MUSCAT: As the flagship bank in Oman, all key business lines of Bank Muscat recorded a healthy performance on expected lines amid the challenging economic and financial situation.

The bank achieved a net profit of RO 126.73 million for the nine-month period ended 30 September 2014 compared to RO 102.51 million reported during the same period in 2013. Net interest income from conventional banking and income from Islamic financing stood at RO 182.75 million for the nine months of 2014 compared to RO 171.97 million for the same period of 2013, an increase of 6.3 per cent.

Non-interest income at RO 104.1 million was higher by 33.2 per cent compared to RO 78.16 million in 2013. This included one-off investment gain of RO 9.4 million arising from investment in Al Salam Bank in Bahrain. Net loans and advances increased by 5.2 per cent to RO 6,042 million as against RO 5,741 million in 2013. Customer deposits, including CDs, increased by 14.9 per cent to RO 6,351 million as against RO 5,527 million as on 30 September 2013. Islamic financing receivables amounted to RO 385 million compared to RO 247 million in the same period of 2013. Islamic banking customer deposits amounted to RO 231 million compared to RO 124 million in the nine month period in 2013.

National development projects require a large amount of investment. How has Bank Muscat managed to increase its involvement in the country’s development over the past years?

During the last 32 years since its inception in 1982, Bank Muscat has been closely involved in the progressive march of the nation. The bank maintains its emphasis on supporting feasible projects in core areas such as the oil and gas sector. Bank Muscat has been involved with almost all major projects in the Sohar industrial Port and Free zone, including Oman Gas Company, Oman Refinery and Petrochemicals, Aromatics Oman and Oiltanking Odfjell Terminals. In project and structured finance, the bank is focused on maintaining its leadership position by playing an integral part in key infrastructure projects in all major sectors, including oil and gas.

Bank Muscat was involved in the financing of Oman LNG. The refinancing involving $1.3-billion term-loan facility and $64-million debt-service letter of credit facility was an opportunity for Bank Muscat to display its aptitude in project financing. Alongside a syndicate of 12 international and regional banks, Bank Muscat worked to bring the refinancing project to fruition. The bank has a highly rated team of investment banking professionals. The investment banking group concluded approximately $6 billion of equity and debt advisory transactions during 2013. The bank was retained by an oil and gas major on a $3.5 billion equity financial advisory mandate, which was closed successfully during the year.

The government of Oman has emphasised the importance of diversifying the economy. What role can the bank play to help make the Sultanate’s objective a reality?

The outlook for Oman’s economy in 2014 is positive as the government has announced a 5 per cent increase in spending. The bank foresees a strong performance in 2014 owing to the government’s continued focus on economic diversification and infrastructure development across the Sultanate.

The 2014 government investment expenditure is estimated at RO 3.2 billion, which is 24 per cent of the overall public expenditure. As the country’s economy continues its growth momentum, new opportunities are available for corporate banking business. In Project and Structured Finance, the bank is focused on maintaining its leadership position by playing an integral part in key infrastructure projects in sectors such as oil & gas, petrochemicals, shipping, real estate, aviation, power & water.

In line with the government focus on promoting small businesses, the bank remains committed to SME development in Oman. With a strong pipeline of mandates amounting to $4 billion under execution going into 2014, the bank continues its dominance of the investment banking business in Oman.

Tell us of any new expansion, product and service launches this year? Why is this timely and what demand does it meet?

Bank Muscat, in association with Visa, was granted an exclusive positioning among 20 global banks chosen as official Retail Bank of 2014 FIFA World Cup™. Bank Muscat was the only financial institution in Oman to receive this unique privilege. The bank lined up a series of campaigns and activities to build up the 2014 FIFA World Cup™ excitement in Oman. During the 4- month promotion period, the bank’s touch points built up excitement to engage the people with the 2014 FIFA World Cup™.

In line with the government focus on promoting small scalebusinesses, the bank established a dedicated Retail Enterprises department to support small scale businesses in the country. The innovative Najahi product line-up introduced by the bank for this segment does not require collaterals or audited financials to obatin credit facilities, encouraging youth to join the world of entrepreneurship. As the country’s economy continues its growth momentum, new opportunities are available for corporate banking business.

As part of efforts aimed at enhancing customer reach, three exclusive corporate branches were opened and more are planned for corporate clients across the Sultanate. Meethaq, the pioneer of Islamic banking in Oman from Bank Muscat, is well positioned to provide Islamic financial expertise to diverse segments.

What new product strategies have you developed to increase income from wealth management?

The bank, as part of its strategy to harness investment opportunities in the GCC property market, recently launched the Bank Muscat GCC Property Income Fund. The first transaction of the fund was the acquisition of the five star Movenpick Hotel located in the prestigious Jumeirah Beach Residence in Dubai. The fund will invest in income yielding properties in the GCC region that generate a stable annual yield of 7 to 8 per cent. The target size of the fund managed by the Asset Management division of Bank Muscat is US$500 million. The fund is positive on the GCC real estate market which presents huge growth potential driven by several structural factors.

Has your bank added more digital offerings to attract upwardly mobile young people?

A new strategy focusing on customer segmentation in the mass market resulted in improvements in product sales. The bank increased its mobile customer base by almost 75 per cent along with online transaction volumes. With such a large market share, the bank is migrating customers from the more conventional branch channel to alternative channels. The bank’s online and mobile banking platforms have been upgraded, resulting in an increase of active mobile users.

Can you share details about your branch and ATM network and are there any plans of upgrading your presence in the year ahead?

Bank Muscat’s presence has strengthened in all parts of Oman through the widest network of 138 branches, 597 ATM/CDMs and over 10,000 PoS terminals. The bank is well positioned to leverage on the large network of branches and other delivery channels to target the growth potential and cross-sell opportunities. The bank is also set to leverage on investments in new technology to further increase efficiency, improve customer service and support growth plan. The bank’s biggest footprint and presence across the Sultanate and world class products and services are helping to make the vital differentiation, with the focus on its ‘Let’s Do More’ vision.

How do you think the bank differentiates itself in lending to SMEs and what government initiatives does the bank partner for helping to grow SMEs and your client base?

Over the past years, Bank Muscat has launched several initiatives as part of its commitment to SME development in Oman. Serving as building blocks for entrepreneurs, these initiatives assume importance in the backdrop of the priority accorded by the government to develop the SME sector in Oman. Aimed at strengthening the SME sector and creating a successful generation of entrepreneurs, al Wathbah, Bank Muscat’s SME department, offers a comprehensive suite of tailor-made finance solutions.

Notable first-of-its-kind initiatives by al Wathbah include the launch of al Wathbah Academy aimed at training entrepreneurs in Oman, leading to accredited international certification. The main objective of al Wathbah Academy is to impart the required skills and guidance for entrepreneurs drawn from diverse fields to identify growth opportunities and tackle challenges in developing their SME business ventures. al Wathbah also launched an innovative SME financing programme not requiring collateral guarantee.

The al Wathbah SME Non-Collateral Programme is a bold step affirming the bank’s commitment to encouraging an entrepreneurial culture in Oman. The bank also organised a unique mentoring programme for SMEs as part of an initiative by the Ministry of Commerce and Industry. Aimed at creating a successful generation of entrepreneurs, the CEO mentoring programme was in line with the directives of His Majesty Sultan Qaboos bin Said to support the SME sector, and strengthen its role in the economic development of Oman. The bank recently launched Najahi, yet another initiative to support micro and small businesses.

In order to promote SMEs in Oman, you have to identify entrepreneurial ventures which are doing well and creating value for youngsters. There are opportunities for SMEs in the oil & gas, construction and infrastructure sectors. The SMEs can succeed and enjoy credibility with the government and banks if they are disciplined and committed to their objectives.

Kindly tell us how any Central Bank of Oman regulations will impact your lending books for infrastructure finance and home finance/mortgages? How much growth do you predict in these segments?

The banking sector in Oman is governed by policies defined by the Central Bank of Oman (CBO). The recent CBO stipulations on the banking sector include the 35 per cent ceiling on personal loan portfolio of banks, while increasing the cap on housing loans from 10 per cent to 15 per cent, with effect from 30 June 2014. The CBO has also mandated 5 per cent loan portfolio to SMEs and reduced the ceiling of interest rates on personal loans from 7 per cent to 6 per cent.

The CBO decision to reduce the interest rate on personal loans reflects global trends in interest rates. On the other hand, the decision to lower the ceiling on personal loan portfolio and increase the cap on housing loan portfolio will improve the quality of bank assets and help allot more funds for mortgage loans to create real assets for banks and consumers. Bank Muscat fully supports this approach contributing to long-term gains for Omani society.

The year 2014 will be a period of increasing competition for the banking sector in Oman with the recent introduction of Islamic banks and consolidation of conventional banks, launch of competitive channels and new products to cater to various new and growing sectors. On the back of a buoyant economy, Bank Muscat expects credit growth to be around 8 to 10 per cent this year. Even as the bank seeks to fulfill its social responsibility in meeting the financial requirements of citizens and residents, the cost of funding remains lower on the back of prevailing strong liquidity in the market which will help to maintain profit margins.

What is your vision for contributing to the “ideals of family core values” and “community connectivity” in line with the national development goals? Kindly mention some of these initiatives and how these benefit the bank’s profile, lending and the community as a whole?

Endowed with a global outlook, Bank Muscat remains Omani at heart, truly a classic case of service without boundaries. Bank Muscat is the first bank to establish a full-fledged Corporate Social Responsibility (CSR) department in Oman.

Considered among core values, the CSR policy stems from the bank’s commitment to social responsibility encompassing allround development vis-à-vis society, environment and economy. The bank has developed several programmes that promote community building. The CSR programmes are centred on developing youth through educational support, training and sports, investing in homes for low-income and social welfare families etc.

Tadhamun The Tadhamun programme was launched by the bank in partnership with the Ministry of Social Development to extend support to social welfare and low- income families in the Sultanate. Reflecting the corporate ethos, the bank seizes every available opportunity to channel resources for creating sustainable, positive changes in communities by investing in their welfare to equip them for a better life. Over the years, the Tadhamun programme has benefitted numerous social welfare and low-income beneficiaries and it will be expanded to cover more beneficiaries.

Jesr Al Mustaqbal The ‘Jesr al Mustaqbal’ (Bridge to Future) youth scholarship programme is targeted at students belonging to social welfare and low-income families, selected to study in their chosen fields, including banking, accounting, information technology and finance. The scholarship programme was launched in execution of the directive of His Majesty Sultan Qaboos bin Said to provide relevant educational and training opportunities to Omani youth to develop employable skills. The CSR programme offers educational and vocational training for the young Omanis belonging to social welfare and low-income families who have not been able to complete their education for various reasons. Scholarships are available to students from all the regions of the country.

Green Sports The bank launched the unique Green Sports initiative in 2012, in collaboration with the Ministry of Sports Affairs, to promote Oman as a sporting nation, as part of which sports teams/clubs across Oman are supported to green their playing fields. The bank significantly enhanced support to the programme this year, raising the number of beneficiairies to 14 compared to 10 in the previous year. Till date, a total of 34 teams have been extended support to green their playgrounds across the Sultanate.

The bank recognises that local clubs wield immense influence on neighbourhood communities, especially the youth, therefore clubs with modern infrastructure facilities can help raise sporting heroes for the country. Green Sports not only encourages the youth to excel in sports, but also promotes a healthy lifestyle and environmental protection.

How has the FIFA World Cup helped you in building your brand?

As a forward looking financial institution, Bank Muscat strives to establish its leadership role in all realms of activities. Given the importance of the game of football in Oman, the 2014 FIFA World Cup™ campaign was designed to reward football enthusiasts with a lifetime chance to witness the 2014 FIFA World Cup™ action in Brazil. Notably, 66 lucky Bank Muscat customers had the opportunity to visit Brazil and witness the 2014 FIFA World Cup™ matches. Stemming from the bank’s key role in elevating the experience associated with the real action of 2014 FIFA World Cup™ in Brazil, we fully believe the passion for football, which runs in the blood of Omanis, could not have been rewarded better. For any communication to be successful, it must be relevant to people, closer to their needs and requirements. The Bank Muscat brand lived up to satisfy these needs, whipping up excitement to make the magic of 2014 FIFA World Cup™ real in Oman.

What is Bank Muscat’s longterm in-country value and Omanisation strategy?

Omanisation strategy? Bank Muscat provides valuable contributions to the community through opportunities for local businesses to proposer and grow. The bank accords top priority for human resources development and has adopted innovative strategies to equip Omani employees to take up leadership positions in tandem with future challenges. Presently, the bank has achieved Omanisation level at 93.67 per cent. Our women empowerment strategy is also notable as 46 per cent of employees are women at various levels, including members of the management team. The bank accords utmost priority for the development of human resources and provides ample opportunities for the Omani nationals to achieve accelerated career growth.

How is Meethaq contributing to redefine Islamic banking operations in the Sultanate of Oman?

Meethaq Islamic Banking from Bank Muscat marked the foray of independent Islamic banking window operations in Oman. The bank has invested in staff, systems and controls to ensure the service is delivered in a professional, segregated and fully Shari’a-compliant manner. Meethaq is well-positioned to provide Islamic financial expertise to diverse segments and thereby promote the good of society as a whole. Meethaq has adopted the best practices in Islamic banking and finance worldwide to combine a robust model which protects customers and complements the Islamic banking industry. Every Meethaq product goes through the process of Shari’a compliance certification by the Shari’a Supervisory Board and is created in line with the guidelines of the Central Bank of Oman.