Ahmed Al Musalmi, CEO, National Bank of Oman, says that the bank has been able to deliver superior value and experiences to its customers and employees, by investing heavily in people and systems and improving its processes
How was National Bank of Oman’s financial performance in 2016?
It has been three years since NBO implemented a five-year growth strategy centered on delivering a superior customer experience with the objective of becoming the bank of choice for all our stakeholders. Just over two years since we began this journey, we can take satisfaction in our achievements to date, whilst recognising that there is still much to do to realise our ambitious vision.
Today, NBO is the fastest growing and most profitable bank in Oman by several different measures. By investing heavily in people and systems, continuously improving our processes, and providing customers with safe, fast and efficient transaction and advisory platforms, we are able to deliver superior value and experiences for each of our customers and employees.
Throughout 2016, NBO operated with solid foundations that allowed us to achieve success in our financial performance. This was evident in the fact that the bank’s profitability measures remain the highest in the industry, despite significant tests and a challenging economic backdrop.
Our focus on placing the customer at the heart of everything we do, along with our expertise in risk management and partnership building and a highly skilled workforce, once again delivered solid results, underscored by a net profit of RO55.8mn for the year.
Net interest income from conventional banking and revenues from Islamic financing activities increased by 7.2 per cent to RO101.6mn, with modest growth in loans and a favourable funding mix acting as key drivers.
Furthermore, the bank’s capital adequacy ratio is projected at 17.4 per cent, against the regulatory requirement of 13.25 per cent. The bank’s core equity ratio stands at 12.3 per cent, against the regulatory requirement of 8.25 per cent reflecting the bank’s very robust capital position. With ample room for Tier 2 capital, NBO is strongly positioned to leverage any potential growth opportunities which will be selectively pursued.
We also continued to diversify our deposit base to manage funding costs effectively. The bank successfully concluded a $100mn EMTN tap issuance at a 2 per cent spread, clearly indicating the positive sentiments we have developed with our investor base since its inaugural issuance in 2014.
Further underpinning our performance throughout 2016 was our high-performance, values-based culture, which is now evident at every level of the organisation. The skills and expertise of our employees are key differentiators for our customers and we will not let up in our determination to create an environment where employees are given opportunities to improve themselves. Moreover, our success has enabled us to keep creating new employment opportunities for talented, ambitious and committed Omani nationals and we are delighted that our Omanisation level now stands at 91 per cent.
Over the course of 2016, we allocated significant resources, including direct oversight from the most senior officers of the bank, to build upon our already impressive customer service delivery platforms and we continued to focus on enhancing standards and interaction experiences.
We also remained committed to investing in strategically important pillars of the economy, including key projects of national importance, trade, home ownership, SMEs and entrepreneurs.
In addition, we made it a strategic priority to focus on contributions we can all make as individuals and as a bank to the wider community. During 2016, NBO supported entrepreneurs, advocated for innovation, financed education programmes for talented students, promoted Omani sport and cultural platforms and helped to organise assistance for the least able in our society. We are totally committed to making a positive difference to the society that sustains us.
It was also extremely gratifying and humbling to be recognised for our strong performance throughout the year. NBO won the award for large companies at the eighth AIWA Awards for Best Performing Companies.
How was your retail and corporate lending during the year?
Throughout the course of 2016, NBO continued to innovate and enhance its product and service offering in order to capture new market share in both the retail and corporate banking spaces. In 2016, NBO’s net loans and advances grew by 5.4 per cent as compared to the corresponding period in 2016, reaching RO2,670mn. Customer deposits have registered a similar growth of 6.6 per cent to fund the growth in loans.
Our retail banking proposition took a major leap forward with a series of strategically important measures aimed at delivering a consistently superior customer experience. We strengthened our product mix, for example, with the additions of several innovative life and general insurance products, as well as enhancing value propositions to encourage a culture of saving across customer segments.
We continued to aggressively innovate in the way we deliver our products and services, with a particular focus placed on expanding our already extensive alternative distribution capabilities. New retail banking and stock market trading mobile phone apps were launched in response to specific customer needs, while an enhanced corporate internet banking platform delivered a seamless experience for companies operating between Oman and the UAE.
In addition, our corporate banking division provided finance and expertise to some of Oman’s largest infrastructure projects. Over the last three years alone, we have committed more than $1bn to support major developments.
What about the measures taken to support SMEs?
SMEs are playing an essential role in developing a strong and diversified economy and creating new employment opportunities for the future. They are a fundamental part of our economic fabric and play a vital role in enhancing innovation, growth and prosperity.
NBO has a long and proud track record of providing the Sultanate’s SMEs with the financial and technical support they need to thrive. NBO has gained a reputation for being the premier banking solutions provider for SMEs. Our suite of Tijarati products supports SMEs with core solutions such as a business current account and a full range of loans and finance, in addition to a much deeper level of guidance provided by our first-of-their-kind SME hubs, staffed by dedicated, expert employees.
We also set out to inspire young people to achieve success through NBO’s Innovation in SME Award, which held two competitions for full-time undergraduate university students. The bank is now working with the winners to help them turn their business ideas into fully operational companies.
We believe the growth of the entrepreneurial sector in Oman will also lead to a boom in cross-border trade, particularly with the UAE. This, in turn, is supporting diversification efforts by helping local companies grow by expanding overseas.
How was the performance of Muzn (Islamic banking window) during the year?
NBO’s Islamic window, Muzn, was the first Islamic banking window to launch in the market and it continues to perform well, having grown to six dedicated branches across the Sultanate. In 2016, Muzn’s assets reached RO139mn, an increase of 19 per cent over the corresponding period in 2016. Similarly, revenues grew by 12 per cent to reach RO3.7mn. These numbers also translated into a net profit of RO1.2mn, further underlining the demand for Islamic banking products and services in Oman.
What were the major HR initiatives?
Engaging, informing and educating employees remained priorities throughout 2016. Led by our in-house training division, the Academy of Excellence, NBO delivered a comprehensive range of programmes for employees covering key skills such as personal effectiveness, leadership and technical proficiency.
Courses included NBO Leader Programme designed to harness the leadership qualities of middle managers. The Gold and Silver Leadership Programmes form part of the bank’s wider talent and leadership development framework to identify and develop the next generation of middle management and junior level talent respectively.
Both the Qadat Al Mustaqbal and Training Programme for Diploma Holders are management trainee initiatives, also with the aim of identifying talent but with the particular goal of helping facilitate a smooth take-off to a career in the banking industry for students.
The pioneering Women@NBO initiative was launched in February 2016 to deliver motivation, coaching and mentoring to NBO’s female employees throughout the year, with a prominent speaker invited to give a talk each quarter to women working at NBO.
NBO also continued its Ibtikar platform, which was first introduced in 2014 with the underlying objective of motivating employees to develop original innovations that advance the customer experience. The scheme continued to make headway in 2016, with many innovative prototypes being developed by employees.
What are the future plans to enhance operational efficiency?
In order to enhance productivity and efficiency across the entire organisation, the operations group consolidated all its activities and initiated a lean management programmed called “Al Jawda”, a staff engagement initiative that seeks to drive operational efficiency across all layers.
In addition, we continued to invest in enhancing our IT infrastructure to enhance operational controls and mitigate any potential risks.
Building on our commitment to our customers, we further strengthened our complaint handling processes with a marked improvement in service levels. We also introduced various initiatives to improve the service culture by ensuring that the bank’s workforce were trained to deliver a superior customer experience in line with our new service code.
What’s your outlook for 2017?
Despite potential headwinds in the global economy, NBO’s strong balance sheet, clearly defined strategy, and laser-like focus on reaching the right customer segments gives us optimism about the outlook for 2017.
Oman is an economy on the rise, and as a bank with vast local and regional experience, financial strength and networks, NBO will be at the centre of this success story over the coming years. The shift from cash to cards, and offline to online, is also gathering pace in Oman, which augurs well for a bank with NBO’s technological capabilities. We have created a powerful growth platform for NBO and we are confident it will continue to yield results in 2017.