Aftab Patel, an industry veteran and CEO of Al Omaniya Financial Services, talks about  the opportunities and challenges in Oman’s leasing sector as well as his company’s performance and future plans

What are the challenges facing Oman’s leasing industry?
The year 2018 has been extremely challenging for the economy as well as for the financial institutions. The credit offtake has been subdued and the investments into all kinds of capital assets have declined. In view of the lower offtake of credit, the competition from banks, Islamic windows of conventional banks and Islamic banks has been acute.

We believe that the government of Oman and Central bank of Oman have put in place a sound and robust framework of economic guidelines and fiscal policies; this has substantially mitigated the challenges and equipped the financial institutions to remain strong, positive and growth-oriented. The key challenge that will require special focus is the increase in interest cost and there could also be low off-take of capital goods but this will substantially cushioned by demographic composition which will spur spending in all areas.

How was Al Omaniya’s financial performance in FY 2018?  
The company has achieved total revenue of RO 18.24mn and a net operating income of RO12.1mn. The profit before tax earned for the year 2018 is RO4.7mn. The company’s total assets stood at RO236mn as of December 31, 2018.

In spite of excruciating circumstances, we have maintained all quality parameters and crossed several milestones in 2018. Our non-performing loans (NPA) stood at 2.28 per cent which is the lowest in the financial services business space. Our provision cover for NPAs stood at 268 per cent which is again the highest in the banking and non-banking financial institution space. We have paid a dividend of 16.28 per cent this year which is the highest in cash and total dividend paid amongst all non-banking finance companies. The company maintains its record of paying dividend every single year since inception. The total dividend paid so far is 439.28 per cent.

Tell us about your future plans in terms of expansion of network, product innovation etc.?
We are cautiously optimistic and our focus has been on maintaining the quality of our assets; consolidation has been our key focus along with creating liquidity buffers and strengthening an already robust remedial credit mechanism in the company.

With technology in place, expansion of network does not need physical boxes and increasing branches is no more a limiting factor for rendering nation-wide services.

We are focusing on loan syndication in partnership with our banking partners and have participated in several loan syndication by major banks. We will continue to focus on this area. We are redefining Al Omaniya to position as a boutique financial institution.

What is your industry outlook for 2019?
We are cautiously optimistic and believe that with the government announcing a growth-oriented budget for the year, the uncertainty has substantially mitigated. The liquidity has improved. This augurs well for the economy; the budget spending for the year 2019 has been increased with the projected growth of GDP at 5 per cent should provide stability and growth to financial institutions.

The stability in oil prices and the IMF growth projections has retriggered optimism and the budgeted expenditure allocation is expected to create growth opportunities in the economy. NBFI will have to go through a paradigm shift in their strategy and think outside the box, to remain relevant, competitive and profitable. In the financial ecosystem of the country, NBFI will have to create a unique niche for themselves by reinventing, relearning and adapting to the continuously changing economic landscape.