National Finance Company: Numero Uno

ROBERT PANCRAS, CEO, National Finance Co

National finance retained its top position for the second straight year among non-banking finance companies (NBFCs) in the 2016 Business Today-EY survey, driven by better profitability and higher growth.

In this year's survey, the company garnered 278 points overall, higher than its own score of 256 in the previous year. It also scored 40 more points compared to its nearest rival Oman Orix Leasing.

According to industry experts, the leasing and finance sector showed moderate growth during 2016 despite marked increase in cost of funds and a general slowdown in both government and private sectors.

The most interesting part of the company's performance this year is that it has performed well in almost all sections. It outperformed its rivals in earning per share and return on capital and this helped it to secure the top position in this year's survey.

For the year 2016, the company reported a growth of 5.45 per cent in net profit, second highest among peers, at RO6.35mn compared to RO6.02 in the previous year. The company's earning per share in 2016 stood at 24bz in 2016. It again topped the chart in terms of return on capital, where it clocked a return of 23.76 per cent thus scoring highest points.

On its performance in 2016, the company in its annual report said, “As one of the oldest players in the industry it has a mature understanding of the market and has developed systems and processes that are constantly updated to meet the market demands and to face the challenges posed by the changing business environment.

On outlook for 2017, the company said, “The Oman Government has sent a positive message to overcome the stress on the economy due to reduced oil prices by pro actively announcing measures to diversify  revenue and rationalise expenditure, stimulate economic growth, continue to provide support and ideal environment for growth and investment in the private sector and to sustain the level of basic services provided to the community.

“The 2017 Oman budget aims to further rationalise general spending and increase the contribution of non-oil revenue. The budget supports government initiatives such as the Tanfeedh programme and the development of public-private partnership projects, in order to stimulate growth and sustain employment. However, on account of a RO3bn deficit budget for 2017 and the liquidity tightening, we do expect further increase in the borrowing rates in the medium term.”

The company in the second quarter of this year announced that will offer a cash buyout to shareholders of Oman Orix Leasing Company, as part of the merger between the two leading leasing firms in the sultanate. National Finance’s proposed cash offer is equivalent to 1.2 multiples of the book value of Oman Orix at the end of March 2017, which is equivalent to approximately 173bz per share.

The merger plan follows a study conducted by Deloitte, an independent consultant appointed by both companies for evaluating a possible merger. A joint working group of both companies appointed the consultant to study the merger option in November 2016.

If the merger continues as planned, the merged entity will be the largest leasing and hire purchase company in Oman, with a combined net worth of RO81.14mn and a network of 17 branches. 

National Finance Company: Numero Uno
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