Sohar International has grown stronger in line with its strategic targets, registering an increase of over 17 per cent in net profits to achieve RO34.406 million in 2019 compared to 2018, says Ahmed Al Musalmi, CEO of Sohar International

Can you share highlights of Sohar International’s financial performance in 2019 and the outlook for 2020?

In 2019, Sohar International displayed persistence in delivering robust growth, reflecting the bank’s capabilities underpinned by its continued investment in key growth initiatives. Aspiring to be a world leading Omani Service Company, Sohar International has continued to demonstrate that it has the right strategy, the right cohesive global culture and the right principles to deliver consistent and sustained value; to help customers, communities, and people to prosper and grow.

We are extremely pleased with our overall performance in 2019 having registered an increase of more than 17 per cent in net profits to achieve RO34.406 million when compared to year 2018. All key financial indicators also reflect a healthy trajectory for Sohar International reaffirming the sound strategy that has been set forth.

During the year, the over-subscription of RO100 million perpetual bonds in record time also reflects on the trust the bank has been able to accomplish in the market which is further vindicated by the subscription of an additional RO40 million rights issue. Furthermore, the company’s efforts have been globally lauded by credit rating agencies such as Moody’s and Fitch having rated Sohar International in parity with peer banks in Oman.

Our purpose defines what we do, which is to enable people to ‘win’ and become an integral part of our customer’s financial life and journey. In pursuit of our purpose, we continued to simplify our strategies while maximising our capital base throughout the year. We also managed to navigate ourselves through challenging times. As we step closer towards the end of 2019, we have grown stronger in line with our strategic targets and carry a steady momentum into the coming year. With almost 11 percent market share, serving hundreds of thousands of customers, Sohar International is the fastest growing commercial bank in Oman.

We are optimistic about the coming year as we march ahead on the government’s economic diversification plan, Tanfeedh. With the government’s directive of achieving Tanfeedh goals for economic diversification as we move away from hydrocarbons, 2020 is going to be a turnaround year with some of the identified sectors, namely agriculture and fisheries, manufacturing, logistics and transport, energy and mining, and tourism.

Are developments in technology and regulation having a transformative effect on the banking sector?

In an increasingly digitalised world, disruption by way of technological innovation is inevitable. It has become essential for all the organisations to stay up-to-date with the latest developments, at the same time one must examine them carefully to see relevance for their respective businesses.

However, we also believe that it is not just the technology but also the underlying customer centric needs that can disrupt a business. This in turn makes it essential for banks and corporations in general to stay closer to the customer and provide the best customer experience, address all pain points and provide extremely overwhelming experience across touchpoints for its target customers.

Technology however will remain an essential enabler for the industry allowing us to further understand our current and potential clients better and provide them banking for their ever-changing world.  It is therefore essential that we harness the power of technology and invest wisely.

Is the digitalisation trend enabling banks to increase profitability?

It is a very conclusive non-statement to say digitalisation has a direct effect on a bank’s profit. However, digitalisation in banking sector is very helpful for financial inclusion and helping the economy to grow faster with the development of other sectors. Some of the advantages of digitalisation in banking sectors are increased efficiency, faster processes, vaster coverage, and improvement in quality, less space for human error, environment friendly, increased investment and decreased costs. These factors all together help in increasing profitability for the bank.

What are the new banking trends that will spur banking sector growth?

There has been a revolution in the financial sector in Oman with the emergence of innovative financial technology. It has resulted in the introduction and advancement of several technology trends that have contributed to the radical transformation, growth, and advancement of these industries. The alliance between the innovative technologies of the financial sector and banking services has changed the conventional systems of handling money, and this collaboration is expected to create a massive shift with emerging trends in financial services.

Below are a few banking trends that are transforming the banking sector.

Digitisation

With the rapid growth and adaptation of digital technology across various sectors, it is essential for the banking and financial sector to take the leap on the digital bandwagon as well. Digitisation has created the comfort of “anywhere and anytime banking” and has resulted in reduced costs, automation of various banking procedures, improved revenue generation, and reduced human error. Along with increased customer satisfaction, it has also further enabled the customers by creating personalised solutions for their investment plans and improving their overall banking experience.

Enhanced Mobile Banking

Mobile banking is one of the most dominant current trends in banking systems across the globe. In the coming years, mobile banking is expected to become even more efficient and effortless to keep up with the customer demands. Mobile banking future trends hint at the acquisition of IoT and Voice-Enabled Payment Services to become the reality of tomorrow.

Open Banking

Open banking is another trend that can be seen enhancing financial experiences for customers across the globe. Under Open Banking, banks and other financial institutions are allowing third parties with access to financial information by opening up their application programming interfaces (APIs), to develop new apps and services and provide account holders a greater financial transparency options.

Business Intelligence and Data as the new Oil

In this technology driven era, Business Intelligence and data is the fuel that drives production, innovation and commerce. Business Intelligence not only helps corporates to make better strategic decisions but in combination of Big Data analytics, it can help companies to extract valuable insights such as a comprehensive view of the industry and other market trends.

What are the challenges facing the banking sector? 

The Omani banking sector has remained resilient and maintained a steady growth in 2019 despite the challenging economic headwinds. Organic growth and strengthened capital buffers with sufficient liquidity have allowed banks to provide adequate credit and other services efficiently to all segments of the economy while posting reasonable profits. However, the banking sector have been facing challenges such as improving the asset quality  and increasing cost of credit, accelerating credit flow to the SMEs, expanding financial inclusion, and leveraging fin-tech for increasing efficiency of the banking sector. Besides these, the rising interest rates and fluctuating global oil prices also posed challenges to the sector. But with counteractive measures adopted by the government in general and Central Bank of Oman in particular and steady global oil prices, we should be able to navigate through this challenging economic cycle and thrive in the medium and long term.