Oman Orix Leasing Company, which is going to be merged with National Finance Company in 2018, recorded the highest business volumes in its history in 2017. Excerpts from an interview with CEO, Shahin Mohammed Al Balushi, who will also be the CEO of the merged entity

Central Bank of Oman gave its final approval for the proposed merger of Oman Orix Leasing Company with National Finance Company in December 2017. What is the latest development on the merger?

The company has obtained all the relevant approvals from the regulatory authorities and merger between the two entities is in its final stage. Shareholders who have opted for cash offer would receive their payments by third week of March 2018 and thereafter Oman ORIX Leasing Co will cease to exist.

How was Oman Orix Leasing Company’s financial performance in FY 2017?

The company recorded the highest business volumes in its history. Gross lease receivables of the company increased by 14.7 per cent to RO258.77mn compared with RO225.73mn in 2016. This level of growth was achieved without compromising on the high credit standards of the company. Growth has resulted in an increase of 1.75 per cent in the operating profits, to RO8.84mn compared with RO8.69mn in 2016.

Total revenue for the year increased by 14 per cent to RO21.11mn compared with RO18.47mn in 2016. Financial charges also increased by 25 per cent to RO6.75mn compared with RO5.41mn for last year, as a result of higher borrowings which stood at RO157.28mn compared with RO138.48mn previous year. Total operating costs increased by 26 per cent to RO5.51mn (including merger related costs of RO0.25mn) compared with RO4.37mn in 2016 reflecting cost of growth in the company’s operations.

Can you give us a brief on the company’s major milestones during the year?

Shareholders approved merger of the company with National Finance Company.
Highest operating profit in the industry.
Two new branches opened in Duqm and Sinaw.

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

Oman ORIX continued to grow during the year 2017 in terms of loan disbursement. The company maintained a prudent and cautious approach during the disbursement process. There has been a marginal increase in the non-performing loans.

What is your outlook for the future?

A positive growth rate for the Omani economy is expected by at least three per cent for the current year, driven by recovery of oil prices, economic diversification and the changing investment environment. Efforts are being made to create new jobs both in the government and private sectors. The total public expenditure of the state budget for the year 2018 is estimated at RO12.5bn. We are expecting that the current year will be better as compared to the previous year.

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

With increased competition and slow down in the economic activities the NBFI’s will find it challenging to grow, sustainability will be key for the current year. The increasing interest rates scenario will also affect the overall profitability of most companies.