Al Omaniya Financial Services is contemplating to launch a digital platform to market its product in both B2B and B2C and has plans to enter the credit card business, says CEO, Aftab Patel in an interview
Can you highlight Al Omaniya’s financial performance in 2016?
Al Omaniya Financial Services, Oman’s largest non-banking financial Institution started operations in 1997. We continue to be the largest non-banking finance company having maintained our pole position on most parameters in 2016 – largest asset base, highest net worth, highest provision coverage, lowest non-performing loans and largest market capitalisation on the MSM in the sector.
The total revenues of the company stood at RO18.9mn. The pre-tax profit stands at RO6.3mn and the net profit is RO5.311mn. The company has provided RO1.601mn as provision for doubtful debts. The Earnings per Share is RO0.020, for regulatory limits, the net worth of the company stands at RO67.944mn. The book value of the share is RO0.235.
We are the only NBFC to be rated by Moody’s Investor Service on a global scale; they have reaffirmed their ratings of Ba3 corporate family rating. Our core competency lies in delivering a compelling value proposition.
Did the company improve its profitability in 2016?
Total profit for the year was RO5.311mn, the pretax profit stood at RO6.272mn. The company’s growth trajectory is in tandem with the country economic growth, given the current economic scenario. We have more than succeeded in keeping the NPL below 1 per cent and the provision cover is in excess of 300 per cent. This ranks as the No 1 in quality in the financial services business in the country.
The demand for credit offtake was moderate during the year and the company has been conservative and prudent in writing business. The company has maintained its No 1 position and paid the highest dividend in the NBFC segment and second highest in the banking sector. We believe that we will be able to capitalise on the company’s strength and grow rapidly as soon as the economic conditions improve and consolidate its business and create a sustainable business model.
The company has paid a total dividend of 403 per cent since inception and has the unique distinction of paying dividend every single year of its existence.
Has the company undertaken any initiatives to reduce non-performing loans and curtail disbursements? How successful were these measures?
Historically, the non-performing loans have always been less than 1 per cent. We operate at the top end of the market. Our NPL’s are still under 1 per cent and our provision cover is above 300 per cent ranking us No 1 on this quality parameter among the banking as well as the NBFC sector.
What is company’s outlook for the future? Are there plans to increase interest rates in 2017 or will it continue to remain in the same level?
We are cautiously optimistic and believe that with the government announcing the completion of the borrowing programme for the year, the uncertainty has substantially disappeared. The liquidity has improved. This augurs well for the economy. Further the TANFEEDH programme has brought about a new sense of confidence and optimism. This should provide stability and growth to the financial institutions. Increase in the interest cost remains a concern.
Does the company have any plan to expand into new product areas?
We offer a comprehensive range of products covering all business needs and personal financing. Our products have the reach and flexibility which bring compelling value to our customers. AOFS is also contemplating to launch a digital platform to market its product in both B2B and B2C. We are also planning to enter the credit card business.
We remain market-driven, responsive and clearly engaged with our customers. Our goal is to meet the changing customer need and aspirations.
How is Al Omaniya coping up with the increased competition in the market?
AOFS has a sound and innovative capital structure and novel and value integrated business model. We have automated and real time systems and processes and offer superior delivery mechanisms and personalised customer service to build customer loyalty and superior brand positioning.
The company continues to manage the liquidity and costs judiciously to ensure sustainable earnings and profitability and to operate in the top end of the market to ensure a high quality loan book. We are also able to reduce our borrowing costs as lenders perceive us as very low risk due to our lowest non-performing loan, highest provisioning coverage, consistent profitability, transparency and innovative products range. We are customer centric and our processes and systems revolve around the customer and not the other way around.
What do you think about the performance of non-banking finance industry in the coming years?
The Industry has performed well during the current year considering the underlying economic conditions and reduced offtake of credit. NBFC segment has come off age and is more than two decades old with RO1bn plus book size. NBFC’s are offering a diverse range of products and services. They are well capitalised and form an integral part of the financial services eco system of the country.