Lloyd Maddock, CEO, Ahlibank Oman shares his views on the bank’s strong financial performance and its consistent growth trajectory.
Financial performance in 2014
The financial results for the year ended December 31, 2014 reflects growth in key areas in line with the bank’s business plan and an increase in core earnings. Net profit increased by nine per cent, and went up to RO25.1mn, as compared to RO23mn in 2013. Total assets stood at RO1,645mn from RO1,339mn last year – an increase of 23 per cent. Loans and advances portfolio increased by 26 per cent, to RO1,389mn in 2014 from RO1,105mn and the loan book continues to be of a very high quality as reflected in our NPL ratio of 0.97 per cent in 2014 (2013: 0.97 per cent). Customers’ deposits grew by 13 per cent from RO955mn to RO1,076mn in line with the bank’s strategy to build a stable low cost deposit base. Continued focus on enhanced productivity and business diversification resulted in an improvement in the operating income by 11 per cent. (RO51.6mn in 2014, as compared to RO46.6mn in 2013). Operating expenses (excluding loans and investments impairment net of recoveries) were controlled at RO17.7mn, due to prudent cost spends resulting in a best in class cost to income ratio of 34.2 per cent. Equity increased to RO200mn in 2014, from RO185mn in 2013 (an eight per cent increase).
Retail and corporate lending
Our retail lending continues to go from strength to strength, for both conventional and Islamic customers, through an expanded product offering. We have over the past year, concentrated on a segmented offering through special packages to companies and ministries by having road shows. In addition, we have tied up with real estate developers to offer under construction property financing at competitive pricing to cater to first time home owners. With the launch of our competitive auto finance product, again catering to both Islamic and conventional segments, we now have a full suite of offering. The key to our lending product is now based on instant approvals as in the case of auto loans, which now come with a 60 minute turnaround for customers. Further to enhance our customer experience and continue to provide additional payment options, we have introduced Platinum Credit Cards for conventional customers and Signature and Platinum for our Islamic segment with a range of benefits and offers. As a first of a kind, we introduced an application-based dining programme for our card customers, whereby our customers could avail of up to 25 per cent discount on various dining options by using either their credit or debit cards for all segments. Customers can download this application on their mobile device thus not having to carry any additional coupons and information.
To supplement our well established industry-specific corporate banking teams, the bank hired dedicated project finance resources in 2014, and we were duly awarded a number of high-profile advisory and financing mandates. For example, in December the bank was awarded the sole finance mandate, for ORPIC Logistics Company’s $320mn Sohar to Muscat pipeline project, jointly underwritten with our strategic partner Ahli United Bank.
Supporting SMEs
Ahlibank has established a dedicated SME department with professional bankers and financial experts that has completed its first full year of operation during 2014. We have developed a policy suited for the SME segment providing a wide range of products that have been successfully implemented. The performance of the unit during 2014 has been positive with several sectors of the market benefiting from the support we have extended. Our SME team is also providing advisory services to its clients that contribute to the development and sophistication of the SME Sector. We remain committed to the growth of this segment which is a key focus area of the country’s economy. By end 2014, the SME unit had contributed 2.5 per cent of the bank’s total loan book.
Islamic Finance
The bank launched its Islamic banking window under the brand name ‘Al Hilal Islamic Banking Services’ in 2013. Al Hilal offers a bouquet of sharia-compliant products and services which cater to institutional, corporate and retail clientele through seven dedicated branches located in Wattayah, Bahla, Rustaq, Saham, Salalah, Samail and CBD. With the most recent launch of Islamic Credit Cards, Al Hilal has become the first bank in Oman to offer Islamic Visa Signature Credit Card with a unique value proposition revolving around social responsibility. Every time the cardholder uses his/her Al Hilal Credit Card, 0.50 per cent of every transaction’s profit is donated to a charity organisation. Al Hilal Islamic Banking also launched one-of-its-kind savings account, called ‘Al Namaa Saving Account’ which is a unique transactional savings account giving high sharia-compliant returns based on balance tiers along with cheque book and Visa debit card, making it accessible across the world for customers. In addition to the launch of new products and services, Al Hilal Islamic Banking also launched a kiosk in one of the famous malls, offering sales and service facilities to potential and existing customers till late hours. More of such kiosks, along with E banking, mobile banking and SMS banking will be offered to Islamic banking customers in 2015, which are currently in process.
Branch, ATM and CDM network
We have over the past 12 months embarked on a journey to increase our alternate channel and distribution network. Our current branch network includes 12 conventional branches and seven dedicated Islamic branches. In addition, we have opened four new service centre kiosks, three to cater to our conventional customers and one for Islamic customers. These are equipped with ATMs or multifunctional machines, which allow customers to deposit cash, cheques (bulk or single) as well as pay their utility bills (Oreedoo, Oman Tel, W&E), credit card payments and of course withdraw cash as well. We have also installed two such machines in our existing branches which have high customer footprint in order to improve our customers’ experience at the branches. We will continue to expand our network in 2015, with the opening of new branches, relocation of existing branches, installation of new offsite ATMs as well as multifunctional machines in existing branches and other locations.
As a result of our expansion, we now have a total of 18 onsite and seven off-site ATMs as well as two onsite and two off-site multifunctional machines for our conventional and Islamic banking customers.
HR initiatives
The bank continues to invest in its most valuable asset – employees – by providing comprehensive training and developmental opportunities in order to enhance skill sets and working knowledge especially for our local talent to acquire higher responsibilities in the short and long term and to facilitate Omanisation at various levels. The bank’s friendly and supportive culture plays a big role in retaining its talented staff and committing long term career development solely based on merit and performance. The bank is committed to staff engagement to ensure that all Ahlibank customers belong to one ahlibanking family and are motivated to pursue their career in a fast growing institution where they grow along with the bank.
Future plans
We will continue to grow the business in a prudent and sustainable manner, while seeking to retain our status as Oman’s fastest growing bank. We will strive to again achieve the metrics upon which we challenge ourselves, which include balance sheet growth of above 20 per cent; NPL ratio below one per cent, cost to income ratio below 35 per cent and return on equity (RoE) above 13 per cent. We are investing in all channels; branches, internet, mobile, customer service kiosks while hiring additional local talent to facilitate this growth.