of spending, because most of the projects are already over. I would say that the North Field expansion, the continued high gas prices will lead to positive outcomes for the Qatar economy over the course of the next 12 months. We still remain positive on the outlook economically, which as I had said earlier, is probably one of the best over the last five years, at least. I'll hand over to Rehan, who will go in more detail through the financials and then we'll be happy to answer any questions you have. Rehan.
Thank you, Joseph, and Good Afternoon, everyone. I'll focus on slide eight, which shows the quarter-by-quarter performance as well as H1 of this year versus H1 of last year. T hese normalized numbers exclude the impact of IFRS 2 on both the income and the cost side as a result of the staff performance scheme that we have. This is a fully hedged scheme, and therefore there's no impact at the operating profit level. I t's the same number both in the normalized and the reported columns. I'll discuss the normalized numbers, and this gives you the underlying performance and trend of the bank.
In addition, T hat we have the impact of IAS 29, hyperinflation pertaining to Turkey. The implementation of this is effective from January 1, but in this presentation, we've taken the entire impact in the Q2 of this year to ensure that Q1 is in line with the earlier reported numbers, which was QAR 702. That therefore means that QAR 730 is the normalized profit for Q2, which means QAR 1,432 is the overall profit for the first half of this year. This is an increase, as Joseph said, of 7.9% year-on-year and 4% quarter-on-quarter.
If we just look at the balance sheet, initially, T he loan movement is 0.6% year-on-year, but 2.9% quarter-on-quarter. We do have momentum, but overall, the loan growth has been impacted by the government repayments. We saw the last of that earlier this month. Net growth is likely to be muted as a result of these settlements, and also those that we're working on in our non-performing loan book. Deposits have increased by 8.5% year-on-year and 5.7% quarter-on-quarter. The market remains very liquid and our deposit mix has actually improved further with a growth in our low-cost deposits of 11% year-on-year.
That's helping us manage our cost of funds. Within operating income, our net interest income has improved by 10% year-on-year and 5% quarter-on-quarter. In addition, Our non-fund income has increased by 18% year-on-year and 27% quarter-on-quarter, mainly due to an increase in our fees, our FX, and also our trading income. Overall, you can see our operating income has grown by 11.7% year-on-year and 9.8% quarter-on-quarter. We continue to have a strong cost discipline. Our costs overall year-on-year are broadly flat. That we expect to continue in the second half of this year as well.
Our cost-to-income ratio as a result has reduced from 25.3% in the first half of last year to 22.6% in the first half of this year. Mainly driven by an increase in the operating income. On the provision side, we'll continue to be conservative. We gave a guidance that our cost of risk will be around 100 to 110 basis points for the year. We're in that range right now. NPL ratio is slightly below Q1 of this year and slightly higher than H1 of last year. We are continuing to work, O n settling those NPL names. We expect to see some of those results coming through in the second half of this year.
In addition to this, We see very good growth in our associates' income. Both NBO and UAB have seen a continuing increase in their profitability. The Commercial Bank is working closely with both of those entities in the execution of their strategies. Last, just coming to hyperinflation. T he non-cash net monetary loss is QAR 69 million. Overall, the impact is QAR 93 million across the various lines, including the non-monetary loss. Those are absorbed within operating income and costs and tax. The overall impact is QAR 93 million that comes through in the first half of this year. We would expect that kind of number to continue in the second half of the year, depending very much on the monthly inflation rates.
Let me hand you over to Kaan Gür, CEO of Alternatif Bank, and he will talk more on the macro side of Turkey as well as Alternatif specifically. Over to you, Kaan Gür.
Thanks a lot, Rehan. Mr. Rehan. I would like to give some snapshots about the Turkish macroeconomic expectations. Starting from the GDP, I can say that GDP growth is expected to moderate to potential levels in second half of year. Actually, we are expecting almost 4% the growth as annual growth. The thing is here, especially the current account deficits, the trends. We have seen that elevated energy costs may keep the current account deficit to GDP level at 4% as year ends. The most important thing is t he CPI. increased to 78.6% in June and expected to still rise until October before starting to decline by end of 2022.
Another important thing I would like to share, the expectations about the CBRT. We don't expect that CBRT is going to make any adjustments, increase on the policy rates. The overall expectation is CBRT to keep rates stable. I rather would like to draw your attention to page 25, A kind of snapshot of Alternatif Bank's first half financial performances. I would like to say that especially again, A strong quarter for us. We were very cautious. We selectively grew and 25% total asset size is one of the important performances.
When you look into loan breakdown especially, I would like to emphasize that our reshaping effort is ongoing and our Turkish lira loan share as of June, 58%. Which is increased by 11%, when you compare to December 2021. You can see that this is a conversion effort and our foreign currency loans decreased by 18%. We are going to focus on that. In the same time, on the deposit side, especially our Turkish lira funding costs, we are benefiting from the FX-protected deposit scheme. 50% of our total deposit is almost a FX-protected, lira deposit product.
Allows us to minimize our overall Turkish lira funding cost, including of course the central bank swap facilities. Those are i mportant factors in order to increase our Turkish lira balance sheet spreads. Our asset quality has been improving thanks to our NPL very limited NPL inflow, very strong collections. Our bank-only NPL ratio is below 2%, 1.7%. When you compare to private bank sector NPL ratio is above 3.2%. All in all, second quarter was at a very balanced, very selective the growth on our side.
When we come to especially the profitable side, I can say that 38% quarter-on-quarter increase in our operating income that was supported by the net interest income, our trading and other income, and net fee and commission income. It means that actually we are in the market selectively growing there. Our customer base expanding. New business are strong. T his is in the same time very selective approach. As I said, our Turkish loan deposits spread is improving. A nother important thing is living in a high inflation environment, the OpEx. Actually, our OpEx is managed well significantly below year-on-year and quarter-on-quarter performances when you compare the inflation.
On the bottom line, I can say that the second quarter our total profit is TRY 218 million, which is 65% higher than first quarter. Of course, as Mr. Rehan underlined and emphasized the IAS 29 transition. After offsetting those, actually our final net profit reached to TRY 231 million. The most important is especially for coming months, quarters, actually the net profit should beat the inflation. Then actually we are ready to the performance in that way. I would like to end up here. If there's any question I'm ready to answer. I'm handing you Zubair. Thank you, Kaan. We will now start the Q&As.
If you wish to ask a question, please use the raise hand feature. If your name is announced, please unmute your device, state your name and organization, and ask your question. Once your question is answered, please mute yourself to allow others to ask their question. You could also send a message and we will pick up the questions from there. We have our first question from Chiradeep Ghosh. Chiradeep, please go ahead, unmute yourself and ask the question. Chiradeep, we cannot hear you.
Can you hear me?
Yes.
You can hear me, right? Hi, this is Chiradeep Ghosh from SICO Bahrain. Two very quick questions. First one is, we see that in Turkey, the NPL has become quite. Th e asset quality has remained quite well, quite strong. Although it's slightly counterintuitive that in an environment of such high inflation we would have expected asset quality to deteriorate. If you can share with us some ground reality of how is the scenario there? What do you expect asset quality going forward? That would be my first question. Second one is about the hyperinflation. A very quick one. Beyond the profit at the comprehensive income level, we see over the six months, CBQ actually made a hyperinflation gain of roughly QAR 2 billion.
Does it have anything to do with the QAR 1.8 billion of FX translation loss, which you made, over the six months? these are my questions.
Kaan, will you take the third one? Okay. I'm gonna answer that. Thanks for the question. First of all, I can say that within the last four years, actually, our overall lending appetite, we were very selective. As I said before, actually we are converting our overall balance sheet, especially from FX to Turkish lira, and we build up very strong and solid new customer portfolio, especially on corporate and large commercial side. At the same time, I can say that actually we don't expect any surprises for upcoming months in 2023. We have very prudent provisioning, policy.
At the same time, T he inflation during that time, it kind of enabling us to improve the evaluation of the existing collateral portfolio. We are good at the collection side. There is no NPL, very prudent provisioning and limited cautious, but very selective lending approach in the best customer, especially in the market. This is a better differentiation of Alternatif Bank, especially in the market. I can say that.
Going forward, how do you see the asset quality?
The quality, we're going to keep that. This is the main and major, let's say, the target of the management. We don't expect surprises. I n overall, especially, starting from second half 2% level is going to be a solid base, NPL rate for the end of the year.
Although there are some volatilities, but we believe in our strong and solid, newly built up customer portfolio, so.
Thank you.
Thanks a lot.
Chiradeep, for your second question, you're right. The QAR 2 billion and QAR 1.8 billion kind of net off each other. That's why we say that the impact to equity and on capital ratios is minimal. Because the marginal gain that we get in the capital is offset by some increases on the RWAs.
Oh, perfect. That's all from me. Thank you very much.
Thanks, Chio. Our next question is from Edmond Christou. Please go ahead, unmute, and ask your question.
Hello. Hi. Thanks for the presentation. Can you hear me?
We can hear you.
Okay, excellent. First question, I f I understand this correctly, is you mentioned that the hyperinflation impact for the second half of the year will be similar to the first half. There is a larger adjustment in 1Q of QAR 65 million compared to QAR 4 million in the second quarter. What is the assumption you have in terms of inflation by the end of the year to make an assumption that you will have another QAR 69 million by the second half of the year, if I heard that correctly? The second question I do have is, it seems to me, just looking at the numbers initially, that the margin for the corporate side domestically has come under pressure sequentially.
Is this due to rising cost of funding and the impact of rate differential between the central bank on the lending or the deposit rate? How you expect the bank to perform in the second half during Q4? Do you expect Q4 to see margin widening domestically improvement into next year? The last one, when I look at the presentation also quickly, loans sequentially has been good compared to the peer. You've grown the public sector. I think the repayment impact for your bank was lesser than the peers. It was quite interesting to see the real estate up to 20% from 18. Do you see more demand on that sector compared to the public sector? Does it change your strategy or goal going forward? Thank you.
Thanks for those, Edmond. I think first of all, in terms of hyperinflation, at the moment, we're forecasting a similar impact in the second half of the year, QAR 90 million-QAR 100 million. That's based purely on having similar inflation in the second half of the year to the first half. It's as simple as that. We are bound to see some fluctuations in inflation rates month to month. It is a monthly calculation that we'll be doing. We, at the moment, our guidance is similar in the second half to the first half. Your second question was on net interest income and net interest margins. Our guidance was that we would increase our NIM by 10 basis points this year versus last year.
We're at around that level now, and we expect that to continue in the second half of the year. Repricing has taken place in the second quarter of this year, especially post the announcements by the central bank for the increases, both in the loan rates and the deposit rates. Y our third question, Edmond, was around the composition of the loan.
Real estate and public.
Basically, the composition has changed purely as a result of those repayments by the government. Not, it doesn't change our strategy in terms of focusing on that sector and reducing the real estate. There may be t here will be some changes during the course of this year as a result of those repayments. They just change the percentages a little bit, but it doesn't change the long-term strategy of the bank.
Okay, thank you. Can I fol-
Just to clarify.
Yes.
Just on the guidance, forward guidance for the hyperinflation. The QAR 69 million is a figure which has been cushioned a bit by some release of what we call free provisions, which we had some buffers that we had built up in Turkey. The real figure would be about QAR 93 or QAR 100-
QAR 93 million.
QAR 93 million.
Yes.
Going forward, if assuming this continues, then we should expect QAR 10-15 million per month as the hyperinflation accounting effect for the remaining, T he rest of the year and ongoing.
That's right.
Okay. Makes sense. QAR 93 million impact, okay, on the income statement. Okay. Perfect. Sorry. On Turkey, do you expect higher spread in the second half of the year to continue to benefit from Turkey inflation, CPI, and the cost of funding?
I would like to answer this question. Thank you for the question. Actually, in the new context of the macro-prudential measures, especially announced by the CBRT and the BDDK, actually, those are a kind of limitation of the Turkish lira lending efforts. So actually, we are going to keep with our existing net interest margin on the, especially Turkish lira, book. So we're going to defend our existing levels, especially, for the second half.
Okay, understood. Thank you very much.
Thank you.
Thank you, Edmond. Our next question is from Waleed. Waleed, please go ahead and ask your question.
Yes. Thank you much. Waleed here from Goldman Sachs. Three quick questions from my side. Number one on credit growth outlook. De spite the repayments that you mentioned on the public sector side, still pretty healthy growth overall in this quarter. I just wanted to get a sense of your outlook for the rest of the year. Should we expect a continuation of growth emanating from commercial and real estate sector? Or where do you see the growth coming through on the credit side? That's the first question. Secondly, A s you mentioned, a pretty impressive expansion on the deposit volumes, and you attribute it to mainly the low cost deposits.
If you could talk a little bit about the strategy and what's been successful because in this particular quarter we've almost had around QAR 5 billion of kind of new net deposit origination. Any color on that would be very helpful. My third and final question is for Kaan Gür on Turkish NIM. In the first couple of quarters, it seems the FX-protected deposit scheme has obviously helped in terms of T urkish lira deposits and keeping that Turkish lira deposit cost at around 17%. We've been hearing that the deposit costs are starting to go up substantially on Turkish lira. Wanted to get a sense of how would you defend the NIM?
Because you mentioned that you intend to defend the NIM. Is it gonna be through CPI linkers, or anything else, which would help you defend the NIMs, especially in a period where TL deposit costs are going up? Thank you.
Can I start, Rehan, or?
Yes, please Kaan Gür.
Thanks a lot. Thanks for the question again. The first thing is I would like to say that it's a kind of, the better mix to manage our cost of funding on the Turkish lira side. Of course, yes, you're right. We have seen some raises on the Turkish lira deposit rates, standard Turkish lira deposits actually. In the same time, actually our focus on the low cost deposits, demand deposits, thanks to our very strong, new customer base, so actually help us a lot. In the meantime, when you look into especially, the lending yields, we have seen a kind of, the parallel rise on the yield side.
That's why I'm saying that even though the cost of funding is going to increase, but in the same time we have room to manage and adjust our especially lending yields. Actually we are on the safe side and if we successfully defend our existing position, it's not going to be any, let's say, decrease on our Turkish lira net interest margin side. We are in the market, we are doing new businesses. it's not going to be case for us even, it's not going to be any, let's say, macro disruption in the Turkish economy. I can say that.
Thank you, Kaan Gür. With regard to the first part of your question about credit growth, our expectation is that, in the second half of the year we'll do an annualized 3%-5% growth. Part of that is due to t he last quarter, particularly, when the World Cup is on, we'll see a slowdown in sort of new loans with this period because people are otherwise occupied. That's just our why we're anticipating that. We are going to try and do whatever we can in this quarter and the early part of the last quarter. In terms of where it's going to come from, the credit growth is still going to be...
The World Cup will have. Mo st of that is already done, most of the infrastructure spend and around that piece. W e might see some incremental, S pending. T he majority of it is going to be coming from continued expansion of the infrastructure of the country in areas like the North Field expansion. There's certain onshore works which have to be completed or there'll be associated, whether it's shipping, et cetera, associated facilities and services linked to the North Field expansion. The second will be also around expansion of the country's infrastructure, like the airport, et cetera. The contracting sector will continue to be involved in that, and we will see some business as a part of that.
I think normally we think there'll be some on the retail side, some residential property growth, mortgages, et cetera. They're coming primarily from Qatar's residency program, which I believe will get a pickup, not so much in this year, but next year, from the visibility from the World Cup. Overall, that's where we see it, but we do see perhaps a little bit of a slowdown. No, not slowdown, but just because people are busy. The last two months are probably not gonna be that active in terms of new loan booking. It's the next three months which are critical.
The other question, Waleed, you had was regarding the deposits strategy. Look, on the low cost deposits which I mentioned earlier are up 11% year-over-year. This is really a function of the products that we're focusing on, such as remittances, payments, and cash management. They do mean that more funds stay with the bank, more funds come into the bank, and stay longer with the bank. That's really a prime reason for the increase in deposits.
That obviously helps our cost of funding. Secondly, as I mentioned, the market is very liquid, with high energy prices, the repayments of temporary overdrafts, et cetera. That has meant that we've been able to pick up additional deposits. We're certainly not chasing on rate side, and that's why we've been able to maintain our net interest margins and actually increase them from a year ago when it was 2.6% to now 2.8%. Hopefully that answers your three questions.
Yes. Thank you much. That's very clear. Thank you. I would like to add to Mr. Bilandani's question actually regarding the Turkish net interest margin. Actually, the first one is, this is ongoing repricing our existing portfolio. we have chance to reprice it, so it's ongoing effort. It is very important. At the same time, we are working on the working capital, loan side, very short term, portfolio we have been building up. Those are the enablers in order to manage our net interest margin on the Turkish side. Thank you.
Our next question is from Rahul. Rahul, please go ahead and ask your questions.
Hi, this is Rahul Bajaj from Citi. Thanks for the call. I have three quick questions, if I may, please. The first question is kind of a follow-up of the previous one, which was asked, I'm not sure if that was covered. This is on the NIMs in the wholesale business. If I look at the segmental disclosure, NII for the wholesale business remain pretty flat, but assets have gone up. You've picked up loans there. So NIMs have definitely compressed in the wholesale, on the wholesale side, in Qatar. Just wanted to understand, what is driving this? are you kind of trying to gain market share here, with some compression in margins maybe, or this is just cost of funding related?
Any further color there would be useful. The second question is on lending growth. Again, asked earlier, but kind of a follow-up on that. There's been a lot of talk about government repayments and how this is impacting sort of negative loan trajectory in Qatar, year to date. Just want to understand from where you are, how far or how long do you think this repayment cycle could continue? I s there a level where you think, even if oil price or gas price is at current levels, is there a level where you think that the government might just stop repaying or any specific kind of loans, maybe overdrafts they want to draw down completely?
Or do you think this is a cycle which might continue for the foreseeable future? That's my second question. Third and final question on cost. If I look at the adjusted cost number, it appears to be up quite significantly quarter-over-quarter, actually more than 10%. Just wanted to understand, is there any one-off there? Anything I should know in terms of the cost increase? Is this the normal run rate? Thank you.
Thanks, Rahul. Let me take those. I think firstly, NIM in Qatar. what we see and what you don't see is that the loan growth happened right at the end of Q2. And therefore, there isn't the interest income impact of that loan growth. So obviously when you look at it on an average basis, there's no NIM compression. And obviously you're looking at period end to period end, which will give you a different number. So that's the reason why our NIMs are maintaining not only at domestic level but at consolidated level as well. So that's on an average loan book basis.
Second, on the lending growth and the repayments, Y ou might have missed what I said, is that the last of the repayments was made earlier this month. As of now, we are completely zero in terms of those temporary overdrafts. That cycle has finished as far as The Commercial Bank certainly is concerned. Thirdly, on costs, you're quite right, quarter-over-quarter there is an increase. Actually that is wholly related to the hyperinflation adjustments. As I mentioned, the adjustment that is visible is the QAR 69 million, which is the net monetary loss. But there are adjustments within lines as well, which is around QAR 48 million up on income, but QAR 30 million up on costs.
That's why you will see that change in quarter-on-quarter. Hopefully that helps you in terms of your modeling going forward.
Understood. Thanks, Rehan. Just one quick follow-up on the second response. You mentioned that the last of the repayment was done on the government overdraft. Correct me if I'm wrong, I see central bank data, it says that, of course, the majority of repayment is coming on overdraft, but even the other part of the lending beyond the overdraft to the public sector is compressing. So are you seeing repayments on that part of the book as well, or for you it has been totally concentrated in the overdrafts?
We haven't seen that, but certainly what we have seen is delays in new lending on governments. Ones where we've been working on with public sector, they've been pushed back. What might have happened without those energy price increases maybe in the first and second quarter are now slated to be done later in the year and even into next year. Certainly delays in new lending in that sector.
Understood. All clear. Thank you.
Sure. Our next question is from Varuna Kumarage. Please go ahead, Varuna, and ask your questions.
Hi. Thank you very much for this opportunity. I have couple of questions. One is a follow-up on the hyperinflation accounting. I want to just understand now if I'm to refer to slide number 25, in the Alternatif Bank numbers, because you give a comparison between six months numbers before and after the IAS 29 treatment. I want to understand whether this net interest income, the difference, is it because of CPI linkers impact, which is offsetting part of the net monetary loss effectively? That's the first question. The second question is on the provision reversal here. That essentially means that at the group level you benefited from this the provision reversal. The provisions that we see at the group level is net of this reversal.
Is that the correct way to see it? Those two are my questions.
Yes, Varuna, that's correct. Obviously, the numbers you see are net of that reversal. We had started building up additional provisions from Q1 of this year in anticipation of IAS 29. Obviously it had been announced earlier by the Big Four that they had decided that Turkey would be in a hyperinflation situation. And implementation would be in the second quarter, but it would be effective from first of January. Hence, we started building up those provisions, which we've now used against that to offset the overall impact. Yes, that's quite right. In terms of CPI linkers, yes, they are part of the overall alternative numbers.
At group level, just to keep it in perspective, they represent less than 0.5% of our interest income. It's a very small part of the overall group number.
Okay. Right. Thank you very much. Just one, if I am to add one more question. Now, this E arlier question, one of the members in the audience asked about this other comprehensive income, the gain that you recorded. So I just want to understand what is really driving this, because my understanding was that the net monetary loss that you record in the P&L is kind of equity neutral, so that gets offset. But the magnitude of the gain is far higher than what you record here. So will you be able to, shortly explain this? Or maybe we can take it offline.
Yes.
Time consuming.
Varuna very shortly, the P&L shows the impact of this year. In the equity, you see the impact of priors. Just very short and sweet. We can explain more. If you want more details, you can get in touch with me directly.
Thank you. that's it. Thank you very much.
We have two questions on the messages. One is for ABank. Kaan Gür, ABank reported TRY 218 million in Q2. How much of this was due to re-indexation from hyperinflation? This question is from Vikram Viswanath.
Actually, Rehan, maybe you can go on with that because, you know, the net loss from the expected indexation is -TRY 86 million. After the provision reversal then, we are going to end up with the final net profit, TRY 231 million. This is the overall impact of our side's on the profitability, figures.
Thank you, Kaan Gür. The last question is from Rohit Raj: What is the driver of the sharp increase in Forex income, Turkey or Qatar? This is the quote from him.
On the FX side, definitely, in Qatar, we have seen an increase in sales. As I said, remittances is an important part of our strategy, and that's helping drive up the income. In terms of Turkey, there is a little bit of a swing. They did have FX trading loss in the first half of last year versus a positive contribution in the first half of this year. There is a variance from a negative to a positive that's helping the overall number. Kaan Gür, anything you would add to that?
I totally agree with you. Maybe I include that our especially treasury transaction especially on the business side was very strong. I can add that.
See.
The trading, of course, right?
We have one last question. We'll take that from Edmond Christou. Edmond, please go ahead.
Hi. Just follow up on the Forex. So is my understanding correct that you believe Forex, at least in Qatar, is sustainable in the second half of the year? Or this is a factor of volatility in the market? Also on the fees, I can see the fees has dropped sequentially. It will make it very difficult to see what is the run rate for the second half of the year, and we have the World Cup. So is the second quarter a good run rate for the rest of the year or go back to 1Q? And the last one is on Turkey. CPI bonds portfolio, what is the percentage of the total credit exposure? Because you mentioned the balance sheet is fully hedged.
Just wanna understand if there is a room to increase the CPI bonds to mitigate the impact of hyperinflation? Thank you.
Okay. Certainly in terms of Edmond Christou, in terms of FX, there's no one-offs in there, so it's sustainable in the second half of this year. Fees also, we've certainly been working on fee income generation. Again, we think that first half of this year is a good reflection of what we expect in the second half of this year as well. In terms of the third question on CPI linkers, Y our question is more around capacity to grow that any further. Kaan Gür, would you take that?
Actually, I can say that, CPI linkers, as a total, the securities portfolio is around 26%.
In Turkish.
In Turkish securities portfolio. This is the existing portfolio structure. I can say that 26% of the total Turkish lira securities portfolio is CPI index.
I believe there is a room to increase it in the coming quarters just to mitigate some of the
We have certain attempts in order to build up more. We are on the track in order to find a proper timing in the market.
Thank you.
We have one last question from through a message. This is from Afifi. My question is on staff cost. In the first quarter, there was SAR 111 million as performance related cost, and the second quarter this number is 86. Is this number cumulative? T he full first half is 86 or 181.97. Afifi, the full first half is 86. The staff performance related cost is a direct link to the Commercial Bank share price movement. In this quarter, the share price fell, and that's why you're seeing the 111 cumulatively become 86. That's all we have from questions. Joseph, any closing comments, please?
As always, thank you very much for your interest in The Commercial Bank and all the reports which you write, which we find very informative. If you have any questions, please feel free to contact Rehan or Zubair. We're always open to providing further details. Thank you very much again, and we'll see you again at the next quarterly call. Thank you.
Thank you. Bye for now.
Bye.
Thank you.
Thanks a lot.