2020 will be a turnaround year for the economy, piggybacking on the government’s diversification strategy, says Ahmed Al Musalmi, CEO of Sohar International. Excerpts from an interview

How optimistic are you about Oman’s economic growth in 2020? What is your industry outlook for the year and beyond?

With over 80 per cent economic dependency on the hydrocarbon sector, global oil prices play an essential role in the economy of Oman and region at large. As the economy continues to draw dividend from higher than expected average oil process, businesses will increasingly rely on non-hydrocarbon sectors. We expect that non-oil sectors will continue to gain heavy traction on the backbone of improved business infrastructure underpinned by effective policy making.

We are optimistic for the upcoming 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. The government has identified potential sectors for economic diversification such as agriculture & fisheries, manufacturing, logistics & transport, mining and tourism. Government’s investment in these sectors will help promote the respective sectors and create more jobs opportunities.

Since the implementation of the 9th five-year plan in 2016, the government has kept its focus on development and promotion for non-hydrocarbon sectors. The review of success of the plan will help the Supreme Council of Planning in formulating the 10th five-year plan (2021-2025) as the first implementation plan for Oman’s Vision 2040. The vision sets four main objectives for work, including man and society, economy and development, governance and institutional performance, and the environment of work. There are 12 national priorities which contain 75 strategic aims and 68 indicators to measure this performance.

How was the year 2019 for Sohar International and the banking sector in general?

The Omani banking sector remained robust during 2019 despite the challenging economic headwinds. Organic growth and strengthened capital buffers allowed banks to post reasonable profits. The sector witnessed a healthy 6 to 7 per cent growth in credit YoY, touching approximately RO34bn by the end of 2019. The banks kept a strong foothold despite the rising interest rates and challenging operating conditions, owing to the counteractive measures adopted by the Central Bank of Oman circumfused by the better than expected global oil prices providing further respite.

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. We ended our Q3 with a net profit of over RO25mn, marking an increase of 14.2 per cent in comparison to our last year’s performance. The over-subscription of RO100mn perpetual bonds in record time also reflects upon the trust the bank has been able to accomplish in the market which is further vindicated by the subscription of an additional RO40mn rights issue. Furthermore, the company’s efforts have been globally lauded by credit rating agencies such as Moody’s and Fitch who have 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 turbulent times such as the slow-growth of economy, government spending and stressed private asset quality. 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 upcoming year. With almost 11 percent market share, serving over hundreds of thousands of customers, Sohar International is the youngest and one of the fastest growing commercial banks in Oman.

Can you talk about the future plans and major areas of innovation for your company in 2020?

2019 has been a fantastic year for us with multiple award wins, announcement of our new iconic headquarters and a deployment of a raft of products, services and functionalities that have gone from strength-to-strength across the Sultanate. We are looking forward to keeping the momentum going through 2020 alongside further expansion, ensuring our plans and strategy are towards the digital expansion of banking with a strong focus on our customers and their needs.

Amongst other key initiatives aligned to the bank’s strategy, Sohar International is gearing up to further on customer centricity with internal investments on the bank’s infrastructure and the overall capabilities. The bank is also investing heavily on customer centric initiatives such as ‘lifestyle banking’, which will focus on offering banking products and services to identify new micro-segments based on lifestyle, values, aspirations, and needs. Lifestyle banking will also focus on delivering non-financial experiences to customers enhancing their lives whilst embedding banking products and services within these experiences. This will allow the Bank to play a bigger more personal role in the customer’s life enabling them to win.

All the initiatives are in alignment with the bank’s new purpose of helping customers, community and people grow, prosper and ‘win’ by providing them responsive banking solutions in an ever-changing world, our first step towards a foray into redefining banking beyond just financial services which falls directly in-line with our customer-centric mentality. We will continue to craft new avenues of growth that not only further our customer’s success but also catapult the development of the industry and the Sultanate as well. We will enter 2020 with a promise to generate more velocity, vision, and value for all our stakeholders.