Sayyid Wasfi Jamshid Al Said, Acting CEO, NBO says customer centricity, service, innovation and a diverse range of products and services will continue to be the focus areas for National Bank of Oman

Can you give us a brief on National Bank of Oman’s financial performance in 2018?

The year began on a cautious note, given the persistently low oil prices, the challenging market conditions, and the overall global uncertainty, including in the banking industry. Despite this, NBO’s performance in Oman was very satisfactory, with a 3.6 per cent growth in operating profit and a solid 15 per cent growth in net profits. This is due largely to a significant increase in fee income and better cost management and stabilisation of our UAE operations which have been a drag on overall performance for the past two years. Funding costs have risen sharply from 1.97 per cent in 2017 to 2.32 per cent in 2018. Despite our strong franchise and powerful brand in Oman, and our ability to mobilise low-cost deposits and maintain the highest ratio of savings and current account deposits in the market, net spreads still reduced by 20 bps.

One of our business goals for 2018 was to return to profit growth and in case efficiency and we did so successfully with the cost-to-income ratio falling by almost one per cent from 48.8 per cent to 47.9 per cent. We were able to reach this goal on the account of two drivers: one, we pressed ahead in launching new products and services which bolstered our non-funded income to attain the highest growth among our larger peers and secondly, we had dedicated teams focused on optimising costs while still allowing for key investments into important business development areas.

The bank is well capitalised, which positioned it to grow its balance sheet whilst maintaining sound capital buffers. The bank’s capital adequacy ratio as at December 2018 stood at 16.3 per cent, against the regulatory requirement of 13.50 per cent, and its core equity ratio stands at 11.7 per cent, against the regulatory requirement of 8.875 per cent. NBO’s return on equity rose sharply return for 2018, ending the year at 9.6 per cent from 8.2 per cent in 2017 making us one of the most attractive corporates in the country for investors.

Impairments on loans and advances for the year were at RO7.4mn. This is a reduction of 54.8 per cent over the same period last year, due largely to lower levels of provisioning in the UAE and higher recoveries. We continue to be vigilant in monitoring the loan portfolio for both Oman and the UAE.

Net loans and advances as at December 2018 were RO2.8bn, an increase of 5.9 per cent on last year, with most of the growth occurring at the end of Q4. Meanwhile, customer deposits as at December 2018 were RO2.45bn, with a market beating low-cost funds-to-total-liabilities ratio of 59.5 per cent.

As for operations in the UAE market, the bank has proactively exited the majority of its non-strategic UAE customers over the past 18 months, as we seek to concentrate on relationships emanating from Oman. Now, with UAE operations stabilised, we expect a gradual improvement from Q1 2019. Going forward, our focus will be on the substantial trade opportunities between Oman and UAE and on strengthening and deepening our existing relationships. As a result, we expect the UAE drag to continue to diminish, contributing to a stronger performance for the bank as a whole.

How was your retail and corporate lending during the year?

During 2018, we focused on growing our loan portfolio while at the same time reducing credit exposure against higher risk assets. We achieved the latter by working with clients to systemically reduce those higher risk exposures and where appropriate the bank did exit from non-strategic relationships, in particular corporate loans in the UAE. In delivering this fine balancing act, the bank was able to achieve a growth in the net loans and advances of almost 6 per cent plus very importantly improve the overall asset quality by reducing allocations to sensitive sectors even further. Corporate loan growth was among the very best in market.

Our efforts and commitment to stand with our clients has helped us to grow our commercial loan portfolio by 9 per cent over the previous period.

Our personal lending grew by 3.1 per cent year-on-year, which is consistent with the trends in the Oman market. The reasons for the dampened growth in personal loans are due to the tighter underwriting standards by banks, as well as, consumers taking more cautious approach to increasing personal debt levels. This should encourage more savings in the medium term as behaviour evolves and it would be a positive trend for individuals and families and the economy as a whole.

What were the major achievements during the year?

Throughout 2018, we have strengthened our position as the ‘Bank of Choice’ in Oman across all key banking segments by delivering compelling solutions, innovative products and best in class customer experience. Our notable achievements included being among the first banks to launch the prepaid cards ‘Badeel’, which incorporate contactless ‘tap and go’ technology and help individuals and families to manage their finances and make purchases and other financial transactions with ease.

The move away from cash reflects the bank’s continued development of its digital channels to ensure the best user experience for customers. To be truly digital means going beyond front-end customer interfaces to also focus on back-end processes and greater efficiency. NBO has spent several years re-architecting its technology infrastructure to build a resilient and scalable eco-system in support of our ambition to deliver individually tailored products and services for our large and varied customer base.

Our award-winning mobile app has been further improved this year with more upgrades, new features and additional ways for customers to bank electronically. Similarly, upgrades to our online banking platform ensure it is easier and more convenient than ever for both corporate and personal customers to keep on top of their finances.

On the retail side, we ended 2018 with the largest ever prizes in our revamped Al Kanz Mega Draw, which is proving to be a powerful tool to motivate customers to build their wealth through savings.

What about the measures taken to support SMEs?

Over the years, we have developed a deep understanding of the changing needs of the country’s rapidly evolving SME sector, which has enabled us to develop products and impart advice that cater to their requirements and help elevate their businesses. Our ‘Tijariti’ SME financing not only provides financial support and technical assistance, but also takes on a strong advisory role through mentoring programmes and accessibility at dedicated SME hubs across the country via the Tijariti SME Speakers Series, which we developed in 2018. The series brings together business influencers and thought-leaders to encourage debate, connections and knowledge-sharing among the country’s SMEs and budding entrepreneurs and the platform has been enthusiastically received.

Our ‘Innovation in SME Award’, is another strong example of the bank’s commitment to this sector. The award aims to engage with local entrepreneurs and SMEs to help them turn their next great business idea into a commercial reality. With substantial monetary awards, SMEs are provided the tools and opportunities to grow into genuine success stories.

In a similar vein, our annual 24-hour ‘hackathon’ enjoyed a second successful year, with over 500 student developers, coders, programmers and designers challenged to find solutions that embrace the future of banking, further supporting the SME sector.

What were the major HR initiatives taken by National Bank of Oman?

At NBO, we recognise that none of our achievements would be possible without the hard work, commitment and dedication of our people, at all levels of our organisation. We understand that our success depends on having the smartest and most motivated employees who can operate in an empowering environment fuelled by positive energy, so our strategy is to recruit the most talented candidates and then do all we can to continuously develop and support them and make them feel part of a meaningful mission and powerful institution. By guiding and supporting our employees to reach their full potential with us and helping them to identify and secure new roles and opportunities, we are building a solid base of talent to drive our future growth and development as well as that of our customers. All of our HR initiatives during 2018 were designed to ensure NBO remains the first choice for talented and ambitious people to fulfill their potential and we have progressed well in our objectives in this regard.

Throughout 2018, our Academy of Excellence organised 439 training courses and delivered more than 10,000 training days in total, representing an average of seven training days per employee. We also hired several new graduates, contributing to a 93 per cent Omanisation rate. Our hiring policy supports the government’s pledge to create 25,000 jobs for Omani nationals that will further advance the economic and social development of Oman, in line with the Vision 2040 national development plan.

‘Ibtikar’, the bank’s innovation day, encourages employees to develop creative solutions that add value and create superior customer experiences, and has been an annual staple since its introduction in 2014. The objective is to motivate employees to produce original ideas that improve the customer experience and advances the bank’s strategic aims and business performance, with an opportunity to have the winning idea put into practice. This and many other initiatives contribute to solidifying the bank’s position as a fantastic place to work in and grow.

What are your thoughts on the bank’s prospects for 2019?

As we look forward to 2019, we are committed to leading the market by consistently demonstrating our customer-first approach, superior service, innovative technology and diverse range of products and services. Our goal is to be the best bank for our customers, employees, shareholders and community and we are very well positioned to accomplish our ambitions.

There is, of course, always more work to do to ensure long term success in a rapidly changing and challenging world. But our relentless focus on delivering on our promises to our people and our customers provides a solid, stable platform for sustainable success. Combined with our team of empowered, committed people, our strategy means we are strongly positioned to drive NBO forward through its next phase of growth, to support the development of Oman and its people, and to build a bank fit for the future.