Ahmed Al Musalmi, CEO, National Bank of Oman shares his roadmap and initiatives that are making NBO the bank of choice for customers.
Financial performance in 2014
The year 2014 was a milestone year in National Bank of Oman (NBO)’s distinguished history for two very important reasons.
Firstly, the year was outstanding in terms of financial performance. The bank recorded its strongest ever net profit, crossing RO50mn for the first time, while net loans, advances and financing activities were up 12 per cent, and operating income by 10 per cent. Our Muzn Islamic Window, our overseas branches in the UAE and the wholesale banking business have recorded strong and impressive results. We also issued a highly successful five-year $500mn bond under the Euro Medium-Term Note (EMTN) programme, which made a significant contribution towards the diversification of our funding base as well as to a reduction in our funding costs.
Secondly, and of greater strategic importance, 2014 was the year when NBO began a transformational journey to establish itself as the bank of choice. This included the launch of a series of initiatives designed to improve our revenues, range of products, operational efficiency and service delivery. Many of these have started coming on-stream and have begun delivering results.
NBO today is operating from a rock solid platform with a crystal clear vision and a robust five-year growth strategy. Notwithstanding the challenges that lower oil prices present, the bank is strongly positioned for continued growth, driven by a stable and well diversified funding base, good asset quality and good non-performing loans (NPL) coverage, a well-established UAE operation and a promising Islamic banking window. The retail and corporate businesses will continue to be core contributors to the bank’s revenues.
We are strengthening our overall capabilities and focus on driving digital leadership to enhance our customers’ experience which will be a key differentiator for the bank. Our vision is to be the bank of choice by delivering a consistently superior customer experience through all our customer touch-points.
Retail and corporate lending
Throughout the course of 2014, NBO continued to innovate and enhance its product and service offering in order to capture new market share in both the retail and corporate banking spaces.
Our efforts to retain and attract retail customers were greatly helped by the launch of the ‘MyChoice Rewards’ loyalty programme in 2014, which embodies our commitment to put the customer at the centre of our business. We also established a dedicated customer experience division to continue to deliver on our commitment to customer service excellence. We successfully utilised digital technologies to engage customers and deliver a superior banking experience, including the launch of a new website, a state-of-the-art mobile banking app and new social media channels.
A key component of our comprehensive banking operations is our large and growing project finance division and our strategy is aligned to the Sultanate of Oman’s economic agenda. We offer project finance and loan syndication services to encourage private and foreign investments and further support Oman’s diversification strategy.
Over the last three years, NBO has committed over $1bn to support major strategic projects, including projects in the tourism, transport, infrastructure, power and water sectors, such as the ORPIC expansion project, Electricity Holding Company, Duqm Development and many other multimillion rial projects.
The bank continued to play a leading role in support of Oman’s industrial and infrastructure sectors in 2014. For instance, in 2014 we signed a Memorandum of Understanding with the Special Economic Zone at Duqm to provide financial support to potential investors. In 2015, we provided $116.24mn financing for Dalma Energy’s Petroleum Development Oman project.
In 2014, the bank’s asset management business grew its GCC equity fund to be the largest equity fund in Oman and the bank received the MENA FM ‘Oman Asset Manager of the Year’ award for the third year running against very strong competition.
In 2014, we launched the Point of Sale (PoS) acquiring business that has been positively received by corporate and SME clients and we continue to work with corporate and institutional clients to automate and integrate our services – wherever possible – so that there is straight-through processing of routine transactions. Going forward, we will be increasingly focused on providing advisory services and becoming a strategic partner for our corporate clients.
Supporting SMEs
NBO fully appreciates the essential role that SMEs play in developing a strong and diversified economy and creating new employment opportunities for this and future generations. They are a fundamental part of our economic fabric and play a vital role in enhancing innovation, growth and prosperity.
We have also established a new business group namely SME banking and invested quite substantially in people, technology and processes. The business has high-growth potential and is headed by a very senior Omani general manager. This is very much within the framework of our wider transformational agenda. In 2014 we revamped our Small Business Unit in a bid to provide new stimulus to the SME sector. This included the launch of a first-of-its-kind initiative in the form of SME Hubs, with dedicated staff capable of providing entrepreneurs with the help and support they need to thrive. In addition, as the only Omani bank with operations in the UAE, we are able to facilitate trade flows between Oman and the UAE, to support medium-sized Omani companies with their cross-border trade finance requirements.
As a result of our concerted efforts, total credit extended to the SME sector in 2014 increased by over 300 per cent, and we provided financial and non-financial solutions to over 15,000 new SMEs last year.
Beyond providing financial services, we are also committed to extending guidance and support to entrepreneurs through various training and mentoring programmes. For instance, we supported the delivery of workshops for Omani designers to help them run their SMEs in May 2014; sponsored an exhibition for Omani SMEs in Dubai Mall; and recently partnered with the National Business Centre to roll-out the ‘Najihat’ programme, which supports the Sultanate’s female entrepreneurs. We also recently signed an MoU with the Ministry of Tourism to extend financial support and assistance to businesses in the strategically important tourism sector.
Islamic finance
We measured growth in our Islamic banking window Muzn last year in triple digit percentage points, which is a good barometer of overall demand for these services.
The bank introduced sharia-compliant products for its corporate customers in 2014, such as project financing, construction financing etc., and recorded strong growth in high-value transactions. Being the first Islamic banking window in Oman, we have taken on the mantle of educating people about how Islamic banking differs from conventional banking, how products are structured differently, and how customers can benefit. Our educational programme, which included events such as roadshows, has helped to build our market share by promoting awareness while introducing the Muzn proposition to prospective customers.
To accommodate the growing appetite for Muzn products and services, we have established a strong network of dedicated Islamic banking branches in strategic locations, with three new Muzn branches in Mabellah, Sur and Sohar, and we have plans in place for further expansion. In addition, to improve our customers’ experience, we introduced new digital platforms to provide easy access to Muzn’s products and services via Muzn Islamic banking’s dedicated internet banking portal. We have also increased the size of our talent pool to support our growing operations. We see a bright future for Islamic banking in the Sultanate and we are committed to ensuring Muzn is the market leader.
Branch, ATM and CDM network
Delivering a consistently superior customer experience through all our customer touch-points by introducing leading and innovative digital banking solutions is a key pillar of NBO corporate strategy as it brings us closer to our customers and closer to our goal of being the bank of choice in the Sultanate.
Alongside expanding our physical footprint, we have focused on enhancing our digital offering with the launch of a new state-of-the-art website in keeping with our commitment to deliver customer service excellence through technology-driven innovation. In addition, we have established our very own point-of-sales business and enabled our customers to bank-on-the-go with the launch of a unique mobile banking application, which enables customers to carry out their banking transactions without visiting their branch. We also introduced multi-function cash deposit and withdrawal machines in strategic locations, with many more innovative banking solutions in the pipeline.
We continuously strive to drive internal innovations to deliver the very best that banking has to offer. Our newly launched internal ‘Ibtikar’ programme for instance provides a platform for staff to build innovative concepts, which could be implemented to improve our banking services and operations. Very shortly, we will launch a number of these successful innovations, which will reinforce our commitment to delivering excellence.
HR initiatives
No doubt, the bank’s success would not be possible without our exceptionally talented, skilled and motivated workforce. Once we recruit an individual, I am proud to say that we are able to offer them a dynamic, long-term career path. We are committed to fostering a high-performance and values-based culture and place enormous emphasis on training, and invest in many best-in-class talent development programmes designed to help our people deliver excellence across the breadth of our operations and at every customer touch point.
As part of our commitment to the community, we continuously strive to develop and strengthen our employees’ capabilities to contribute to the bank’s and the country’s success. Training is delivered through our Academy of Excellence, which applies the latest techniques to provide employees with an interactive, meaningful learning experience. We continue to focus on developing a strong pipeline of business leaders through a comprehensive training and development programme. As a testament to this, in 2014, we collaborated with the prestigious London Business School of Management to deliver an eight-month Transformational Leadership Programme for employees. Additionally, we introduced a 15-month Future Leaders Programme with Cambridge University’s Judge Business School in Qatar to fast-track young employees with the potential to take on future leadership roles within the bank.
As part of the bank’s wider Talent and Leadership Development Framework, we have recently introduced the Gold and Silver Leadership Programmes to identify and develop the next generation of middle management and junior level talent respectively. The programme provides a structured career development plan and fast-track development opportunities to employees. The Gold and Silver Leadership Programmes are important enablers to help us unlock the potential of our workforce.
Our system has been particularly effective at supporting the development of Omani nationals and empowering them with the skills and knowledge for careers in the top echelons of the global financial services industry. This was evident in 2014 when the bank appointed nine experienced Omanis to key senior positions to help drive the transformation agenda and deliver its strategic objectives.
Additionally, we are proud to be advancing the careers of talented Omani women. For instance, we have appointed Salma al Jaaidi as chief risk officer, making her the first Omani woman to hold this position in the Sultanate’s banking industry.
Future plans
In 2014, we put in place a very clear five-year growth strategy to make NBO the bank of choice for both individual and business customers. 2015 will be the year when many of these initiatives fully come on stream and begin delivering results.
I am particularly passionate about contributing to the socio-economic development of our beloved nation; and we continuously explore new avenues to deliver customer service excellence, support Oman’s diversification strategy, drive thought leadership, inspire Oman’s youth, develop and promote local talent, and make a positive and sustainable difference in our community.
The ‘Qadat Al Mustqbal’ graduate development programme, for example, was launched to attract talented Omani graduates and fast-track them through their careers. The programme aims to provide career opportunities for top graduates of local universities and colleges across the Sultanate. Very soon, we will be announcing the results of the rigorous assessment and evaluation exercise that took place recently, and introduce the first batch of the ‘Qadat Al Mustaqbal’ candidates.
We introduced the NBO’s Chairman’s Speaker Series in 2014 to benefit Omani youth and the wider business community. The 2015’s series kicked off with an inspirational talk from the CEO of Mubadala. By bringing such talented and respected business leaders to Oman to share their success stories, I firmly believe that we can inspire a new generation of young Omanis to go on and reach even greater heights.
We will continue to promote the Sultanate to an international audience and place Oman on the world golf map by launching the third edition of the NBO Golf Classic Tournament later this year. In addition, to commemorate our 45th National Day, and as a gift to our nation, we will be providing scholarships for five undergraduate students to complete their Master’s degree at the most reputed universities in the world. We will also provide scholarships for 15 high school students to complete their undergraduate degrees at the top universities globally. The bank will also train and employ 25 diploma level students for various positions within the organisation. NBO is strongly positioned for continued success, and we will continue to drive our growth strategy forward to achieve our vision: ‘To be the bank of choice’.