Hello everyone, and welcome to Riyad Bank's 2Q 2025 earnings call. All participant lines are currently muted. After the prepared remarks, there will be a question-and- answer session. If you would like to ask a question and have joined the call via WebEx, please use the Raise Hand button found on the toolbar. You may also submit a question in writing using the Q&A box provided. If you have joined us on the phone today, please dial star followed by star on your telephone keypad to register a question. I'll now hand you over to your host, Mohammed Faisal Potrik from Riyad Capital. Please go ahead, sir.
Thank you, Sam. My name is Muhammad Faisal Potrik. Good afternoon and good morning, ladies and gentlemen. Riyad Capital is pleased to host Riyad Bank's second quarter 2025 earnings call. At this point, I'd like to hand over the call to Mr. Rayan Althubyani, Head of Investor Relations and Market Intelligence. Please go ahead, Ryan.
Thank you, Muhammad Faisal Potrik. Good day, everyone, and thank you for joining the call. With us on the call today are our CEO, Nadir Al-Koraya, and CFO, Abdullah Al-Oraini. As always, CEO will start with the performance highlight and strategy update, followed by our CFO to cover the financial performance in more detail. I would like to remind everyone that today's presentation is available on our Investor Relations website. With that, I'll hand over to CEO Nadir. Over to you.
Thank you, Ryan. Good afternoon, everyone, and thank you for joining us today for our second quarter 2025 earnings call. I'm pleased to be here to share the highlights of another strong quarter and the continued momentum we have seen throughout the first half of the year. I will walk you through our key financial results and update you on the progress we are making toward our strategic goals. The quarter performance reflects our management team's strong focus and the outstanding dedication of our people across the bank. As you know, 2025 marks the final year of our current strategic plan, and I'm proud to report that all our key performance indicators are either ahead of or within target. Our focus will continue to be on accelerating and completing our remaining strategic priorities, centered around two main themes.
First, driving further growth on the asset side and strengthening cross-selling efforts to unlock greater value across our businesses. Second, continuing to execute on high-impact efficiency initiatives by optimizing our cost base and raising operational efficiencies across the organization. We are excited about the road ahead, and I look forward to sharing more detail with you during this call. Let's now turn to the financial performance highlight for the first half of 2025. On the balance sheet side, in Q2, we continue the strong momentum. As mentioned, the total asset increased by 9% to reach SAR 491 billion. This increase is driven by SAR 34 billion in loan book, which is an 11% increase year-to- date. On the funding side, customer deposits grew 3.4% year-to- date, mainly coming from customer deposits and the rest through diversified funding sources.
In profitability, we delivered a 12% increase in operating income, backed by strong asset growth and cross-sell activities. Our focus on cost and efficiencies is delivering results. As you can see, our cost-to-income ratio improved to 30%, down 180 basis points from last year. Our net income increased by 15% year-on- year to SAR 5.1 billion, and our return on equity + 90 basis points to 17%. With this solid growth, our asset quality remained strong. Our MBL stood at 1.13% and coverage ratio at 135%. Our capital position is healthy. Total CAR is at 16.9%, and our LDR is at 85.3%, within the regulatory limits. On strategy update, as mentioned in previous calls, this year, 2025, is the final year of our current strategy. Earlier this year, we began the process of shaping our next five-year plan, Riyad Bank 2030.
While the planning continues, our focus remains on executing our current priorities. You are all familiar with our current strategy, which is anchored on four core pillars: most profitable, most efficient, bank of choice, and most innovative and digitally enabled bank. On this slide, we highlight some of the key initiatives that progressed well during the second quarter to drive our performance and future growth. Our cross-sell momentum is strong and will continue to be a focus area for us. It diversifies our revenue base and also contributes to both long-term growth and a stronger client value proposition. Another area where we are seeing some traction is our growing credit card portfolio. Building on the success of our Al Fursan, Al Hilal, and the multi-currency credit card, we launched Temu, which is a credit card for the SME segment.
We are also working on other products targeting affluent youth and the mass segment to mitigate the impact on the recent changes in credit card fee regulations. Finally, we are also proud of the steps we are taking to support broader national goals, particularly when it comes to sustainability. In collaboration with the Environmental Fund, we have launched Naseem, the Kingdom's largest financing initiative for an environmental project. The program offers up to SAR 1 billion in financing linked to specific environment criteria. With that, I would give the floor to my colleague Abdullah to go into the financial numbers and details. To you, Abdullah.
Thank you, Nadir, and good afternoon, good morning, ladies and gentlemen. I think just to reflect on what Nadir's mentioned at the key financial highlights, I think the strong growth in profitability boosted by operating income growth improved efficiencies, and that translates through a strong positive growth, as we will cover it later on, as well as a normalized cost of credit risk on the back of a strong recovery, as the bank has been focusing on this since the beginning of the year. Just to summarize it again, I think the footing has expanded by 9% on the back of a loan growth of 11% on a year-to-date basis. If we compare it to the similar period last year, that translates to a 21% and 22% respectively.
These were largely funded by customer deposits, and particularly on interest-bearing deposits, reflecting the fact that there has been also a shift from non-interest-bearing deposits to interest-bearing deposits, which also contributed to our deposits mix dilution. Having said that, I think on the reflections of that strong growth, I think we had recorded in every single line of income growth percentages. We're talking about 5% as a net special commission income, as well as the margin has decreased on a year-to-year basis by roughly 40 basis points, but we'll cover this in more detail. As a reflection of that, I think 15% of net income as a growth rate was achieved and translated into an additional 90 basis points to the return on average equity.
Talking about the lower part of the performance statement, our cost-to-income ratio reflects a continuous improvement, and this is a reflection of our continued focus on driving efficiencies as part of our strategic pillars. That reflects also a growth rate of 5% on the cost base compared to the same period last year. Cost of risk, as I highlighted, has come down to 36 basis points, registering 22 basis points reductions, and that is primarily or almost completely on the back of strong recovery. MPR ratios remain stable, albeit with five basis points reductions. Both regulatory as well as capital measures are staying at very comfortable levels. Just to shed some highlights on the movement since the beginning of the year, as I have mentioned, that is, it's primarily driven by the investments, the loans, and investments.
It's clearly highlighted that our continued focus on driving our leadership on our commercial activity, as well as selectively, as well as optimistically, continue to drive additional investments as a diversification, as well as other parts of our asset liability management practices. On the right side, you see the attributions of the gross compositions as of 2025 second quarter. Corporate remains the significant part here, with mortgages dented positively towards 68, while SMEs, I think it's worth highlighting here, the strong growth that you see here, it is driven by two factors. One, the year-to-date growth rate is 14%, which is as per our plan, but also as a result of regular data cleansing, as well as regulatory alignments on the definitions. Here, talking about the SME authorities, given their classifications of the three categories, we have aligned that and reflected there.
I think the key message here is that the diversified portfolio continues to be intact. While continuing to diversify the funding sources as a key priority that has been identified several years ago, I think we continue to tap into wholesale funding to support the overall cost of funds management circuit, but more importantly, also the maturity profile and the distributions of our funding dates. It's very clearly highlighted here that the growth has been funded by both deposits and interbank, but more importantly, I think the debt securities where we have been very active. We highlighted that we have tapped the markets for a syndicated loan sometime in March, and the actual payment took place in April, as well as we continue to diversify the sources through different sources as well as loans.
I highlighted the deposit mix here has been trending down from Q1 by almost 6 percentage points, and I think part of that is a continued growth in the IB deposits, but also we witnessed a shifting within the bank from current deposits as well as to interest-bearing deposits. This is very clearly reflected on the left bottom chart. I think the key message here is also to highlight that the net stable funding ratio continues to be stable at 106.6. Headline LDR has increased on a year-to-date basis roughly by 7%, and that is mimicking largely the growth in the loan book for on a year-to-date basis. LDR continues to be comfortable at the regulatory level. The net special commission income noticed a steady growth, albeit at a lower pace than the loan growth, but this is propelled by volume.
We continue to focus on the cost of funds, and the cost of funds clearly from the bottom chart has continued to increase due to continued growth rates in the system, as well as particularly for Riyad Bank. We had highlighted before that we had deposit-free deposits maturing in the next quarter, and that has impacted also our ratio in terms of cost of funds. We have grown the loan book, and that we're funded from interest-bearing deposits in addition to the migrations. Overall, I think the stability of the net special commission income, coupled with the next slide, as I would highlight it, has been done consciously so that we capture the right value for the business. This is, I think, the second component of a very important focus area for us, which has been the cross-sell activities.
When we say cross-sell, it's across businesses as well as entities within the group. I think the momentum on fee and other income continues to be very strong. A record quarter for that line, which came also an additional SAR 100 million compared to the previous quarter. That's how we are in the right business because if it has some unsalaried business, we are willing to give away some spreads on that. I think this will also be an area of focus across other businesses as well. The other lines are the fee income from banking services, which reflect largely our loan growth rates in terms of volume. More importantly, also, the trade finance has been very active in the second quarter. I think we will also envisage that with the launching of some system enhancements will continue to drive value for the bank.
The 6.4% positive growth, which is above even our planned level of 5.8%, I think improved cost efficiencies despite our continued investments in not only the digital and infrastructure capability, but more importantly also in the people and the talent. This is the categories of the growth areas, and as you can see, it's spread along different elements. It's very important to highlight we continue to have the right cost mix. I think we are embarking on increasing the productivity of that cost mix over the next period of time. Quarterly expenses highlight that the cost base for the quarter remains well within the last three quarters, and that reflected the 30% cost increment ratio.
As I highlighted on the previous slides, the proactive risk management, but also the strong recoveries that we had recorded for the first quarter compared to the last period, I think has enabled us to have registered a lower cost of risk for the period. I think largely the staging coverage continues to be more or less within the previous trends, although there is some inched up on the stage three. Our coverage ratios to that are 135.4% for the period. Putting it all together, I think that explains our strong performance year-on- year across the revenue line. I think even the expense lines have been very modestly impacting the profitability. It's worth mentioning that we continue to lead when it comes to the non-funding income as a percentage of revenue, and I think that is very clearly highlighting how we have achieved that.
On a year-on-year basis, the 12% growth on total revenue and the 15% growth on revenue before income and payment charges, I think that has been very notable. Continue to derive return to shareholders through ROE by increasing its contribution, also while maintaining our return on assets at 2.16% compared to last quarter of 2.17%. Capitalization remains strong, albeit that we are cautiously monitoring it because that is part of our growth formula. While at the same time, we may notice the movements and how these are playing off. The total CAR stood at 16.9%. As I highlighted before, I think we continue to derive more multiplier through our leverage to continue to invest and grow, and that has been the attributions for the common equity year-one reduction.
Looking back to our guidance, which reflects our focused executions on our outlook and the key KPIs, I think the revised positive mid-teen, we had talked about it in Q1, and we had looked into the second half of this year with the expected seasonality effect as well as prepayment. We expect mid-teens as a total for the year. Net special commission income, mid-single digit, is continuing to be focused, and the first half has recorded that. In terms of cost of income issues or efficiency, I think we came better than our full-year guidance. I think we stay intact. We're focused even to drive this to the sub-30 level. Our return on equity continues to be on the right track. Cost of risk, we expect it to land within the guidance, and as well as the tier-one capital has been lowered to the initial guidance.
I think the main reasons of that are basically the growth that has been recorded. With that, I think I will return it back to operate.
Thank you. If you would like to ask a question or join via WebEx, please use the Raise Hand button on the toolbar. You may also submit a question in writing using the Q&A box. If you have joined us on the phone today, please dial star followed by one on your telephone keypad to register a question. Our first question today comes from Shabbir Malik from EFG Hermes. Please unmute locally and proceed with your question.
Hi, good evening, everyone. Thank you very much for the presentation. I have three questions, please. In terms of your net special commission guidance, you're looking at mid-single digit growth this year. I believe in the first half, you are trending in line with that, but when I look at the second quarter, it's a bit below that, I think 2% - 3%. I just have a question: how comfortable are you with your full-year guidance? I guess that the guidance that you've given suggests that you expect a better outcome in the second half in terms of NII growth. What do you think will be the drivers of that? My second question is around capital position. You reduced your Tier 1 ratio guidance because of the stronger growth.
My question is, how do you feel with your capital position, especially with the new countercyclical buffer that is coming in next year? My final question is on your NPL coverage, which has also come down compared to a few quarters ago. I think it's 130% or so. What gives you the confidence that this level of coverage is adequate considering the current backdrop of relatively low oil prices? Thank you.
Thanks, Shabbir. With the NII guidance, I think the only deviations from our plan in Q2 is that we had to replace, we had witnessed some market volatility on the liquidity and deposits costs. We had replaced our COVID deposits with a higher or much higher spread than anticipated or planned. That's one. Second is that we do understand our movements of balances. I think that would support positively. There are some expected also releases of some customers that we are suspending their interest. That will contribute positively. I think our confidence that the guidance is on the back of our best forecast and expectations before this call because that's how we are rolling it. With respect to the capital, I think for the interest of the whole investor community and the audience, the countercyclical buffer framework has been there in Saudi Arabia for quite some time.
It's for an industry-wide. SAMA has decided to increase that from 0%- 1% for the Saudi exposures. This is strengthening the resilience of the banking sector during different cycles. From our perspective, given our current capital positions and our internal projections and medium-term planning, we don't anticipate a material impact on our growth agenda as we speak. That's in general. It's yet to see how this will translate because our internal rate of generations of capital is high. That is part of our 2026, 2027, 2028 ICAP, which will be covered during the second half of the year. Currently, we don't envisage this to be a major blocker for us in terms of our current expected growth for the next year. For the third one, the coverage, actually, it has increased. It was 132%- 133%, and it has increased.
The way that we are looking at this, we continuously review the portfolio and where adequately and justifiably we can increase, particularly when we have very good recoveries. We have been consistent on that. We envisage in this to increase, but given our expected credit outlook for a certain set of customers and the portfolio behavior, we are intact as we speak in terms of guidance.
Got it. Thank you very much.
You're welcome.
Our next question comes from Rahul Bajaj from Citi. Please unmute locally and proceed with your question. Rahul Bajaj, please unmute locally and proceed with your question. Unfortunately, we're not receiving any audio from Rahul's line, so moving on. Our next question comes from John Pierce of UBS. John, please unmute locally and proceed with your question.
Can you hear me okay?
Yes, we can, John.
Great, thank you. Yes, my first question, please, is on your new higher loan growth guidance. How would you expect it by business to compare with the first half of the year? Do you expect to see any acceleration or slowdown in corporate versus SME, retail mortgage, project finance, etc.? How will the second half look like versus the first half? The second question is on the very strong result in the non-interest income. Are there any sort of lumpy items in there, one-time items in there that you'd call out? Thanks very much.
In terms of the first one, how we're looking at this, I think the key factor here is that we had captured very good opportunities in the first two quarters. I think the third quarter typically is given the seasonality as well as the pipeline and also the expectations. We believe it's not going to be the same. The fourth quarter typically notices or experiences repayments. I think that's the basis that our guidance has been upgraded, but still below our current year-on-year rate. Particularly that last year, the fourth quarter and third quarter were different for us. They were very strong quarters, and I think that is the expectation that we have set. In terms of the non, I would say, non-recurring or potential non-recurring, I think in the second quarter we had a capital gain around SAR 45 million- SAR 50 million. That opportunistically were recorded.
We had one excess reversal on retail. That is around SAR 30 million or so. I think these are non-recurring, and the remaining are functions of the loan growth.
Just to add to what Abdullah Al-Oraini mentioned, we did update our guidance on loan portfolio to be mid-teens from low double digit. We do see strong credit demand from corporate and SME, basically driven by positive economic outlook and the strong non-oil activities. Retail, we expect demand to improve during 2026 when rates are expected to go lower. In terms of increase of fee income, it's mostly coming from the cross-sell, which we, as I said, mentioned earlier, that we continue to have it as a main focus area. To do that, we ensure that to capture the full business opportunity and enhance the overall return, which helps offsetting the pressure on the margins. Obviously, there are factors that help in this growth. The creation of the Wholesale Banking division did help. Our leadership position in trade finance also helped in the fee income generation.
Thank you.
Thank you. Our next question comes from Olga Veselova of Bank of America. Please unmute locally and proceed with your question.
Can you hear me?
Yes, we can.
Thank you. Thank you for taking questions. I have several. One is on this margin pressure. I think historically in the past, you did mention that COVID funds were not significant, and now they are again a reason for pressure on net interest margin. Can you quantify for us the amount of what has been paid and if anything remains to be paid going forward? This is one. Second, generally on your attitude to growth, there was a sizable gap between growth of loans and deposits year-to- date. 11% versus 3% is a big difference, and there was a margin pressure in both quarters, first and second. Why do you choose not to slow down loan growth to protect margin? Maybe we can think about this going forward. How will you make this choice between margin protection and volumes expansion in the next several quarters?
My third question is on your capital. During the presentation of the first part of this call, you mentioned that we are cautiously monitoring your capitalization levels. What exactly does this mean? Do you look at options to optimize risk-weighted assets or options to monetize subsidiaries or anything outside of AT1 or Tier 2? What will be your priorities in the list of choices? Thank you.
Thanks, Olga. Yes, just to reconfirm what I had mentioned in Q1, the remaining COVID deposit is small compared to 2024 and 2023. It was in the area of SAR 4.2 billion-SAR 4.3 billion, and that has impacted the margins between 4.2%- 4.4% roughly. I think the point here that I'm trying to make is that the anticipated spread that we had to replace at a market rate has been different than what we had planned at the beginning of the year, and particularly is driven by the widening or the increase in the cost of funds over cycle, which I think is the explanation here. The second thing is also we have been impacted by the migrations, and we are talking here about, for example, the six months, the migrations have contributed roughly by four basis points.
Again, replacing that migration at different spreads level, of course, during the year, but have been higher than expected. I think this is a market phenomenon. We have seen that the Feds have pushed the rate cuts towards the latter part of the year versus the earlier part. We have seen that the credit growth continued to supersede the deposits growth. I think what we have done is that we try to diversify the sources while optimizing cost and other metrics that we follow. For example, we are in the maturity transformation profile, and we are in a corporate business that has very widely spread repayments as well as refinances. We tapped into more rate-sensitive liabilities with a shorter tenor. They did explain that we have done the program of the CD. We have done the program of the syndicated lender.
You may have come across that we had done also a Tier 2 of SAR 1.25 billion in July. We had done two early in January on SAR. I think that is on an ongoing basis. When I say we monitor this and manage this consciously, yes, because we wanted to continue to capture growth, but at the same time, that growth has to be meaningful for us. That has been reflected on the non-funded income. If I relate, for example, the growth on the non-funded income in year -to-y ear or to the margin, because that is driven by them, so I'm looking at both. That is exactly why when we built our guidance for the beginning of the year, we opted to choose the net special commission income because the market dynamics on the cost of funds have been very, very active.
I think that's how we are looking at it. I think the deployment in terms of assets, we will always look for the opportunity where is the highest total return for that deployment, whether this is in retail or corporate. Given our leadership in the corporate and wholesale as a general, I think we had been very successful on that front.
To your point, Olga, regarding monetizing some of our subsidiaries, you're right. Obviously, that's one of the reasons why we are planning to take part of our Riyad Capital public. When that will happen, it definitely will help in improving our capital.
Thank you.
Thank you. Thank you. If I can squeeze in a small question, did you estimate impact from new regulation payment fees?
Regulation fees. I think for us, the capital adequacy ratios we are anticipating around SAR 85 million- SAR 90 million as an annual impact. I think we do have a big agenda for growing our capital adequacy ratio business. We believe that the volume will supersede that amount by more than sufficiently.
Thank you.
Our next question comes from the line of Naresh Bilandani from Jefferies. Naresh, please unmute locally and proceed with your question.
Hi, thank you very much. It's Naresh from Jefferies. Thanks for the presentation and congrats on the results. I have three questions, please. The first was on the strategy. I mean, Nadir, could you please offer any early insight into the priorities that will underpin the next strategy formulation? Especially keen to know the areas that you feel you have room to improve further and how will you position yourselves in a competitive environment that is currently marked with uncertainties through the medium term? My second question is, just as the balance sheet structure stands today, could you indicate how your position to be affected on the NII from the upcoming change in policy rates?
Third, I know you offered some insight into the impact on the card fee incomes, but you know, compared to the previous quarters, and despite the new CAR launches that you've had, we are still seeing a relatively muted performance on the credit card fee incomes. I think Q2 has been much lower as compared to what you've seen in the previous quarters. I'm just keen to understand, you know, barring the regulation, any insight into what are the pressure points here and how should we see the trajectory pick up through the medium term? Thank you so much.
I will start with the strategy. As mentioned, we did enter this year, the final year of our 2025 strategy. Obviously, we are all proud of what we have achieved in the last few years and what we delivered across all our strategic KPIs. We remain focused on executing our current strategy this year. We started already early this year the exercise of developing the next five-year strategy leading up to 2030. Basically, our new strategy will build on the strong foundation that we have established with the previous strategy, with its key themes aligned to our long-term vision. We will focus on accelerating growth, leveraging the positive economic outlook to drive higher total returns for our shareholders. Obviously, efficiency will remain a priority to support scalable expansion. We will continue investing in our people and customer experience. We will reinforce our position as a bank of choice.
We will advance our sustainability agenda and continue our investment in our digital capabilities and infrastructure to remain relevant in an increasingly dynamic environment. We aim to finalize our strategy toward the end of this year and it will be presented to the board for their approval. We will then present it to the market. Thank you, Abdullah.
Thanks, Naresh. With respect to the balance sheet structure, I think as a general theme, we have seen that many banks are becoming more rate neutral in terms of structure, given that the last three years and the continuations of a more corporate lend. I think our current rate sensitivities for 25 basis points are almost less than 0.13, if I remember correctly. It's sad. I think the way we look at it is a little bit different. Given our loan mix, I think there is a very good potential growth in the medium terms on high-yielding assets like mortgages, as well as our product offering on certain SME segments. That's what enhanced the year. I think the investment portfolio is relevant here, and it has been very well positioned.
I think our potential fair market share capture journey on the retail in general, particularly on the low-cost funding, would position us nicely. That's on the assets and liability side. Sorry, on the asset side. The liability side, I think that was one of the aims that we had looked into, the diversifications, not only through the sources of funds, but more importantly through the maturities. That will give us an advantage at a certain point in time at the beginning of this falling rate cycle. More importantly, it is reflecting also on creating a natural hedge for our exporters on the asset side. From a capital perspective, I think the capital structure has been enhanced over the past five years. This is something that is absolutely as we have planned for it.
I think we will continue to look into the next five years how we are positioning this based on the forward grade and anticipated growth pools for the sectors and our aimed market share. With respect to the fee, to be here transparent, I think the fee, there has been lots of volatility that we have seen, particularly for us since last year in terms of certain fee-related costs. That is expected on the next 18 years to further enhance. I think the volume is something that we are expecting to start rolling out on the second few quarters. Particularly given our new leadership on retail, I think that is one of his priorities as part of asset class mix capture in terms of market share.
Okay, thank you very much.
Our next question comes from the line of Aybek Islamov from HSBC. Aybek, please unmute locally and proceed with your question.
Yes, thank you. Thank you for the conference call. Can you hear me fine?
Yes, loud and clear.
Thank you. I think a few questions I want to ask you. The first one is looking at your retail loan book, you know, the momentum is quite kind of weakish. Credit cards nearly flat, quote-unquote, down year -on- year. You know, overall retail loan portfolio, mortgages in particular, also flat, quote-unquote. What should we read from this data? Are there any patterns in consumer retail appetite, retail borrowing appetite that has changed? I know you commented about when rates fall, demand will definitely pick up. I will be curious to know what's going on now at the moment. That's my first question. The second one is, I can see that a lot of your NPL coverage improvement is driven by this provision write-backs recoveries that you commented on earlier. What's the visibility on this write-backs recoveries into next year? How sustainable are they?
Obviously, that has a read across for your net cost of risk, particularly in the medium term. That's my second question. The third question is around your trading income. In the first half, it's quite strong. You're doing very well. I don't see that growth in the trading securities, right? When I compare the trading income to trading securities, that ratio is almost 20%. What's happening on the trading side? Again, how sustainable are these trading gains? That's it. Thank you.
Thank you very much. I will answer the retail part. Our retail banking aimed to balance growth with profitability, obviously, as compared to increasing market share through aggressive pricing. We focus on sustainable growth through positive product margin. However, we started many initiatives in the second quarter, and we will see the result in the coming quarters to improve the retail value proposition and product offering in order to capture a new business as we expect demand to pick up in the coming year when rates are expected to go lower.
The second question is on your point on the trading and investment income is very strong. That's a reflection of our strength of the wholesale propositions that we offer for our customers. That's also hard to compensate lower credit spreads because we need to capture also something at least meaningfully partially compensate that. That's as you should expect. This is as a function of the corporate growth rate. If you look historically, I think that has been more or less similar in terms of rates. We don't do lots of capital gains. Opportunistically, sometimes we do rebalancing. This rebalancing many times is driven by, for example, enhancing traders' portfolio rating, sometimes enhancing rebalancing between markets based on developments of these markets. We don't have really very regular non-recurring capital investments. The trading securities, this is particularly the brokerage. It has nothing to do with the bank. That's completely Riyad Capital.
I think they have witnessed some slowdown. They have been focusing on, I think, particularly with the new management over the past at least six months, nine months on the infrastructure development. I think this is something that also has been affected negatively with the market sentiments. Trading security or the brokerage business, I think we had said this before. We wanted to have a higher ranking compared to number five or six. I don't want to have a lot of answer on this, but we have seen a change in the market compositions in terms of market shares of the brokerage over the past two years, particularly with the international players.
Thank you. There was a third question about your provision write-backs recoveries.
Yes, recoveries there. We're a leading corporate bank. We're probably the leading wholesale bank. I think we had a greater opportunity to accelerate our recovery because in the corporate recovery, some recoveries take for you years, and some recoveries you could have much faster through an agreed appropriate bilateral settlement. I think our focus, we have established a mission this at the beginning of the year. We have established really a very big unit called Special Assets, and their mandate, and we have equipped them with a very high caliber. Their mandate is basically linked to that KPI.
Thank you. Just one follow-on question on something that was answered previously. On the NII growth guidance in 2025, you mentioned that you will see some reversals of suspended interest, and that will be the main driver of NII growth. Is that correct? Is my understanding correct on that?
I think the rate of growth is correct. I am not sure about the main driver, but that is a positive factor, definitely.
Okay, thank you.
You're welcome.
Our next question comes from Mehmet Sevim of JP Morgan. Mehmet, please unmute locally and proceed with your question.
Good evening. Thanks very much for your time. Just two minor clarifications for me, please. You mentioned in your remarks, Abdullah, that within the SME segment, there's been an impact over reclassification of some files as per their definition, and that that drove some of the 14% year-to-date growth. Did I understand that correctly? If yes, would you be able to share if that's been a significant impact? Just on the NII outlook for the second half, I was just wondering, if I understood it correctly, whether you said that there will be some interest in suspense of recoveries in the second half that would support NII.
Yes, part of the NII positive adjusting factor, yes, that's what we expect. For the first question, actually, the 14% is before some reclassifications. That's the like-for-like growth rate.
Got it. That's very clear.
Because if you compare the amount to the previous quarter, you would find a significant difference. Typically, those are the large SMEs.
Yes, super. That's very clear. Thanks very much.
You're welcome.
We have reached the end of the webinar. For any further questions, please kindly reach out to the Investor Relations team. I'd now like to hand back to CEO Mr. Nadir Al-Koraya for any final remarks.
Thank you very much. Again, ladies and gentlemen, thank you for joining us in today's call. We are pleased to have shared another set of strong and healthy results for the second quarter of 2025. Our continued progress reflects the strength of our strategy and the discipline of our execution. We remain focused on delivering our ambition to become the best bank in Saudi Arabia by being the most profitable, the most efficient bank of choice, and the leader in innovation. We are excited about what lies ahead and look forward to sharing more updates with you in our future earnings calls. Thank you again for your time and goodbye.
This concludes today's webinar. Thank you, everyone, for joining. You may now disconnect.