In 2018, Muscat Finance adopted a cautious approach to growth and focussed its attention on ensuring low accretion to non-performing loans and on maintaining asset quality 

Muscat Finance was incorporated in 1987. Over the last 30 years, the company has established an enviable reputation and continues to maintain its track record of consistent profits and uninterrupted dividends. The company operates through its head office in Muscat as well as through an extensive network of six branch offices located at Barka, Sohar, Sur, Salalah, Ibri and Nizwa.

During the nearly three decades of its operations, the company has set up a large customer database comprising of almost 100,000 customers. This has enabled the company to obtain a substantial share of repeat business.

In addition, the six branches, and vehicle dealers serve as a source point of service and new business referrals. An independent rating agency, Capital Intelligence, completed its review of the company in December 2018, and has affirmed its ratings of Muscat Finance to ‘omA-’Long term and ‘omA2’ Short term, with a stable outlook. This indicates the relative strength of Muscat Finance as a financial institution within Oman.

Products  

The company continues to provide products which support the needs of the customers and assist in the government’s efforts to grow the economy. It provides financing of vehicles, equipment, warehouse financing and plant and machinery to business establishments in the form of financial leasing. It also provides short term finance to them by way of factoring of receivables. Loans are also provided to individual customers to purchase vehicles and consumer durables for their homes.

Muscat Finance also accepts deposits from corporate depositors, and offers attractive interest rates on these deposits, depending on their tenor.

Performance
In 2018, Muscat Finance adopted a cautious approach to growth and focussed its attention on ensuring low accretion to non-performing loans and on maintaining asset quality, to ensure improvement in shareholder value.

The company was able to achieve a net profit after tax of RO4.051mn. During the year, the company increased its provision charge to the profits by 73 per cent. Incremental provisions for the year after write offs, comprised of almost RO2.026mn and cumulative provisions, including reserve interest, reached RO 18.9mn, representing 11.73 per cent of net assets. During the year, the company has successfully adopted IFRS 9 estimated credit loss model to assess its portfolio of instalment finance receivables.

Looking ahead
There was an increase in the number of our Non-performing loans in 2018. To counter this effect, the company has increased its focus on collection activities and increased the number of field visits to clients in order to assist with remedying any adverse effects of stress at an early stage.

Despite the above, the company is very optimistic about the medium term outlook for the Oman economy, and shall continue its part in promoting the focus areas outlined in vision 2040 and Tanfidh programme in order to reach a resilient and stable and diversified economy by the stipulated milestones. The company shall monitor the emerging market scenario, align its business targets and expand its size cautiously in tune with the emerging market conditions.