Robert Pancras, CEO of National Finance talks about the company’s performance in 2017, future outlook and the industry trends.

How was National Finance Company’s financial performance in FY 2017?

We were able to maintain our positive growth trajectory, though the industry as a whole witnessed a negative growth during this period. Net finance assets have grown 4.2 per cent during the year to reach RO200.5mn from RO192.5mn in 2016. The company recorded a net profit of RO7.05mn in 2017 representing an increase of 10.57 per cent over the 2016 profit of RO6.35mn.

Major milestones during the year:

Net finance assets crossed the RO200mn mark.

Company’s market share improved from 18.74 per cent as on 31 Dec 2016 to 19.65 per cent as on 31 Dec 2017.

Recorded a net profit of RO7.05mn which is the highest in the industry and an all-time high for National Finance.

Acquisition of Oman Orix Leasing Co, a similar sized company, which is being completed in record time.

What is the latest development on the merger between National Finance Company and Oman Orix Leasing Company?

All the formalities are over and we are in the final leg of the transaction acquisition which is expected to be complete in a few days from now.

What is your outlook for the future?

Within the overall conservative strategy, the company has been expanding its branch network to enable access to core customers who meet our credit profile. With the acquisition of Oman Orix Leasing, National Finance will have the largest branch network in Omani finance and leasing industry with a market share of about 38 per cent. We aim to build on the synergies arising out of this merger and improve our market share. We strongly believe that commitment to our core values of customer service, flexibility and employee development will enable us to capture a fair share of the market.

Can you talk about your plans to leverage on technology?

We have already developed social media pages and are working towards developing internet as an established channel for sourcing business and servicing customers.

In a fast-changing, competitive market place, it is vital that we leverage on technology to empower field sales staff to use mobile technology to process transactions at the dealer/customer office and revert with a decision on the spot. It would also help us better utilize our sales force, thereby letting us use our back-end processing team more effectively.

Another area where we intend to utilize technology is to provide the facility for customers to raise service requests through internet/mobile phones that would not only improve the overall customer experience, but would also reduce the reliance and overhead expenditure on customer support functions while promoting self-service and ensuring 24/7 availability.
We are in the advanced stages of implementing a full-fledged mobile application for our existing as well as new clients that will address these issues.

What is the status of your non-performing loans and loan disbursement?

The year witnessed a slowdown in credit offtake due to dearth of new projects combined with the slowdown of contracting companies in major segments viz. oil & gas, infrastructure, construction etc. so much so that 4 out of the 6 NBFCs in the country have reported negative growth in business during the year. We did have growth of 4 per cent in our earning assets during the year.

There has been some increase in non-performing loans which has largely been due to the adverse economic environment. The increase is as expected in our business and we are operating well within our internal norms for NPAs.

What do you think about the performance of non-banking finance industry in the coming years?

The Oman budget aims to rationalize general spending and increase the contribution of non-oil revenue. The budget supports Government initiatives such as the Tanfeedh programme and the development of public-private partnership projects, in order to stimulate growth and sustain employment. However, on account of a RO3bn deficit budget and the liquidity tightening, we do expect further increase in the borrowing rates in the medium term.

We expect the outlook for the finance and leasing industry to remain challenging. We also expect some further tightening of liquidity leading to compression in spreads due to increase in funding costs and increased competition for business. The key differentiator would continue to be service levels and the industry will continue to develop strategies for maintaining margins through more efficient operations. This combined with improved asset quality and focus on maintaining good collections will be key to successful performance in this space.