Bank Nizwa recorded the fastest growth in the financial sector in Oman resulting in clearing the accumulated losses for the first time in the history of the bank. In 2021, retail banking will see further innovation in products and services that offer a rewarding and enriching experience through modernised operations and investment in new capabilities, says CEO, Khalid Al Kayed in an interview

-An OERLive Exclusive

Can you share details about Bank Nizwa’s financial performance in 2020?

As the largest and growing full-fledged Islamic bank in the Sultanate, Bank Nizwa is leading the sector’s growth through both corporate and wholesale banking and retail banking which is a reflection of our strategic approach to be the trusted financial partner of choice for the people and enterprises of Oman.

Demonstrating utmost resilience in all its operations and exhibiting exceptional performance across all its departments, even in the face of unprecedented challenges, Bank Nizwa has recorded RO11.067mn in net profit indicating a 9 per cent growth after tax for the period ended December 31, 2020, compared to RO10.17mn in 2019. The bank’s total assets also grew by 17 per cent to reach RO1205.99mn compared to RO1034.58mn in the preceding year. Its growing preference amongst customers is reflected in its increasing customer deposit portfolio which increased by 16 per cent to RO924.2mn against RO797.1mn on a year-on-year basis. The bank’s financing to customers rose by 20 per cent to RO1004.1mn for the year ending December 31, 2020, compared to RO839.3mn in 2019.

A key contributor to this extraordinary performance amidst challenging market conditions is the increased awareness of the benefits of Islamic banking amongst individuals and businesses alike, a responsibility Bank Nizwa has taken upon itself to continue to lead.

What were the major milestones achieved by the bank during the year?

During the year, the Bank identified key opportunities, critical areas of improvement and subsequent tactical plans that helped retain its leadership position. The bank’s conscious and consistent efforts rightfully manifest its most trusted position within Oman’s Islamic banking sector. In 2020, Bank Nizwa recorded the fastest growth in the financial sector in Oman which has resulted in clearing the accumulated losses for the first time in the history of the bank. These milestones have allowed the bank to move to another stage and emphasise its leading position in the sector of Islamic Finance in Oman. 

Following, Bank Nizwa’s Strategy, Project Finance and Syndication, which is a specialised function, played a significant role in supporting the government’s diversification plan as well as Oman’s 2040 vision. The function effectively closed several milestone transactions in the manufacturing, utilities, construction, retail, hospitality, aviation, logistics, tourism, education, waste management, metals and mining, medical, and food sectors. Essentially, Corporate Banking remains one of the key growth drivers in the wholesale banking business, registering a record growth during 2020. Although there were several new business opportunities, the Bank’s well-diversified portfolio approach has helped maintain an emphasis on asset quality.

During the pandemic, clients were supported in their cash flow management within the extent of policy measures allowed as issued by the Central Bank of Oman. Major cities of Muscat, Sohar, Salalah and Duqm continued to be the main focus areas. In Duqm, the emphasis was on development projects in line with national objectives. With the active collaboration of all stakeholders, special attention was given to infrastructure projects and national priority industries across the Sultanate to develop innovative Sharia-compliant solutions that delivered strong business value.

The bank’s concerted efforts put several awards and accolades to its credit. In 2020, Bank Nizwa was named the ‘Most Innovative Islamic Bank’ at the International Finance Magazine Awards; ranked as ‘One of the World’s Best Islamic Financial Institutions’ at the Global Finance 2020 Islamic Finance Awards; and awarded the coveted title of ‘Best Performing Company (Large Cap)’ at the Alam Al Iktisaad Awards 2020.

What measures are in place to support SMEs?

Bank Nizwa acknowledges the vital role of small and medium enterprise (SME) sector plays in contributing to the economy and its impact in providing national employment and supports the sector keenly with solutions tailor-made for SMEs in the Sultanate. 

The trust placed in Bank Nizwa’s compliant products and services is evident in the notable increase of the SME customer base and business volume. The SME business continues to expand coverage in key cities outside Muscat. With a special focus on industrial areas such as Madayn, more tie-ups and associations with major corporations and oil majors are on the cards. 

Affiliations with vendors in the supply chain of larger corporate enterprises, particularly SMEs, will remain a mainstay. A dedicated brochure was made to highlight the Sharia-compliant products and services available to SMEs. Despite numerous challenges, the SME Banking unit added new business and products to register satisfactory growth. Bank Nizwa will continue to support the growth of SMEs with Sharia-compliant products and services utilising various channels.

Are there any specific plans to enhance operational efficiency?

Bank Nizwa continually puts in concerted efforts to enhance the efficiency of its operations, which in turn enhances client confidence in the Bank’s capabilities. Since its inception as Oman’s first dedicated Islamic bank, Bank Nizwa has been committed to the vision of being the leading and most trusted Islamic Bank in Oman. The goal has always been to earn the trust of our customers, business community and society at large by setting the benchmarks for integrity, innovation and customer satisfaction. All our efforts and plans will be implemented towards this objective.

What initiatives are in place to increase awareness of Sharia-compliant finance and Islamic banking?

As the first Islamic bank in Oman, Bank Nizwa maintains a long-standing commitment to raising awareness of Islamic finance’s concept and principles and sharing its multifaceted benefits with people across the Sultanate.

In February 2020, Bank Nizwa partnered to host the First Islamic Finance Youth Forum at the College of Banking and Financial Studies. Bank Nizwa’s signature ‘Islamic Finance Knowledge Series’ (IFKS) was held in collaboration with the Directorate-General for Endowment and Religious Affairs in South Batinah governorate, Fiqh Council in Wilayat Bidbid, Tanuf School in Nizwa, and Mohamed bin Roh in Nizwa. In March 2020, the Bank partnered with the Imam Jabir Bin Zaid Waqf Foundation by sponsoring its ‘Endowment Provisions’ workshop to raise awareness about the importance of Waqf in supporting humanitarian causes.

Despite the restriction to fight the COVID-19 pandemic, Bank Nizwa continued on its mission to reach out to local communities across Oman and empower them with the knowledge of Islamic finance through webinars and virtual events. In addition, the bank conducted regular knowledge sessions to increase awareness and clarity about Islamic banking and Sharia-compliant financial services and products, intending to enable attendees to make informed financial decisions. The Bank sponsored and participated in numerous local, regional and international virtual meeting on Islamic finance, including the Islamic Finance News (IFN) Forum and the 5th Annual AAOIFI-IsDB Conference. Bank Nizwa extended support and participated in the 4th IFN Oman Finance Forum 2020 held in partnership with the Capital Market Authority. Senior officials from the bank participated as panellists and shared from their extensive experience as part of Oman’s pioneer Islamic bank, as well as advised on tangible solutions for driving the segment’s growth in times to come.

Furthermore, to ensure that all members of management and staff have sufficient working knowledge of Islamic banking principles and guidelines, Sharia compliance department staff continues to exert major focus on Sharia training so that these principles are understood and practised. Sharia training also encompasses external parties based on an awareness campaign on Islamic banking for all constituents of society such as school teachers and students, university students, employees in ministries and public sector institutions.

How has Bank Nizwa incorporated technology as an effective tool in its Retail Banking, especially during the COVID-19 pandemic?

The activities of a modern financial institution are unthinkable without Information Technology. Developing the IT infrastructure was one of Bank Nizwa’s most important strategic goals for 2020. The Bank continued to invest in innovation to offer compelling customer experiences, stand out amid increasing competition, and position the business for future growth. Innovation is continuous within the Bank, backed by strategic partnerships to enhance customer-facing applications and back-end processes and systems.

Some of the major initiatives in 2020 included implementation of Anti-Fraud Solution, Video Conferencing using Microsoft Teams, Work-From-Home Solution, Digital Board Meeting Solution, WPS System, HR Mobile App, Workplace by Facebook, OCB Mala’a System, B2B System, 3D Secure Online Credit Card Transaction, Mobile Banking UI/UX Revamp, as well as additional services like Charity & Bill Payments across multiple institutions in Oman, Instant Account Opening, and Instant Transfer (24×7).

Enhancements and upgrades continued in Corporate Internet Banking, IVR and credit card services intending to create greater customer satisfaction. In 2020, Bank Nizwa enhanced its network security through a firewall upgrade and introduced faster digital connectivity for branches.

Bank Nizwa aspires to be the ‘digital bank of choice’. In a rapidly evolving digital environment, this commitment is anchored on preserving robust customer relationships by cultivating trust, relevance and convenience through every banking channel. Significant investment has been made in future-proofing platforms and in embracing cutting-edge technologies such as artificial intelligence, data science, robotics to enhance customer experience and serve them better. The Bank has also upgraded its networks and systems. Some of the large transformation programmes that will continue into 2021 include a Core Banking transformation and customer experience enhancement through multiple Digital Banking solutions.

Against a dynamic backdrop in the business, technology and threat environments, Bank Nizwa maintains an exact balance between tight security and seamless productivity. In line with the Bank’s process-centric approach that focuses on continuous improvement, several robust enterprise security protocols have been implemented, including 24/7 security monitoring, upgraded firewall, IP telephony system, direct connectivity with SWIFT alliance, advance call recording system, and faster connectivity links for branch operations.

What trends do you see emerging in the Retail Banking space in the remainder of 2021?

2020 was an unprecedented year, and individuals and retail customers were most impacted. Due to the pandemic and related restrictions on movements, closure of markets, reduction of salaries and various other factors, the retail banking sector was negatively impacted. Despite these challenges, our retail banking division consolidated its customer base. The focus was to strengthen and improve Bank Nizwa’s market share while carefully balancing credit risk and exposure. 

Bank Nizwa’s Retail Banking division has continuously redefined the Islamic banking experience in Oman by providing customers with innovative products and services underpinned by responsive customer care and technologically advanced solutions to meet today’s dynamic requirements. This approach has brought about positive change in Oman’s retail banking space, prompting other institutions to re-examine their product and service offerings.

Moving forward, Retail banking at Bank Nizwa and across the industry will continue to upgrade its digital channels to improve financial inclusion and accelerate the move to a digital economy. These will include electronic platforms like IVR/phone banking, mobile app, internet banking, ATM/CDM machines, SMS, and Email – to enhance customer convenience. 

Interestingly, Bank Nizwa’s Retail banking conducted regular knowledge sessions in 2020 to increase awareness and clarity about Islamic banking and Sharia-compliant financial services and products, to enable attendees to make informed financial decisions.

In 2021, retail banking will see further innovation in products and services that offer a rewarding and enriching experience through modernised operations and investment in new capabilities. At Bank Nizwa, we are constantly looking for ways to adapt and reinvent ourselves while always keeping the customer at the centre of what we do. And while we have always been at the forefront of innovation, the proliferation of digital technologies provides us with opportunities to redefine how our customers see Bank Nizwa and the role we play in their lives.