Strong fundamentals

Al Omaniya marked its 20th anniversary in 2017. OER speaks to CEO, Aftab Patel about the company’s major milestones, financial performance, and future outlook

Al Omaniya marked its 20th anniversary in 2017. Can you give us a brief on the company’s major milestones?

The company started its operations as a retail asset finance institution and along its journey in tandem with economic growth, diversified its product lines and today it stands as a comprehensive corporate financial solutions provider, but with unique difference of personalised touch and tailor made financial solutions to all its clients. The company started its operation in the year 1997 and has consistently grown year after year, building strong fundamentals, creating and utilising every growth opportunity, and in the process creating a unique value proposition for each and every stakeholder.

Al Omaniya is the leader in the non-banking financial sector in Oman with strong presence with the highest market share. The company’s capital structure is unique that the company has the high capital adequacy which enabled us to grow at a faster pace in tandem with the economic growth in the country participating and contributing significantly to the growth trajectory. Al Omaniya has the highest asset size and net worth, largest market capitalisation, highest earnings per share and has been consistently paying high dividends since inception. The company has the lowest non-performing assets ratio consistently for many years not only among NBFCs but in the banking sector in Oman as well.

The company has been assigned a global scale corporate family credit rating of ‘Ba3’ by Moody’s Investor Service. The ratings has been reaffirmed in the scenario of downgrades of other financial institutions. The company has been awarded the highest ranking and as the best non-banking financial institutions multiple times locally and by the international agencies. Today the company has grown in to so many facets that what remains as the core value is the continuous innovation and the relentless service to our customers.

How was Al Omaniya’s financial performance in FY 2017?

The company has achieved net operating income of Ro13.2mn as compared to Ro12.71mn in the previous year. The profit before provision and tax earned for the year 2017 is RO8.58mn as compared to RO7.87mn for the year 2016. The company’s net installment finance receivables stood at RO216.75mn as of December 31, 2017 and the total assets size is RO244.604mn.

The company has provided Ro3.1mn towards provision for impairment for the year 2017. The profit after tax and deferred tax adjustment is RO6.98mn which has resulted in a growth in profitability of 31 per cent over the previous year. An amount of RO2.498mn has been transferred to a special reserve for non-performing assets from retained earnings. The company continues to maintain its position as the largest NBFC in terms of assets size, net worth, market capitalisation and provisioning cover for NPL’s, etc and lowest in NPL in ratio in the industry for the year 2017.

What is the status of your non-performing loans and loan disbursement?

The company’s loan book has been the cleanest and its non-performing portfolio is the lowest not only in the industry but also the lowest among the banking sector. Al Omaniya’s philosophy has always been to maintain good quality loan book and this has been consistently and successfully maintained over many years.

The company has focused collection efforts to arrest the non-performing loans and it has been successful in maintaining the non-performing loans at less than 1 per cent consecutively for many years. The company also creates more than adequate provisions every year which provides insulation for unforeseen circumstances.

What is Al Omaniya’s outlook for the future? Does the company have a plan to expand into new product areas?

The company has solid fundamentals and has the capacity to diversify and expand the product lines. We remain focused on maintaining the asset size and maintaining the quality of the book with the objective of consistent returns for all the stake holders. The company is well poised to benefit from the economic growth and benefit from the opportunities that will arise given its operational readiness, capital structure, managerial competence, the insights that it has into the business, the relationships and the goodwill it has built over the last two decades.

What about your foray into digital platform?

We believe that the future is in digitalisation and fintechs will play a very significant and critical role in the future. We are committed to a digital platform and are actively working on the same.

What do you think about the performance of non-banking finance industry in the coming years?

The year 2016 and 2017 has been extremely challenging for the economy and also for the financial institutions. The credit offtake has been subdued and the investments into all kinds of capital assets have declined.

The recovery in oil prices and the IMF growth projections has retriggered optimism and the budgeted expenditure allocations is expected to create growth opportunities in the economy. NBFI will have to go through a paradigm shift in their strategy and think outside the box, to remain relevant, competitive and profitable. In the financial ecosystem of the country NBFI will have to create a unique niche for themselves by reinventing, relearning and adapting to the continuously changing economic landscape.

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