Hello and welcome to the Qatar Islamic Bank earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at this time, just press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press star one again. Thank you. I will now turn the call over to Shahan Keushgerian. You may begin.
Thank you and hello everyone. I want to welcome you to QIB's second quarter and first half 2026 financial results conference call. On this call from management, we have the bank's Chief Financial Officer, Gourang Hemani, and Vinay Balakrishnan, Head of Business Reporting and Budgeting and Investor Relations Officer. As usual, we will conduct this call with first management reviewing the company's results, followed by a Q&A session. I will now turn the call over to Vinay. Please go ahead.
Good afternoon, everybody and welcome to the Q2 2026 results call of Qatar Islamic Bank. We'll quickly take you through the main highlights for the first half results for 2026. We're pleased to inform that Qatar's QIB has reported a net profit attributable to shareholders of QAR 2.23 billion for the first half of 2026, representing a 2.3% growth against the first half of previous year, 2025. The net profit attributable to shareholders for the second quarter of 2026 was QAR 1.24 billion, representing a 4.2% growth against the corresponding quarter of the last year. The total assets of the bank now stand at QAR 234 billion, which is up by 5.9% versus December 2025 and up by 10.4% compared to 30th June 2025. Core activities of the bank represented by financing and investing activities continued to grow in the second quarter of 2026.
Financing assets as of 30th June 2026, now stand at QAR 156 billion, having grown by 12.9% compared to December 2025, up by 19.6% compared to June 2025. Investment securities at QAR 60.4 billion as of 30th June 2026, higher by QAR 177 million as compared to December 2025 and higher by QAR 326 million as compared to June 2025. Customer deposits stand at QAR 148 billion as of 30th June 2026, registering a growth of 3.9% compared to December 2025 and up by 9.8% compared to June 2025. The credit to deposit ratio as per QCB guidelines is 97.8% as of 30th June 2026, which is one of the lowest among its peer banks in Qatar, reflecting the bank's strong and stable liquidity position.
The operating income, which is net of profit attributable to QIB equity holders for the six months period ended 30th June 2026, was QAR 3.44 billion, as compared to QAR 3.3 billion for the six months ended 30th June 2025. Net income from financing and investing activities stand at QAR 5.1 billion for the six months ended 30th June 2026. The total operating expense of the bank was QAR 566 million for the period ended 30th June 2026, representing an increase of 5.2% as compared to the first half of 2025. The bank was able to maintain its cost to income ratio at around 16.4%, which continues to remain the lowest in the Qatari banking sector.
On the asset quality front, QIB was able to manage the ratio of non-performing financing assets to total financing assets at 1.49% and maintaining a healthy coverage ratio for non-performing financing assets at 95.1% as of 30th June 2026. The bank continued to build total impairment provisions of QAR 3,362 million in the first half of 2026. The bank was also able to improve its stage two coverage ratio to 9.03% against 8.5% as of 30th June 2025. These actions taken by the bank reflect the bank's strong risk management framework as well as a conservative provision policy. The bank continues to closely monitor the evolving geopolitical situation, is undertaking ongoing assessments to evaluate any potential implications on its operations, if any. The capital adequacy ratio as per the new Basel guidelines is a healthy 23.3%, giving us sufficient cushion for continuous future balance sheet growth.
Having taken you through the key highlights of the financials, I hand it over back to Shahan to take it to the next Q&A sessions. Thank you.
Okay. We can go ahead and start the Q&A session, please.
We will now begin the question- and- answer session. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. And again, if you would like to withdraw your question, just press star one again. Thank you. Our first question comes from the line of John Peace with UBS. John, please go ahead.
Thank you very much. My first question please, is there any update on the key line item guidance that you've given us before around loan growth margins, cost income ratio, et cetera? Also, I know you normally don't guide very much on the cost of risk, but how should we think about the second half of this year? Do you still expect to see good asset quality or is there any need to build any sort of forward-looking provisions? Thank you.
Thank you, John. Just to by, the, having the staking forward to Vinay had said right. If you look at the numbers, I think so far we have significantly exceeded our guidance in terms of the loan financing book growth. I think excluding acceptances, our year-to-date growth is roughly around 11%, while including acceptances is slightly higher. I'm sure it's going to come as a follow-up question, which I would like to answer it here. The majority of the growth that we have achieved, especially in the second half of the year and large part of the growth in the first half of the year, comes from government and government-related entities. If you would look at it, our share in government business has gone almost up to 10%-11% area.
This is what has been some significant transactions that we have been able to participate in and basically take a lead in. That has resulted in the growth in the financing book. Some of the deals have been done on a syndicated basis where we are the lead syndicate. Then maybe some kind of a sell-down could happen on that portfolio as we go into the second half of the year. However, on a full year basis, we expect our loan book to remain around the current levels, unless and until there are any opportunities that we see that come by. As of now, we expect to sell down some of these financing, which will be replaced by the normal organic growth that we get in terms of our regular private sector book that we have.
We update our loan growth from 6% range that we had given to almost 10%-11% range. However, as I mentioned, majority of the growth has come in the government and government-related entities business which carry lower margins compared to the regular private sector businesses that we do. That could have a bit of an impact on our margin. We expect the margins to drop by 5 to 6 basis points given the change in the asset mix that we have seen in the first half of the year. Other than that, on the cost of risk, as I said, we don't see any major change in the asset quality. Overall absolute NPF levels have remained around the same levels at the beginning of the year.
No major so far as we had even told in the previous call that so far the majority of the impact that we see because of the ongoing geopolitical scenario on the macro front is more in terms of the public sector side of it or the government side of it, where the revenues from the hydrocarbon have really kind of got impacted because of lack of exports. On the private sector side, so far it seems to be fairly well managed and nothing major change as we have seen. We don't see any major impact happening on the asset quality front and that's why the cost of risk continues to remain more driven by what is going to be the operating performance of the bank rather than the pure need in the deterioration of the asset quality. Hope that answers the query.
Very good. Thank you.
Question comes from the line of Murad Ansari with GTN. Murad, please go ahead.
Yes, thank you and good afternoon. Just following up on your loan growth comment. In previous years, we've seen government borrowing gradually getting paid back or repaid towards the end of the year. From your commentary, it seems that this is more of a longer-term lending that has happened in this quarter. Just wanted to confirm that and if you can.
Yeah, I can confirm that these are not overdraft, but these are project-related financing, et cetera. These, we are not expecting any major repayments. However, as I mentioned, some of them are syndicated transaction where we may sell down to reduce our exposure. Contractually, there is no repayment conditions till the end of the year at least.
The acceptances amount is the difference between the 11% growth and the headline growth. That would be the. Has there been any growth in acceptances in this quarter as well?
Yes, there has been. The acceptances in this quarter have increased by roughly around QAR 1.3 billion, QAR 1.4 billion equivalent. These are all closely linked to the long-term deposits that we are attracting from the customers. These are seven-year deposits that get repriced annually that we have taken from customers and against which we have issued acceptances. It's effectively, if you see there is a corresponding increase in the other liability section of the bank. For all your calculations purposes. You can take out roughly QAR 8.96 billion of acceptances which are there at the end of second half.
Great. Thank you.
At the end of the first half.
At the end of the first half. All right. Just two more things. Margins appear to be quite strong in this quarter, and the other bit is the fee income. If you could just comment on those two.
The margins have been decent. Sometimes the margins calculations do get impacted based on the timing of the growth, et cetera. I would request you to go with the revised guidance that I just provided, where we expect the margins to really, compared to last year, the margins will be about 4 to 5 basis points lower because of the fact that these are more governmental endings, which are guaranteed by Ministry of Finance, et cetera, which carry lower yields compared to the private sector lending, financing that we would do.
There was no one-off in the interest income, as in interest and suspense recognition, et cetera.
There is no one-off at this point of time. It's all regular income that we continue to generate. On the fee side, as we had mentioned in the previous quarter as well, to say that, don't look at quarter-by-quarter fees. Sometimes it do get impacted based on how the recognition of the revenues are going to happen, et cetera. Especially the March of last year, March in Q1 was impacted more significantly by the ongoing geopolitical situation. We see strong recoveries, at least in the areas of cards income and other retail banking income. The area where we believe we are behind what we would like to achieve is on the trade-related income. Hopefully that should also recover as we keep going forward.
Overall, I think the fee income growth compared to last year is low single digit 3%-4%. Our target is 4%-5% by the end of the year, should be around that level.
Thank you. One last question. If you can, on the loan deferrals, if you can give any ballpark idea of how big that has been for you?
It's not been very large. Again, just to say, the financing deferrals, majority of them are just a delay in payments, but all these delayed payments, majority of them, you continue to accrue profits on them. It's not that they are profit-free deferrals, it's just that the deferrals are done giving them more time to repay. They all attract the same profit rates that they were doing based on the original contracted rates.
Thank you so much.
Okay.
That's it from me.
Thank you.
Our next question comes from the line of Ejayan Al-ahbabi with Al Rayan Investment. Ejayan, please go ahead.
Hi. Thank you. Sorry, this is Lee, using Ejayan's line. I just have three questions. The first is just to confirm that the growth in the acceptances that was also linked to deposits. It's booked under the deposit line, growth in deposits as well as other liabilities? I just want to clarify that point. The second question I have is, the tax rate that's being applied now for two quarters, is that likely to be the tax rate that will be applied for the rest of this year as well as going forward into 2027? The third question is, any comments on dividend payout?
Okay.
Thank you. Just these three questions.
So, Lee, on the first question is that yes, when we accept those long-term deposits, they get booked as deposits like any normal customer deposit that we take. However, any acceptances that we are issuing against them, one leg of it sits in the financing, the other leg sits in other liabilities. Effectively, in some countries, they're even treated as off-balance-sheet. Some jurisdictions they get booked as other assets and other liabilities. Currently, they are being booked under financing. The acceptance leg gets booked under financing and the other leg sits in other liabilities. If you want to do a fair calculations in terms of return on assets, return on financing or anything, you need to take it out from the other liabilities as well as from the financing.
On the tax side of it, I think for 2026, yes, the tax rates continue to remain the same. What you have seen in Q1, Q2, this is the effective taxation rate that is there. In terms of 2027, I think we still are trying to look into to say that if there will be some announcement that will be made where that will change or if there's going to be a change in the structure in the way our international operations are there. A lot of things are ongoing on those fronts. 2027, we'll give a better clarity as we go into Q3 and Q4, as we speak. In terms of the dividends, I think that overall dividend policy, there is no change. We are not expecting any major change in the annual payout ratios.
It is just because of, given the ongoing geopolitical scenario, the board of directors took a more prudent approach, they said that they decided to, let's say, skip the interim dividend. However, there is no indication at this point of time that the annual dividend policy of the bank is going to change compared to what we have seen in the past, given the fact that we continue to have a strong capital adequacy ratios. We have seen asset growths which are very strong, but most of the asset growth, as I explained earlier, are low RWAs because of the guarantees of the government, et cetera. We still expect the capital adequacy to continue to remain strong, and there shouldn't be any major change in the bank's ability to pay dividends from the capital adequacy ratio perspective as well. Hope that answers the question, Lee.
Yes. Thank you very much. Actually, just clarification. Can you give a bit more details on what's behind these acceptances? They're quite large.
Sorry?
In nature, can you give some extra color on what's behind these acceptances? They are quite large.
Yes.
From which industry, and so on?
It's very directly related to the deposits. I'm sure you've seen the market. Generally, the deposits are taken for six months and 12 months at best are the average deposit tenures which get rolled over. However, to better protect in terms of any potential outflow challenges that could come from non-resident deposits, we coordinated with couple of counterparties, which are predominantly into commodity brokers, et cetera, sitting with surplus liquidities, which they could park with us for a period of seven years. However, given the long nature of the deposits, they want additional comfort in terms of acceptances to be issued against those deposits. These are all non-resident deposits, seven-year, very, let's say, kind of sticky ones. However, to give them better comfort, we issue acceptances for them given that they are much longer. It's a win-win scenario for the bank. As I said, it's a seven-year funding.
You are kind of giving a guarantee on yourself, which is a very normal guarantee that you would give when you are doing any business of banking. Just a comfort that we give to them given the fact that they are giving us seven-year deposit to us. We book the seven-year acceptances as financing in our books.
Thank you.
Sorry. Let me rephrase what I said. We book as a one-year acceptances, but we expect them to roll it over for seven years, over the life of the deposit. These are one-year acceptances, booked as one-year financing, but they are expected to be rolled over for the remaining six years of the life they would have.
Again, if you would like to ask a question, just press star followed by the number one on your telephone keypad. Our next question comes from the line of Rahul Rajan with Bank of America. Rahul, please go ahead.
Hi. Good afternoon. I hope I'm audible.
Yeah, sure, Rahul. Go ahead.
Yes. Thank you so much for the call. A few questions from my end. Firstly, is thanks for the color on the loan growth coming from GREs. Could you help us understand as to what's the sector that this is pertaining to? Is it more relating to the energy sector? You mentioned these are more project-related. Any broad picture on what kind of projects these are being funded for, number one. Secondly, within that is, you also mentioned that you are the lead banker in the syndication, potentially. What is it that is different in this government lending, which was probably different from some of the other lending historically where probably QIB was not the lead? How is this lending different from some of the other typical government lending? That's number one. Secondly is on the deposit side of things.
Again, very strong deposit growth this quarter. I understand part of it is because of the acceptances-related deposits. Even other than that, it's been strong. Could you also give us a color on the type of deposits, how much of it is from GREs or from the energy sector, and how we should see the stickiness of these deposits? That's number two. Finally is, could you also help us understand the sensitivity to Fed rate changes, the NIM sensitivity to Fed rate changes? How do you think financing and deposits will actually play out if we were to see a Fed hike, say, 50 basis points sort of a Fed hike? Thank you.
Okay. Going one at a time. The first question is to say that historically, when the QIB has participated in government financing, they've predominantly been over-draft, a kind of a short-term financing that we've been doing with some projects, et cetera, there. This time, some of the government-related is in real estate sector. That has been put under real estate segment. Some of them are strategic government projects into, some of them could be energy, some of them are other government initiatives that are being taken, which are predominantly longer term funding. These are not, let's say, working capital financing for government, but these are project financing. That's the big difference compared to the previous financing government public sector financing book. In terms of the deposit growth, we are the largest Islamic bank. We are one of the kind of preferred bankers.
We continue to have a very strong retail book. More than 45% of our deposits are retail, having grown 5%. CASA percentage is 31% of the total deposits, up from 29% in December, growth of almost 12%. We have seen government deposits are 33% of our total deposits are government deposits, showing a year-to-date growth of 6%. Overall, we've seen our deposits growth to continue to be well-diversified. The non-resident deposits, which are predominantly, as we explained, a large part of these deposits are from the longer term ones. What we have been doing is when we've been taking these longer term deposits, we have been repaying some of the shorter term deposits. If you'll look into the geographical distribution of the deposits, you will see that our GCC deposits are almost down 20% compared to the end of the year.
The total GCC deposit share is now only 1.8%, so very limited. Some of them are very well-established accounts with significant liquidity, and we don't expect any major repayments coming from there. Even the corporate sector where we classify the longer term deposits, they have also grown by 4%. It's roughly the growth is across all segments of deposits that we have. In terms of the Fed hikes, our assessment is twofold, is that we don't expect any Fed hikes to come till the very Q4, before Q4 of this year, given the various political scenarios that are there within the U.S. markets. As such, we don't see much impact of that coming flowing into this year. However, one big aspect that we need to wait and watch is to say, how does QCB follow the Fed hikes?
There are different assessment goes on at this point of time to say that in some cases, we expect QCB to match the Fed hikes. However, if this war and the geopolitical problems continue, maybe they may not increase the rates in Qatar to avoid putting additional pressures on corporate and retail sectors. There are a lot of ifs and buts at this point of time. However, we don't expect any major impact coming this year. Even if the rate hikes happen in September, October, or something like that, there is usually a lead impact of couple of months at least of them to flow into the P&L. Not much expected in terms of the impact for 2026.
2027, I will give a better picture as we go into the Q3, Q4 numbers, and we have more clarity in terms of whether there is a Fed hike or not, and how is QCB expected to follow them. Hope that answers your queries, Rahul.
Yes. Could it be possible to at least give us a theoretical NIM sensitivity just to understand what is the direction in which the NIM should move?
I am a very practical guy, deal with practical numbers. I've told you we don't expect any major impact for 2026. I would not get into a theoretical calculation impact. The headline NIM impact I've already given, whereby we are expecting the NIMs to drop by four to five basis points compared to last year, given the change in the asset mix, given the fact that we are now taking longer term deposits. All these have a bit of an impact, but other than that, we are not expecting any major impact overall.
Thank you.
The questions of Ejayan Al-ah babi earlier was cut off. We're going next to Ejayan Al-ah babi with the Al Rayan Investment again. Please go ahead.
Salam Alaikum. Yes, can you hear me?
Yes, loud and clear. Go ahead, please.
Excellent. Thank you for the presentation. I want to ask you about the deal with Beema.
Could you give us a little bit more detail about the deal, and when will it be finalized?
For us, in the sense is we were one of the founding shareholders in Beema, where we used to have 25%. When the Beema got listed, the founder members offloaded 25%, and it came down to 18.75%. We have decided to go and further reduce our stake from 18.75% to 5%, so that we are basically focusing on more of our core activities, which is the banking and reduce our exposure to insurance and other sectors. So that's the primary thing. The deal has been completed. As you have seen, the announcements have been made on the Qatar Stock Exchange to that effect.
Will the deal be at the stock market price?
The deal has been done. Because it's a bulk trade, they've been more done on a three-month average basis rather than on the prevailing market price.
What will be the total gain for QIB?
Sorry?
What will be the total gain on for QIB?
We're still calculating the impact. It will reflect in the Q3 numbers. Nothing. If you want to compare it with the overall numbers of the bank's profitability, it is not going to be significantly material. It will be there. There will be a gain, but it's not going to be a very material gain if you want to compare it to the overall balance sheet and the P&L numbers of the bank.
With regarding to the new acceptances, will they be continuing for the next couple years?
As I just mentioned, these are at a one-year maturity, but we expect them to roll over till the maturity of the deposit, so for at least six to seven years.
Can we see in the near future more of these kind of deals, do you think?
Well, as I said from the bank perspective, we believe it's an amazing opportunity that we are able to attract longer-term funding from depositors. Normally, if you want to get any five-year or a seven-year funding, you would have to go to capital markets route, which is basically through Sukuk's, et cetera. This is almost equivalent to getting a longer-term funding which is matched with Sukuk, but they are very well priced from the bank's perspective. They qualify for all the various regulatory ratios in a much better way. If there is an opportunity, we would definitely continue to explore. However, I think when we have crossed more than $2 billion, there is also a limit up to which you would like to go to avoid significant concentrations on a particular maturity profile as well as the particular instrument as well.
Thank you. Thank you very much. Very clear.
Our next question comes from the line of Chiro Ghosh with SICO. Chiro, please go ahead.
Hi, this is Chiro Ghosh from SICO. A couple of questions. The first one is, in a high interest rate environment, we tend to see a relatively weaker retail loan growth, and the demand is usually less. For QIB, this still appears to be quite strong. If you can give us some clarity on that, the retail loan growth. That is one. The second one is a more understanding technical side from my end. Whenever you sell down your syndicated loan, what is the impact, excepting that your loan book comes down? Do you make some fee gain or is there any other benefit which you have or it's just your loan book goes down, basically? You're freeing up capital. Yeah. These are my two questions.
Well, in the retail, I think we continue to say that what you see retail growth is not something new. We've seen similar growth even in the previous higher financing, higher interest rate time periods as well, as well as in the lower interest rate periods. This is a normal business. This is where customers, if they are looking for financing, especially on the retail side, they would come and take the financing. There tends to be a bit of a competition in the market and in this segment especially. As you know, that since majority of the, almost all of the retail financing are backed by salary. If the customer's salary is there with you and if they're overall happy with the customer relationship, the relationship with the customers have with the bank, et cetera, they tend to continue to deal with you.
I think that's where the retail Islamic banking franchise that we've built over the years and being the market leader out there continues to reflect the growth that we see. In terms of the syndication, we don't expect to make any significant gains when we reduce our exposure. It's just the lending book would go down and you would see the concentration which is there in the government sector might come down a little bit, but that's what it is.
Just one quick question. Are you seeing any weakness in the real estate sector impacting collateral value on those parts?
Nothing much in the sense that we've not seen much of the impact on the real estate valuations or anything like that. I think Qatar, compared to other regional countries, is in a bit of a better shape, given the fact that a majority of the real estate financing has been done to local counterparties, whether it be individuals or corporates, et cetera. The prices have never gone up because of some external demands or reduction in demand that which certain geographies in the region are more exposed to. From that perspective, it's a kind of an environment whereby it's more owned locally, funded locally, so that the prices tend to be more, let's say, sticky, both on the upside and the downside perspective. We've not seen any major drop in the valuation. As you know, Chiro, right?
Qatar, if you compare with other, even though maybe almost 90% of the population is expatriate, the expatriate ownership in real estate would be in single digit kind of a scenario. From that perspective, it is not exposed to external inflows and outflows, if you compare with some of the other regional countries.
Okay. Makes sense. Very clear. Thanks.
Our next question comes from the line of Murad Ansari with GTN. Murad, please go ahead.
Okay. Thanks for the follow-up question. Just on the dividend, just to confirm that this skipping of interim and switching to annual dividend is for this year only, and you will revert back to the semi-annual dividends should things in the region stabilize?
Yeah. That's the expectation that we also have, but as I said, the decision is more board-driven. The way the indication that we have is it more appears to be a this year kind of action, and we'll look at it again next year as we go into next year. Overall, we do not see any major change in the annual dividend policy of the annual dividend payouts, et cetera, should remain the same, as I explained earlier.
All right. Thank you.
Our next question comes from the line of Abhinav Sinha with Lesha Bank. Abhinav, please go ahead.
I just have one. On the OpEx, we see that for the first half, it was QAR 566 million, which is roughly QAR 280 million per quarter. Would it be fair to assume that same run rate for the rest of the year?
I'd like to give you any specific run rate. In general, all I can say is if you look at our operating expenses growth compared to last year, the expenses have grown by 5%, of which the staff expense growth has been 3%. The majority of the growth that we have seen so far is the investment which the bank is making, continue to make on the technology side of it. Based on the run rate that we see, we don't see any major change. However, I would not like to quantify. Overall, I think when you are running at a cost to income ratio of 16.5%-17% area, I think the bank sits in a much more, let's say, comfortable position or to say that if required to invest in technology or other things to improve the client experience, et cetera, work on digitization, AI, et cetera.
We continue to be in well-positioned without making sure that any major negative impact would be there in our overall efficiency ratios.
Sure. Understood. Thank you.
Our next question comes from the line of Salome S. with Bloomberg Intelligence. Salome, please go ahead.
Thank you very much. Thanks for the call and the clarifications. Most of the questions are answered, but I have a few follow-ups on the credit growth side, please. Could you give us the percentage share of the portfolios that are subject to regulatory concessions for the deferrals, and what could this mean going forward? On the breakdown of the growth, can I say that part of the growth is related to the, let's say, working capital financing, given that some of the businesses or even government operations might have limited inflows? If you could give us an idea whether there's a shift to more working capital financing, short-term financing. Well, I think these are the two. Third one, more technical one. On the acceptances, you mentioned that other liabilities reflect the liability leg of the acceptances, if I correctly understand.
If we filter out the other liability increase, that could be something matching with the asset side. If you could confirm if I have the correct understanding. Thank you.
Okay. In terms of your queries in terms of the deferral program, I think the QCB guidelines are very clear in terms of which are the impacted sectors that should be able to benefit individuals, et cetera, the ones where people are able to clearly demonstrate that they have been impacted. It's not something that the bank makes a specific call on these. These are driven by QCB guidelines, which are fairly available in the market, or you can reach out and we can share it with you. It's basically you have retail customers as well as you have corporate customers where the business has been impacted because of the ongoing war. It could be from any sector. It is not specifically one sector. You should be in a position to demonstrate that you've been impacted.
I explained earlier that majority of the growth that has come are non-working capital related, are project financing predominantly in the government and government-related sectors. In terms of acceptances, again, I will clarify that when we get the funding, they sit in the deposit side of it. When we issue the acceptances against those deposits, the asset leg of it is sitting in the financing and the liability leg of it is sitting in other liabilities. The total acceptances outstanding at the end of June is about QAR 8.9 billion. If you want to take out the impact of acceptances, you need to reduce QAR 8.9 billion or QAR 8.96 billion, something like that, from other liabilities as well as from the financing side of it. These are recorded as commercial financing.
If you are looking into the segment-wise, they sit under the commercial financing. I hope I have given as much clarification as I can give for the benefit of everybody to say how to assess the impact of acceptances.
Yes, fair. Thank you so much. Appreciate it.
Our next question comes from the line of Ashwath P T with Goldman Sachs. Ashwath, please go ahead.
Hi. Thank you very much. I just have a few follow-up questions. I think you mentioned that the update to the loan guidance is to 10% or 10%-11%. Just wanted to confirm that whether that includes or excludes these acceptances. That's the first question. The second question I had was around the spreads that you would book on these acceptances. Correct me if I'm wrong on my understanding, will that flow through into your NII or is it accounted for differently? That's the first part of that question. The second part is, if it is in the NII, are the spreads of similar levels to other corporate sector loans or GRE sector loans that you give out, or are they less, for example? Those are my questions. Thank you very much.
Ashwath, as I had explained that the year-to-date growth, including acceptance, is roughly around 12.6% and excluding the acceptances is 11%. We hope to keep this till the end of the year, whereby the impact, even if we sell down certain syndications, that will be compensated by the regular organic growth that we achieve. The 11% guidance excludes acceptances. In terms of the spreads on acceptances, you don't earn anything on these acceptances. These are guarantees that are being issued against the deposits that you have accepted. If you want to do any calculations related to net margins, return on assets, et cetera, you should ideally remove them because these are non-profit-bearing assets. These are technically, in some countries, they are even booked off balance sheet. In some countries, they are booked as other assets and other liabilities.
In Qatar, they are booked as financing and other liabilities. Technically, these are, in all reality, non-profit bearing off-balance sheet items that are reflected on balance sheet due to various interpretations that could be done on the accounting treatment of these products. Hope I'm completely clear in terms of acceptances. I think next, going forward, we'll start with maybe a kind of an accounting lesson on acceptances so that is completely clear for everybody. Yeah, unfortunately, different treatments across different geographies make it a bit more difficult for analysts like you to really understand how to treat it.
Thank you very much. It is very clear.
Our next question comes from the line of Rahul Rajan with Bank of America. Rahul, please go ahead.
Yes. Thank you for taking my follow-up question. Just one question, please. This is on the capital side of things. Now that you're sitting with a lot of capital, you mentioned that the dividend payout is expected to remain constant or at a similar level. How should we actually see the utilization of this capital? Do you plan to do any M&A? Do you plan any buybacks or any special dividends? How should we see capital utilization from here? Thank you.
Rahul, I wish I could answer you at this point of time. We are in a scenario where there are a lot of moving parts. As I said, as a matter of prudency, the board has decided to skip the interim dividend. I think till the end of the year, you are not going to see any major change in the capital levels reduction. We are not going to see that. In terms of 2027, what actions can be taken, we'll be able to give you a better clarity at the end of the year results call. At this point of time, all I can tell you, the board is very keen to retain the levels of capital where it is, at least till the end of the year, so that there's a clear assessment of what will be the final impact of the war.
Even though there are nothing significant, I think they want to be more prudent in terms of their approach. At this point of time, that's the information I can share with you based on what is available with us.
Yes. Thank you.
Our final question comes from the line of Aybek Islamov with HSBC. Aybek, please go ahead.
Thank you for the conference call, Mr. Gourang. One question, very general. To what extent do you think QIB and the rest of the banking sector has adapted to the disruption from the Hormuz channel? How do you see the budget for the rest of the year should the disruption prolong for longer? When we speak to banks in Qatar, I think most are saying, it's July time, a few weeks, three, four weeks, until things completely normalize. What if it takes longer? Just your thoughts about this.
As said, Aybek, taking forward to the discussion we had in the past to say that the Hormuz disruption, the macroeconomic impact has primarily been on the government revenues and the GDP. That's on the government side. The private sector side and the banking sector side has so far not seen any major impact coming from the ongoing war, given the fact that the Qatar Sovereign Wealth Fund and the overall government have got deeper pockets to be able to absorb the impact. I think another impact compared to other regions is that the majority of the tourism that is there in Qatar is regional tourism. If I look around, I still see a lot of regional tourists still there, people coming over in cars from Saudi, Kuwait, UAE, et cetera. That tourism has not been impacted significantly. It has gone down.
Overall, if you look at it, the impact on the banking sector has been limited. If you want to make my independent assessment, though I'm nowhere on the overall macroeconomic or the government-related funding, I think the larger impact has been that the lower revenues would more likely have an impact on the external investments, the speed at which the external investments were being made by the country. The domestic banking system and the domestic economy has so far not seen any major impact. How does it pan out going forward? Yes, we are going to see after a very long viewpoint of time that the country is going to have a negative. We're going to see a fiscal deficit, and definitely trade deficits are going to be there this year.
In terms of direct impact on the banking system, we have not seen, and the government has various tools and abilities to be able to absorb it at the government level rather than percolating it down to the domestic economy and the domestic banking system. That's all I have to share with you on the larger picture of it.
Yeah. Thank you.
There's no further question at this time. I will now turn the call back over to our moderator, Shahan. Please go ahead.
If there aren't any more questions, we can wrap up this call. I'd like to thank Gourang and Vinay for giving us an update on the quarter, and we will pick this up again in the third quarter. Thank you.
Thank you.
Thank you very much, everybody. Thank you.
This concludes today's call. You may now disconnect.