Good afternoon, good morning, everyone. My name is Aybek Islamov. I am a MENA Financials Equity Research Analyst at HSBC. On behalf of HSBC, I am very glad to welcome you to the first quarter financial results conference call with Derayah Financial. With us on the call, we have the senior management of the company. Please note that this call is for analysts and investors only. All other media representatives should disconnect now. With no further ado, I would like to hand over the call to Ghida. Ghida, over to you.
Thank you, Aybek. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. We appreciate your continued interest and participation. During the quarter, Derayah delivered a resilient performance despite geopolitical uncertainty and a volatile market environment, with total operating income increasing 9% year-on-year to SAR 228 million while core net profit reaching SAR 127 million . Recurring revenue continued to strengthen, representing 43.3% operating income from primary business activity, with total client assets approaching the SAR 60 billion mark. As usual, today's presentation will be divided into two sections. Our CEO, Mohammed AlShammasi, will begin with an update on strategic and operational highlights for the quarter, followed by our CFO, Bilal Bushnaq, who will walk through the financial performance in more detail. We will then open the floor for Q&A. With that, I hand it over to Mohammed.
Hello. Good afternoon, everybody. Thank you, Ghida, for the introduction. If you can go to slide three and we will start our earning call by starting with our client numbers. Alhamdulillah, we continue to add, according to our historical averages, around 6,000- 7,000 clients per month. This is really helping us in achieving more than 600,000 clients year to date. Our assets under custody, which is a very important figure, especially in the new revenue model that we are adopting, have continued really to show an upward momentum. We are at around SAR 35 billion . We will come to discuss how important is that figure in slides to come. Our assets under management were flat for the quarter. Our operating income moved by around 9% from less than SAR 209 million, if I recall, to more than SAR 228 million .
This is supported by new revenue streams that we have introduced in recent times. Very important to highlight that the revenue mix now is moving from highly cyclical business for brokerage and trading to today, around 43% of our business is really more in the recurring side of the business. This is up from around 35%, 36% a year ago. So we continue to show more signs of stability and resilience in our revenues. Our core net profit, and what we mean by that is excluding our share of losses from D360 Bank, stands around SAR 127 million. The bank losses has been slightly narrowing quarter in a quarter, so if you read the financial statements, we have our share of losses around SAR 29 million for this quarter versus around SAR 33 million in the fourth quarter of last year.
We continue to see slight improvements in the bank, and we will talk about the details of that in slides to come. If you move to the next slide, we will shed some light about the operating environment that we have seen in the past quarter. We see that the trading value in KSA have slightly rebounded. The average in Q4 of last year was around SAR 4.3 billion. We started to see an improvement in the first quarter and also a continuation of that in April, beginning of quarter two. From around SAR 4.3 billion average of last quarter of last year to, like, SAR 5 billion in the first quarter, and so far in this quarter, we have seen an average of around SAR 5.7 billion. Early signs of recovery in trading volumes in the local market and the return of appetite of investors back to the market.
U.S. market, although the overall market data is not yet released, but we see more of a continuation of the same upward-moving trend and customers' appetite to trade internationally. This is supported by the continuation of strong momentum and strong performance in the U.S. market. Mainly what is happening with the high tech and AI memes really helping the index to register new highs. The overall appetite in the local trading side, we have seen, as I mentioned earlier, a return of that to the market. Clients are more engaging and have more appetite now to take positions. If you move to the next slide, please. In terms of brokerage improvements that we have done, we have really done quite a lot this quarter. We have launched in the beginning of the year, the zero commission model in the local market.
We are the first broker to introduce zero trading commission in the local market. This is following an earlier step back in late 2024 when we launched the U.S. zero commission trading. We believe that we offer the highest value to our customers by really enabling them and removing the last obstacle that they face penetrating both local and international markets and pivoting the way basically to make investing available for everyone at the lowest possible cost. Also, we have launched the Securities Borrowing and Lending, and we continue to expand on that program by two ways. By one, signing up more customers to allow for their inventory to be lent out. On the other hand, also, we are expanding the network of potential borrowers that may take these securities and borrow them. We will provide more details in other slides.
Also, we were talking about building our sell-side research capability. I am very happy to see that the team have launched the sell-side research services. We have produced three sell-side reports so far, and the performance of these companies that we have launched has been quite interesting, so we continue to invest in that area of the business and bring to the market something quite unique. We are not really after the well-covered names. We are looking at more in the small and mid-cap space to provide a differentiated research coverage to the market. For the remaining part of this year, we have a very busy pipeline of new initiatives. We are highlighting a few important initiatives. We are doing three more initiatives targeting retail segment. We believe this will help really and bring also new services to the market that others are not really delivering to the retail investors.
Stay tuned with the new surprises that Derayah will bring to the market. Also, we are working on four initiatives targeting institutional investors in the market and also helping to position Derayah as an active player within the institutional space. If I may touch on the SYEP program. A year ago when we were talking to investors about potentially taking the company public, we were talking about a potential size or a total size of our SYEP program for SAR 1.6 billion. We managed to double that size over the past 12 months to reach SAR 3 billion. Not only that, we have been able to get a bigger share of our AUC, and that's why I mentioned this is a very important figure. We need to maintain a very diversified AUC. We need to maintain a very healthy exposure to names that are not available with other borrowers.
From what we have seen, we have a quite unique inventory for us to be able to lend it out to potential borrowers. This is a very important development, and this is really helping us in continuation of our strategy to lower our commission fees by offering and bringing about a very diversified and very different revenue streams to the business. The SYEP today has been initially done as MVP. Then we have launched this in July of last year. Now we are completing the remaining parts of the automation cycle. A lot of that is now automated. We are still doing some sort of front-end enhancements in the program that will even solidify our position. We still have new borrowers in the making that will hopefully even take this size to a bigger level. Thanks to Tadawul for their help throughout this project.
They have been very helpful in achieving this. Talking about asset management, we are working with our teams to raise around SAR 1.5 billion in the second and third quarter of this year through a very busy pipeline of new products that we are planning to bring. We are working on one local private credit fund. We are working on two international funds, one targeting the industrial side and the other one is in the venture space. We are working on one venture fund in the local side and three real estate development funds that are in different stages of discussions, but we are quite confident that we'll be able to close these funds.
This will not only help in increasing AUMs but also will help in improving our overall yield on assets, and what I mean by this is a higher yielding funds where we can generate a higher level of fees. Next slide. D360 Bank continue really to operate extremely well on their operational metrics. Last time we spoke, I think we were around 2.4 billion-2.5 billion. We continue on upward momentum. We are close now to 3 million users. Deposits also almost doubled over the same period to close more than SAR 3 billion of deposit. HSBC hosted a fireside chat with the CFO of the bank, I think four weeks ago. On that call, we benefited from a lot of insights about what's happening there in the bank and the excellent performance showed since the launch of the bank in December 2024.
We believe the bank is in the right trajectory, and this is indicating also in slight losses in the recent time. The real challenge for the bank today is really to build up their lending portfolio. They are doing extremely well on the deposit side. Now they need to do a good job also on building their loan portfolio, which they are actively working on. Next slide. As we are now changing our revenue model, reducing the dependence on the commission income resulting from trading business, we are more focusing on a special commission income as a core source of profitability. This quarter, we have achieved around SAR 65 million in the special commission income category, improving significantly from SAR 42 million recorded a year earlier. This is very important figure and also bringing more stability and more visibility to our revenue away from the cyclical commission income.
We continue to see signs also within the margin business that a higher demand is coming, and we have been actively engaging with potential borrowers to take margin loans. With that, I will leave my colleague, Bilal, to walk you through the financial results of the company. Bilal, to you.
Salaam Alaikum, everyone. Thank you, Abu Abdullah, and thank you, Aybek and the HSBC team, for hosting this call. Alhamdulillah, throughout the result that has been published, Derayah was able to achieve a 9% year-on-year growth on the revenue, which confirms the way Derayah is focusing on increasing the efficiency of its core income and more diversifying the revenue streams to provide more resilient model that helps Derayah to grow going forward. We have achieved a SAR 228 million revenue. Mainly, the growth came with the support from the special commission post application of the zero-based trading. On the other, on the brokerage revenue, we are almost at the same level on the assets under management revenue due to geopolitical situation and the lack of a performance and subscription.
As Abu Abdullah referred earlier, due to the geopolitical situation, we did not launch or work into any funds on the first quarter, which we will start once we feel the stability is there and the appetite of the investor is there to expedite the process of launching a new fund, which will be reflected positively, Inshallah, on the revenue generated from the assets under management. Next slide, please. To the details of the revenue. The brokerage revenue broadly was stable for the first quarter, which was around SAR 133 million compared to same level last year. On the non-margin revenue, the non-margin traded value has increased by almost 33% compared to the same quarter year on year. On the net margin, that was generated from, it dropped down to 10 basis points.
However, it was offset by the increase on the blended margin generated from the assets under custody. As Abu Abdullah referred earlier, we have started or launched the zero-based trading on the local market on the 18th, and this has slightly reduced the blended margin implied net commission generated from the non-margin trading. However, that was offset by the increase on the special commission, which we will come to it in the coming slides. On the Trading Finance Fund, almost as we are stable at the same level, the implied net margin was reduced mainly to the competition that took place, that is happening, which pushed Derayah to provide extra discounts for the margin trader. At the same time, due to the geopolitical situation, there was no big appetite on the margin trading required by the investors.
As everyone knows, in the first quarter, people were not enticed to increase their margin limits in general. Next slide, please. On the assets under management, year on year, it was down by 17%. That was mainly with the lower subscription fees and performance fees. Talking about the same situation, we did not launch any funds. We did not push the assets under management team to work into launching new funds. As you know, the appetite was not there, and that is why it has a negative impact on the assets under management revenue, which, Inshallah, we expect this is to be offset and the rebound to come in the second and third quarter and fourth quarter this year, Inshallah, after launching the funds that Abu Abdullah has referred to in the previous slides. Next slide, please.
On the special commission, as I have said, the decline in the implied commissions that come from the traded revenue was offset by the increase in the blended margin generated from the special commission. Alhamdulillah, that was impacted by the Securities Borrowing and Lending on the local market, which was fully launched on November 1st. And we have witnessed the material impact and the material contribution to come during the first quarter, and it is continuing so far in April and May as well. Next slide, please. Our OpEx mainly has increased, and we have went slightly above the guidance that was provided to the investor, which is around 40 basis points. That came mainly to the investment that Derayah is placing on what we call it as an R&D and enhancing our infrastructure, our platform, our service providing tools. Who attended our previous call, we have referred to this.
That is part of our strategy is to enhance the quality of the IT platform, is to improve the quality, increase the protection, increase the control, increase the cybersecurity level, which we expect this to continue within this year and next year, and to go back to normalize in the midterm to the 40 basis points, Inshallah. The increase mainly came in this quarter related to the increase of employees and the increase on the marketing spending. The increase of employees mainly came because of, again, to the same fact of increasing our working force, mainly in the IT domain. Next slide, please, Ghida. On our overall net income, as Abdullah referred earlier, we present our core profit. That comes from our operation, which is at SAR 128 million. With adding the impact of our equity in D360 Bank, our net commission dropped to SAR 97 million.
If we are looking at the core business or the core operations of Derayah, we are broadly at the same level of the same quarter last year in 2025, despite the geopolitical situation that we are going all through and which proves the resilient model that Derayah has adopted since it started its business. Back to you, Abdullah, on the strategy. I think, Abdullah, you are on mute.
Thank you. Thank you, Bilal. I would like really to reinforce our strategy discussion that we have provided you with a glimpse of that on the past earning call we have done by year-end, and let me just reinforce and give examples of how this is really translating now into initiatives and how are we doing, again, as to that strategic objective. We are working toward building a unified commercial engine, for those utilizing Derayah services and clients of Derayah. You probably noticed that we have brought now a combined trading experience under one application. The same main application of Derayah, you can now trade the local, regional, and international names. We haven't really disabled the Derayah Global application, but we are aiming to provide users with a diversified and multiple ways to trade their markets.
Derayah Global application is probably suitable for the Saudi traders, those who would likely to get a very detailed insights about their portfolio, about markets, about charts, et cetera. We aim to maintain both applications running concurrently with Derayah main application to offer easy, simple access, with the least number of clicks to gain access to markets. We believe this is a very important feature that we are bringing about within our app. This will be followed by other features also on achieving a feature parity across different applications that we are currently running. All of this is expected really to be completed during this year. Secondly is the strengthen and expand brokerage, and wealth management businesses. We have been working not only in the retail side that we have historically operated in.
We have taken a very courageous moves toward identifying opportunities within the brokerage business that will capitalize on our strength. We launched an institutional desk that helped today in bringing a new revenue stream mainly within the SYEP segment of the market. This is entirely new with a very unique proposition that we are bringing to the market, not only free commission in your trading. This will enable investors to make money on their positions sitting idle on their portfolio. The old model of paying commission to trade is a dying model, and Derayah decided to move from that, but also to provide investors who are holding these positions with an upside to their holdings and offering them an additional revenue stream on their assets sitting idle in the portfolio. Within wealth management, we have launched Derayah Smart.
Today, this segment of the business almost quadrupled from the time of the IPO to be close to SAR 100 million to date. We are also working on other segments of the market, targeting not only the mass segment within the robo-advisory or digital wealth to expand beyond that and start attacking the affluent and high-net-worth individuals as we mature more in that business. Within the international side, we have been expanding our reach on the international side. The team that we have been acquiring over the past 12 months continue to expand, and with that, we continue to attract very interesting investment opportunities. We are very happy with the performance of these investment opportunities. Some of them are marked up by 40% and 50% in a matter of months, mainly investing in the U.S., AI, and fintech sectors.
Also, in our capital allocation, we have a very generous payout ratio. We distribute more than 60% of our profits in the form of dividends, but we maintain a good liquidity that will enable us to allocate to different opportunities. In the first quarter of this year, we have underwritten new investments because of time-sensitive nature of these investments. So we put them in our book in preparation of preparing these to be launched, hopefully after Eid, to our investors. So we are very careful about our capital allocation. We are having, alhamdulillah, demonstrated a good ability to utilize this capital effectively. If you notice our results for last year, we have made some decent reevaluation gains on our private investments, and this was carefully selected, closely monitored, and we continue to look for other opportunities that are similarly lucrative in nature.
With our tech needs expanding in this new era of AI and data, we continue our expansion and focus on the products and technology side of the business. So we are launching a unified This is more of an internal platform, a unified data platform internally for the company, hopefully in the next few months. This will enable us really to deal in a much better way with overall client data and provide more insights in our customer base. Also, we are doing a lot of modernization to our front end as well as back end as we believe we need to maintain the agility on this platform. The only way to do that and bring systems that are able to deal with AI is really to modernize that infrastructure side of the business and continue to invest in that.
You have probably noticed an increase in the cost side of that. All of these are mainly investments into that segment of the market, and we look for realizing some gains in years to come as a result of this business. We are working on a number of initiatives related to AI that will significantly improve both the front end and the customer side of the business that should be launched before end of this year. With this, I will end my presentation, and I will open the floor for Q&A to you, Aybek.
Yes. Thank you, Mohammed. We will start the Q&A session, right? To ask your question, you can type it in the Q&A box, and I will read it out on your behalf. While we collect the questions, I will kick off the Q&A with a few questions of my own. The first one is on the market share in your domestic trading. Can you please comment how the market share has evolved, not just through this first quarter, but let's say April? Since you introduced your zero commission trading in Saudi Arabia, right? That is one. Secondly, do you see any positive impact on your international trades since you introduced the zero commission trading for the Saudi equities? That is the first question.
In the near term, we have not really seen a significant move. It was up slightly in January, February, and I think it normalized. Subsequently, we think this is more of a longer-term view on the market that we believe will eventually turn the entire market into zero commission. We wanted really to bring the highest value and do the right thing for Derayah and for its customers. Today, we have heard from participants that a lot of players are now converging into that model privately without really announcing it to the public. We believe that we continue to help in changing or reshaping the way the brokerage scene is operating in Saudi market.
Yeah. Thank you. The next question is from the audience. Can you please provide a tentative breakdown of a 3 basis points quarter-on-quarter reduction in net brokerage commission, which fell to 10 basis points? How much was led by zero commission business? What were the other factors, especially in the international market?
I will give a quick comment on that, and maybe I will ask Bilal to provide more comments. Two things are playing actually in this quarter. We have announced a zero trading commission. We have witnessed a reduction in our overall margins. Ghida, if you go to the slides where we show the margins and brokerage, and then what the special commissions please. Yeah, if you noticed, between third quarter, I am talking about the left-hand side chart in the middle here, from 13 basis points to 10 basis points decline. This is mainly due to zero commission.
If you go to slide 14, you can see that we have gained from 66 basis point to 76 basis point in the special commission. We let go 3 basis points, and we have gained around 10 basis points. That is, I think, an excellent way of looking at our business and how we were able to rebalance our business without really impacting our profitability.
If you allow me, Abu Abdullah, adding to that, as everybody knows, the special commission, sorry, the trading on the non-margin, that includes a variety of securities, and this reflects a blended rate. So, of course, the zero-based trading on the local market has an impact, and another impact that comes on the trading mix of the traders in the international market. As you know, the international market provides different types of products. So part of the action that is taken has an impact on that, as we have seen previously. Adding and confirming to what Mohammed has said, we have witnessed a jump from 66 basis points to 76 basis points on the assets under custody for the special commission, which mainly came the result of the SBL on the local market and the contribution that happens by increasing the assets under custody in general.
Thank you. The next question is about your international trading and specifically, given that you have a sizable share in international trading. Can you please give us a color what your international trading market share is, like the latest available? What will be the countermeasures in case international traded value declines ahead?
I do not have really the market share in total off my head. But yes, we are one of the leaders on that side of the business, and we believe that we have been pioneering this, and we continue really to bring a very interesting way to the market by offering zero commission. None of the players today in the market is offering zero commission. We brought around, I think, a quite unique and the highest value to investors by offering them zero access to international markets. All the competitors in the market are still charging commission in the local and international side.
But just to add, on the market share on the international market for the full year of 2025, we were around 35%.
Yeah. Thank you. Okay. Just to clarify, just the second part of this question. If international trading values fall, let's say 2026, 2027, how do you plan to counteract this decline in international trade?
I think this is a very good question. We are working on a number of initiatives to counter that. Our move into non-cyclical names like focusing on commission income, et cetera, will help in smoothing that. We are working a number of initiatives within the brokerage business targeting to bring more products in the retail side and international side. Unfortunately, I cannot really disclose these because of competitive reasons, but we are bringing new revenue streams to the brokerage business that will help counter any cyclical declines in the international side or local side.
Thank you. The next question is for Bilal. It is about your accounting. Obviously, you changed the way you report Trading Finance Fund in your financials, and thank you for providing a bridge between management accounts and reported financials. Do you plan to change the way you present your guidance? Given that in the financials, we do not see explicitly the revenue attributable to the TFF, to the Trading Finance Fund.
Mainly, the reasons for providing the managerial and the consolidated to show our core business. For the consolidation, this mainly happens due to applying accounting standards related to IFRS 8 and IFRS 10, which triggers a control test because the revenue that Derayah generates from the fund is around 21% or 22% of the fund overall revenue. It is immaterial for Derayah. It is less than 2% of our overall revenue. However, from a fund point of view, we have to consolidate because as a fund manager, we have a control on the fund management. Do we plan to change? It is not our call. It is purely accounting. So it is going to continue this way. Speaking about our overall performance, the net income is not impacted, net equity is not impacted. So simply what is added is assets and liability.
Yes. Okay. Thank you. Moving on to the next question. Can you please tell us what percent, what share of your clients have taken up the stock yield enhancement program? What is the share of the special commission income coming from this revenue stream or from this earning stream? Can you please disclose the economics of the stock yield enhancement program?
I will start with a general discussion on this. We have reported that the program have increased in time. The breakdown of local versus international, we have not really provided, particularly for competitive reasons. We do not want really to explain in very detailed fashion how much we are making in each of these segments of the market, especially that this is now becoming a very important part of our value proposition that we are giving to the market. So unfortunately, we are not providing a breakdown of how much we are making exactly on this SYEP program.
Yep. Thank you very much. The next question is, again, on your zero commission trading. Can you please clarify how zero commissions has been increasing the net margin on accounts under custody?
We have not really said that this will increase. We think this is a very important alternative source of giving you, countering the decline or the move to the zero commission. From the day we have announced zero commission, we said that we are quite confident that we have other revenue streams that are mature enough to compensate for the lost revenue from zero commission. And we have demonstrated in this quarter that we are able to show that our revenue profitability was not really impacted by the move to zero commission. And in fact, we are able to gain a higher commission from commission income that is more than enough to wither the 3 basis point lost in our brokerage revenue margins.
Yeah. Thank you, Mohammed. Next question is around the cost income ratio. Your cost income ratio in the last few quarters has been running above your target range of 38%- 40% that you advocated during the IPO. How soon should we see the conversion towards the target range? Or is the target no longer valid? Bilal.
Yeah. Generally, our target is still valid. As I confirmed, going on to the strategy and the enhancement that we're working on the IT and the strategic initiatives, we expect this level to stay for 2026 and almost 2027, and it will go back to the enduring 2028 onwards to the level of 39 basis points to 40 basis points, which is the original guidelines that was provided on the midterms.
Mm-hmm. Thank you, Bilal. There's another question. Can you please provide a view on the trend witnessed on securities lending in April/May post a strong March? And also, what is the timeline related to the closure of the ongoing funding round of D360 Bank, which has proven to be another successful investment for Derayah?
Ghida, if you can put the slide on SYEP, please. Yes. If you look at the upper side of the slide, we have the U.S. SYEP is fully operational. The local SYEP is still, I think, partially manual. The majority of that now is fully automated, but still we have certain features that are doing in a manual way. As we are moving to expand the counterparties network that we are dealing with, automation becomes a must-have. We approved actually a further investments in the automation side of this product. Let me remind everyone, this is entirely new business in Saudi Arabia, so the know-how is gained as we go.
We see strong appetite, but a lot of that appetite is also linked to our ability to bring more automation and connectivity with these international counterparties to ensure that we have safeguarded the exposure on both sides, on our side and the borrower side. We see a strong appetite. We continue on the same momentum that we have witnessed in the previous months. We haven't really seen same level of growth that we have witnessed in the past, and I think as we automate more, we will be able to attract much more money into that program. On D360 Bank, I think we have provide, or the CFO of the bank provided some color on the last fireside chat, that they are looking to do a fundraising in this year. They are talking to number of lead investors to participate in this round.
We are looking favorably at this round, given the strong operational performance of the bank. A number of large investors have shown also appetite to participate and lead this round. Overall, direction is quite positive, and we expect some good news on that side. But I cannot disclose this, given the confidentiality around these discussions, and we will disclose at a suitable time when all the legal and all the deals has been signed and closed.
Thank you, Mohammed. I'll move on to the next question. Do you see any downside risk to your blended brokerage margins guidance, which was 9 basis points-10 basis points, especially after the implementation of zero commissions for the domestic equities?
As you rightly said, I think we have guided for 9 basis points- 10 basis points net margin in our guidance. What we have achieved above that was actually an icing on the cake. We believe, on the longer term, this is the level that we will be able to achieve in the competitive landscape of the market, with cyclicalities and noise happening from quarter to quarter, depending on the instruments being traded by the customers in that quarter.
Yeah. Thank you. Thank you, Mohammed. I think moving on to the next question. Looking at your asset management segment, right? The fees here, again, are tracking slightly below expectations. Can you please comment on what is impacting the fees and when do you expect to see the recovery in asset management fees?
Thank you for that question. I think this is a market environment where we see people flying to safety, which means that lower-yielding funds are gaining traction over more riskier positions that usually come with a higher level of fees. Our plan is really to launch number of initiatives, number of new funds in the second and third quarter of this year. I explained, I think, some of these ideas. We are looking to raise more than SAR 1.5 billion of new funds in the next two quarters. This will help in securing higher management fees, higher structuring fees, higher subscription fees. So we expect to see a return of these higher level of fees on the overall asset management proposition that we have.
Yeah. Thank you, Mohammed. The next question is around your client acquisition costs. Well, you certainly stepped up your marketing expenses relative to revenue. The client numbers, account numbers seem to be moving in the positive direction. Could you please elaborate on your client acquisition costs, given the competitive nature of your industry? How would you describe it? Is it increasing, stable, lower?
Definitely, there is more competitive pressure in the market and the marketing spend has been under pressure. A lot of that cost increase that you have seen in this quarter was related to a big campaign that we have launched following the announcement of zero commission. I would say yes, we would be expecting really a higher cost of acquisition for customers as the market competition is intensifying, but it is not something that will make us worried as our overall ARPU or live value of customers remain significantly higher than our cost of acquisition. Unfortunately, I am not providing these details into the public sphere.
All right. Thank you, Mohammed. Next question is around your associate result in the first quarter. It did improve, the associate loss did decline in Q1, which is positive.
Sorry, I am not really sure I understand the question.
Yeah. Positive, yeah. How will the ongoing funding round of D360 Bank associate impact the associate result in the coming quarters?
I think, Bilal, that seems to be an accounting question.
The coming round, of course, from an operational point of view, it will improve the bank's operations and capability of going, expanding more products and expanding the lending capability for the bank by increasing their capital adequacy. From an accounting point of view and reflecting on Derayah, as you know, we are applying the equity method. So even though any increase that could happen in the coming fundraising, it has zero impact on the overall valuation because we do not apply mark to market, we apply equity method, if I understand the question properly.
No, that is correct. Yeah. Thank you. Thank you, Bilal. That is very useful. Okay, it looks like we covered most of the questions from the audience. I guess on this note-
Thank you. Yeah, sorry. Go ahead.
Over to you, Mohammed.
Thank you very much, everyone, for your interest in the company. I see a large number of attendees in this call. Appreciate all the questions. Please feel free to reach out to our investor relation team to help you with any further questions that you may have. We remain at your disposal. We highly appreciate the relationship with HSBC and for continuous support in hosting these earning calls from the time of listing until now. Thank you very much for your help and support. Have a lovely day.
Thank you.
Thank you, everyone.