Said Abdullah al Hatmi, CEO of Ahlibank says the bank has experienced sustained growth across various businesses, enabling it to post strong results

How was Ahlibank’s financial performance in FY2018?

Ahlibank has maintained its financial performance despite the recent macroeconomic challenges at the local and regional level. The financial results over the years prove that Ahlibank’s fundamentals are strong and it has the ability to deliver strong performance in a highly competitive market. The bank continued its positive growth, reflecting a 7.9 per cent increase in profit for the period as compared to 2017. Total operating income increased by 10.6 per cent to RO62.2mn as compared to RO56.2mn in 2017. Total equity increased to RO358.9mn compared to RO304.8mn to further support our business growth.

The bank has successfully issued Additional Tier 1 Capital of RO54mn on private placement basis in Q42018. While the bank’s operating expenses increased by 12.7 per cent to RO23.3mn compared to RO20.6mn in 2017, the cost to income ratio remains at 37.4 per cent one of the lowest amongst its peers. Total assets grew by 13.7 per cent to RO2,290.4mn, customer deposits increased by 14.5 per cent to reach RO1,661.6mn and total loans & advances and financing grew by 14.5 per cent to reach RO1,870.7mn.

The bank’s balance sheet remained well capitalised and capital adequacy ratio of the bank stands at 17.5 per cent which is well above the regulatory requirements. The board of directors have proposed 10 per cent cash dividend and 5 per cent stock dividends for the year ended 2018. The NPA’s remained at 1.72 per cent, one of the lowest in the industry which clearly indicates the underlying strength of the balance sheet.

How was your retail and corporate lending during the year?

During the year ended 2018, the bank’s corporate lending has increased by 21 per cent to reach RO1,234mn, this growth amongst the best within the industry. The industry specific teams have a deep understanding of their respective local and regional market segments, to ensure the delivery of insightful relationship management with fast turnaround times, across various product spectrum. The teams are aligned to focus on the sectors that form a part of the Sultanate’s diversification strategy, as the bank continues to contribute towards the economic development of these sectors. Ahlibank’s corporate banking caters to the needs of large, medium and small customers providing a comprehensive range of competitively priced financial products and advisory services. Despite continuous market challenges the bank is closely working with the clients to support their business endeavors.

Retail banking lending has increased to RO671mn in 2018. Ahlibank continues to focus on innovative products and services, both for its conventional and Islamic banking customers, in order to increase its foothold and market presence. In the year 2018, the bank has opened new branches as part of the strategic expansion in ahlibank’s branch network. The main objective of this expansion is to increase touch points with customers, cater to their needs conveniently and contribute to the development of local communities. Increased geographical coverage along with full suite of products offering will help the bank meet its customers’ need across all segments.

What were the major milestones during the year? Can you talk about the measures to enhance retailing, ATM and CDM networks of the bank?

Ahlibank’s retail banking continuously strives to deliver excellence and convenience to the bank’s customers. With the launching of the unique point of sale (POS) acquiring solution for retailers, the bank now offers convenience to the customers. Ensuring the customers receive fast and quality service throughout any of the touch points of the bank, the bank’s call center was enhanced with additional call agents to ensure customer calls are attended to, in greater speed to value the customer’s time. Along the same lines, the ATM machines in all the branches were replaced with full fledge machines (FFM) which includes deposit functionality and offering our customers faster, wider options and more convenience when using our E channels. Ahli E- wallet was also among one of the milestones achieved last year. Ahlibank’s high networth individuals (HNWI) also received great value in banking, through our Private and Premium banking divisions. The bank launched the Signature and Infinite cards, offering attractive benefits such as Chauffeur service, airport lounge access, 1 per cent cash back on purchases and merchant discount programmes.

Products and services that are in development for launch in 2019 includes revamp of existing products, replacement of all ATM’s with fully functional machines (FFM), mobile banking integration etc. These enhancements along with process efficiencies will ensure a richer customer experience leading to sustainable growth in the long term.

What about the measures taken to support SMEs?

Small and medium enterprises (SMEs) are the backbone of the economy, being the main contributors to employment in developing and developed countries. The government and banking sector are doing their part to promote SME’s financing in the country through education & tutoring centers, governments guaranteed loan program etc.

Ahlibank has been in the forefront for supporting SME initiatives and providing funding for SME business over the years. The bank has a dedicated team of professional bankers and specialised financial experts, who work closely with SME clients to provide financial solutions, guide them in best practices, lead them to financial discipline and help their business towards positive growth. The bank has also collaborated with various SME funds and loan programmes, who in turn lend to SMEs in a structured approach.

How was the performance of the bank’s Islamic banking window during 2018?

Despite being a relatively young industry in Oman, the Islamic banking industry has grown rapidly over the past years and constitutes 12.9 per cent of the overall banking assets in the country as of yearend 2018.

Al Hilal Islamic Banking Services (the Islamic window) has shown positive growth consistently since inception in 2013. During the year ended 2018 profit of the Islamic window grew by 14.22 per cent to RO5.6mn as compared to RO4.9mn as of 2017. Total assets of the Islamic window increased by 18 per cent during 2018 to achieve RO355.6mn. The Islamic window caters to all customer segments, including institutional, corporate, SME and retail, through eight dedicated branches. There are still untapped markets which gives room for the Islamic banking growth, especially in interior towns where customers show a keen interest towards Sharia compliant products. We expect consistent growth in Islamic banking market share albeit slowly compared to previous years.

What were the major HR initiatives taken by the bank?

Ahlibank recognises that employees are the cornerstone of any successful business. In this context, we are working on several initiatives to attract talent as well as to provide a fulfilling experience to our growing employee base. The Human Resource department plays a central role by aligning individual goals of employees with the goals of the bank. The bank has nurtured a culture i.e., a balance between performance orientation and employee well-being. This balance helped us to sustain higher levels of performance as well as provide an enriching experience for our employees.

Taking inspiration from His Majesty’s vision of enabling & empowering young Omani talent, the bank has designed many programmes to realise the vision. The bank has inducted management trainees into its workforce through a structured programme to groom young, high potential Omanis, to take on leadership roles within the bank in future. The programme is in its 4th year and we are already starting to realise the contribution of this initiative with a positive impact on operations and internal culture. Internship programmes were conducted for young Omani’s to gain first-hand experience of working in an office set-up and grooming them for the future, after they complete their education. We are also proud of the Omanisation level of over 93 per cent in the bank and Ahlibank remains committed to support government initiatives in creating rewarding jobs for talented young Omanis.

What are the future plans to enhance operational efficiency and technological deployment?

We are optimistic that our focused strategy and diversified business model will enable us to capitalise and grow the bank across all business verticals and continue to create long-term value to our stakeholders. We will continue our initiatives of cost efficiency, adhere to our prudent risk assessment models, while further diversifying revenue streams.

The bank ensures continuous technological upgrades to its core infrastructure, network, security and business applications to support business growth and expansion. We also recognised the role and importance of Fintech to provide superior customer services and innovative products to our clients. We do recognise that such technology initiatives will bring in many benefits such as reduce turnaround time of services, minimise human errors, improve decision-making and cut cost and we stand prepared to benefit from the ecosystems that are being created by innovators.

What’s are the bank’s priority areas and outlook for 2019?

Ahlibank will continue to invest in building its brand value, expanding its reach and grow the business in a prudent and sustainable manner.

Alongside the branch network expansion strategy to increase footprint across the Sultanate, digital transformation shall be the focus for retail banking growth in 2019 as it plays an integral part to deliver value for our customers. Recently the bank enhanced its Internet and mobile banking platform with a new look and feel which offers more convenience to our customers using our e-channels. In addition, they are many projects lined up in 2019 aiming to improve our customer’s interaction with the bank such as contactless payment solution, instant debit cards at branches and digital banking.

We are enhancing our electronic-banking business to business (B2B) platform which is in the process of being upgraded to state-of-the-art system to be launched in year 2019, focusing on driving efficiencies to enable the client to focus on their core businesses.