United Finance Company adopted a cautious approach in view of the subdued and volatile market conditions

United Finance Company (UFC) caters to the financing needs of both the retail and corporate segments with the objective of maintaining a balanced loan portfolio. As at December 2018, the company’s corporate exposure stood at 67 per cent and retail exposure at 33 per cent, according to the annual financial report of the company submitted at Muscat Securities Market (MSM).

In 2018 UFC adopted a cautious approach in view of the subdued and volatile market conditions. The company disbursed fresh loans to the tune of RO33.9mn during the year. The loan portfolio as at December 2018 was RO101.46mn as against RO 113.59mn at the end of the previous year. The company registered a net profit of RO755,000 for the year 2018 as against RO 1.02mn in the previous year. The main factors contributing to the reduction in net profit were the additional provisions made to cover the increase in the level of impaired loans due to the tough market conditions and the reduction in loan book size.

Impaired loans as at December 2018 were RO 27.37mn as against RO 21.61mn as at December 2017. Despite the concerted efforts on recovery, the inordinate delays in settlement of dues by counter parties severely affected the cash flow of customers and forced them to default on their loan commitments resulting in an increase in impaired loans.

The fund position of company remained comfortable during the year despite the fluctuating liquidity in the market. While some banks renewed their credit limits, some of them increased their credit limits and were forthcoming to extend additional credit facilities to meet business needs of the company. The volatility in market liquidity pushed up the borrowing cost resulting in contraction of net interest margins.

The company provided RO2.96mn as additional impairment provision during the year in compliance with IFRS 9 requirements. Despite the tough market conditions, the company is taking necessary steps to improve collection performance and curtail the level of impaired loans in the ensuing year.

Human Resources
UFC lays emphasis on recruiting aspiring young Omanis and nurturing them to achieve their career goals. UFC imparts on the job training to enable its staff to efficiently discharge their assigned responsibilities. The company periodically reviews the training needs of its staff and conducts training programs to enhance their knowledge and skill sets and equip them to take up higher positions and achieve career growth. The company has a track record of consistently maintaining the prescribed level of Omanisation. 

Outlook
In view of the volatile market conditions, UFC would closely watch the market developments and cash in on the business opportunities as they unfold to grow its loan book. The company will continue its emphasis on improving asset quality through critical evaluation of loan proposals. Concerted efforts on the collection front will be pursued to curtail the incidence of fresh delinquencies and bring down the level of impaired loans.

The company would focus on diversifying its loan book to spread risk and reduce credit concentration with the objective of achieving a balanced loan portfolio. The management will make concerted efforts and take necessary steps to improve collection efficiency and restrain the level of impaired loans. Under the guidance of the eminent board, the management and staff of the company will collectively put in their best efforts to improve the company’s performance in the ensuing year.