Shahin Mohammed Al Balushi, CEO of Taageer Finance, talks about his company’s performance, future plans and the challenges facing Oman’s leasing industry
Can you encapsulate the financial performance of Taageer Finance in FY 2018?
The company has registered a profit after tax of RO4.867mn for the financial year 2018 as against RO4.703mn during 2017, an increase of 3.48 per cent. The company’s net leasing portfolio stood at RO163.377mn as on December 31, 2018, against RO147.476mn as on December 31, 2017, an increase of 10.78 per cent over previous year. Taageer improved its market share by 1.5 per cent during 2018 and as on December 2018 its market share is 15.98 per cent on a total industry lease portfolio of RO 1.037 billion.
The total book grew by 11 per cent and PAT by 3 per cent.
As part of resource diversification Taageer during the year 2018 offered RO5mn bonds with 50 per cent green shoe option and the company was able to mobilise RO6.150nmn bonds. Increase in the borrowing costs is a cause of concern and the company is managing its interest rate risk by product diversification and improving the lending margins. The NPA as on December 2018 stands at RO16.48mn against the overall industry NPA of RO132mn. The industry NPA grew by 55 per cent whereas Taageer NPA increase was at 33 per cent.
Going forward, what will be the immediate priorities of the company?
Customer service and delivery will be the cornerstone of performance, going forward. Improving the footprint can be achieved by opening new branches to manage logistics and enhance customer reach and Taageer endeavors to achieve the same.
What are the challenges facing the company in the current market condition?
Due to the current market condition, there has been marginal growth of the leasing industry in the last three years. The interest rate mismatch is the biggest concern considering the liquidity in the market.
What is your industry outlook for 2019?
Despite the recent recovery in oil prices, the government has maintained its aim to continue with its prudent fiscal management, including controlling current spending.
The government continues its initiatives towards prudent fiscal policy and countermeasures to reduce the budget deficit below 10 per cent of GDP. Given the volatility in oil prices, the success of government’s diversification agenda would be the key to achieve growth, enhance employment opportunities, increase government spending on projects and also maintain public debt at reasonable levels in relation to the GDP.
The liquidity position in the market is expected to continue to be tight. The banks continue to adopt a cautious approach in lending and continued to increase interest rates, hence sustaining a high growth rate in terms of new business does pose a major challenge to the FLC industry.
Muhammed Nafie is an Assistant Editor at Oman Economic Review.