In 2016, ahlibank made significant investments to increase products and services and to upgrade and strengthen the core banking systems. Excerpts from an interview with CEO, Lloyd Maddock
How was ahlibank’s financial performance in 2016?
At the outset I must commend the entire ahlibank team for pulling together, to serve our customers during some challenging times. High emphasis was placed on balance sheet management, to ensure the liquidity, capital and regulatory compliance aspects were met. We deliberately moderated balance sheet growth to reflect the prevailing economic landscape, so loans and deposits were maintained on a net basis, compared to the double digit growth that we recorded in previous years. This strategy worked well, as the bank achieved a record NPAT of RO29.7mn, a 7 per cent growth over 2015. As in previous years, the bank achieved a number of key financial metrics which we challenge ourselves upon. These relate to NPLs, cost efficiency, return on equity and return on assets. So in summary, 2016 was a satisfactory year, but not without its challenges.
What were the major milestones during the year? Can you talk about the measures to enhance retailing, ATM and CDM networks of the bank?
It was business as usual in this regard: In 2016, ahlibank made several investments to increase the wide range of products and services, and to upgrade and strengthen the core banking systems, in order to enhance efficient and secure service to our customers.
How was your retail and corporate lending during the year?
Supported by a number of new product launches and propositions, the retail banking division improved its coverage and profitability. The market share of low-cost deposits, in particular, increased. The retail asset book remained stable and of a high quality.
Net growth in the corporate book has also been stable, with the overriding strategy of booking quality, properly structured loan facilities, at acceptable margins. The bank continues to maintain a high quality corporate portfolio with NPLs below 1 per cent. Corporate banking continues to focus on a supportive and customer-centric approach, marketing to all sectors of the economy, while delivering accurate and responsive relationship management.
What about the measures taken to support SMEs?
At ahlibank, we realise the importance of SMEs for the economic development of the country and we have a dedicated specialised team to provide SMEs with advisory services and to meet their banking requirements. Our product suite for SMEs includes working capital finance, project finance, trade finance, leasing and foreign exchange services. The SME business unit performance has exceeded our expectations, and we are investing in it further.
How was the performance of
Al Hilal Islamic banking window during the year?
Satisfactory. The unit now accounts for approximately 25 per cent of our bottom line. There are still several product categories to be approved by the regulator, so we hope to see gaps in the product suite being filled going forward. The financial results of the year 2016 portray a strong foundation for a sustainable core earnings momentum as the bank executes its strategy. These results are a direct consequence of ahlibank’s business strategies and the adoption of a long-term view of business and the commitment to a sustainable business model in the interest of all stakeholders. The bank continues to grow in a prudent way and has established robust risk management policies and procedures enabling it to remain focused on asset quality without affecting its ability to expand its business objectives.
What were the major HR initiatives?
The year 2016 has been a significant year with several key initiatives undertaken by the human resources group which continues to remain closely aligned with corporate objectives and business functions. As usual, the focus was to enhance performance and productivity and to provide employment and career opportunities to the bank’s internal staff as well as the Omani society. The continuous efforts in developing, motivating and engaging the team has succeeded in addressing the organisational objectives in the continued challenging business environment. We maintain a level in excess of 90 per cent Omanisation target set for the banking industry since its inception. ahlibank’s approach always has been to embrace international best practices, customised to its needs, environment and culture for the long term benefit of the bank. We are pleased to have two colleagues on the National CEO Programme and commend the sponsors for such an excellent initiative.
What are the future plans to enhance operational efficiency?
The bank is constantly seeking additional ways to structure and provide innovative products and services to improve the lives of customers. In line with this objective, the bank will continue to upgrade its information technology platforms to ensure secure and fast service to customers. The bank also expanded its e-banking and mobile banking services to Al Hilal Islamic Banking customers, supplemented by additional Cash Deposit Machines for the convenience of all customers.
What’s your outlook for 2017?
2017 is expected to be another challenging year for the banking sector. ahlibank is well positioned to face these headwinds, thanks to its robust risk management framework, corporate governance, and solid capitalisation. The bank will continue to remain judicious in the areas of risk and cost and will do the best to service customer needs and meet shareholders expectations, while being committed to facilitating economic growth in the Sultanate. ahlibank will remain dedicated to its organic growth and development, not only in terms of market share but also in diversifying its products and services to its growing customer base.
In line with the mandate of the government to support SME businesses, ahlibank will remain resolute on providing this segment with the essential support it requires. While continuing to drive profitability across business segments, ahlibank will continue to build its brand equity and expand its banking footprint to further expand its businesses locally as well as regionally in 2017.