National Bank of Oman: Battling the odds

Ahmed al Musalmi, CEO, National Bank of Oman

After two consecutive years of leading the chart in BusinessToday-EY Best Banks ranking, National Bank of Oman has ended up in the fourth position this year. 

The bank lost 60 points from last year to score 300 in the current survey. The bank's net profits were down this year and non performing loans also grew into double figures. These factors affected the bank's in the 2016 survey.

 NBO's net profits were down by 7.2 per cent at RO55.8mn as compared to the 19.57 per cent growth in 2015. The bank's NPLs grew by around 20 per cent to RO73.86mn, steeper than the 5.3 per cent growth in 2015. The bank's assets grew to RO3.53bn compared to RO3.26bn in 2015. NBO's share prices also took a 11.24 per cent dip as it closed at 237bz on December 31, 2016 as opposed to 267bz in the same period in 2015. On the other hand, the bank's customer deposits grew by 7.35 per cent in 2016 compared to the 2.52 per cent growth in 2015.

What are the factors that affected the bank's performance in 2016. How did you overcome the hurdles?

The bank’s continued strategy of putting the customer at the heart of our business whilst forging new partnerships both home and abroad served to propel the bank forward in 2016. The bank recorded a net profit of RO55.8mn for the 12 months ending December 31, 2016, while net interest income from conventional banking and revenues from Islamic financing activities increased by 7.2 per cent to RO101.6mn, driven by loan growth and a favourable funding mix.

Net loans, advances and financing activities grew by 5.4 per cent to RO2.67bn, with NBO remaining focused on quality assets and maintaining sound underwriting standards throughout 2016. Customer deposits grew by 6.6 per cent to fund our growth in loans. We continued to maintain a favourable deposit mix, underscoring our ability to effectively manage our balance sheet.

These results were delivered in a challenging economic climate that included the impact of the low oil price environment, and higher interest rates that pushed up interest on fixed deposits and impacted the cost of funds.

The integration of a number of new technologies in response to specific customer needs, such as our enhanced retail banking and new stock trading mobile phones apps, has also had a positive affect on the bank’s performance. In addition, NBO demonstrated its innovation and leadership in last year with the launch of a unique Elite Life plan, a first-of-its-kind comprehensive product that includes life, travel and gadget insurance to cater to both a customer’s lifestyle and financial needs.

What factors will drive growth this year?

NBO’s strategy in 2017 is closely aligned with Oman’s vision for economic diversification. We are constantly developing innovative products to support the country’s growth ambitions, as well as our own.

The bank is also supporting investors who wish to benefit from a variety of strategic investments in a range of economic sectors such as tourism, manufacturing, mining, logistics etc. With Oman having so much to offer, NBO understands the importance of these industries in driving growth and overcoming economic challenges. Even in sporting, every year, for example, the bank hosts the NBO Golf Classic Grand Final, helping put the sultanate on the world stage as a leading golfing destination while promoting tourism.

Another pillar of NBO’s strategy is the Oman-UAE trade corridor. Cross-border trade not only drives growth for the bank, but also for the economy. To enable easier trade across borders we have recently introduced a Seamless Banking service that allows SMEs and large corporates in either country to view all their activities on a single dashboard, clear cheques, make deposits and withdrawals, check their financial history and make instant fund transfers. NBO is committed to making banking as simple as possible for all its customers, and with these innovative services we look to strengthen our support for Oman’s diversification agenda.

In addition to enhancing our capabilities on our existing products and services NBO is expanding its wealth management and advisory capabilities, while also creating customised trading solutions to help businesses grow and also raise low cost financing.

What are the challenges you are facing this year and what can be done to overcome them?

NBO has proved to be resilient and managed to succeed in a challenging wider macroeconomic climate. This year, financial institutions around the world have faced myriad challenges, from low oil prices to increased cyber crime, but we are confident in our ability to overcome any hurdles that we’re faced with. By keeping a close eye on our balance sheet, a sharp focus on customer service, and a relentless commitment to innovation, we believe we have the tools at our disposal for further success in 2017.

National Bank of Oman: Battling the odds
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