Dossier

1OER DOSSIER February 2010

Concept and content byAkshay BhatnagarSusmita DeGhalib Abdullah Mohammed Fahmi Rajab

Product ManagerShivkumar

Art DirectorsSandesh S. RangnekarMinaal G. Pednekar

DesignM. BalagopalanKhoula Rashid Al Wahaibi

Production ManagerGovindraj Ramesh

PhotographyRajesh BurmanSathyadas C. Narayanan

CORPORATEChief ExecutiveSandeep SehgalExecutive Vice PresidentAlpana RoyVice PresidentRavi Raman

Senior Business Support ExecutiveRadha Kumar

TranslatorMustafa Kamal

Published byUnited Press & Publishing LLCPO Box 3305, Ruwi, Postal Code - 112Muscat, Sultanate of OmanTel (968) 24700896Fax (968) 24707939Email: [email protected]

All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for all advertising contents.

An Presentation

Copyright © 2010 United Press & Publishing LLCPrinted by Mazoon Printing Publishing & Advertising (LLC)

POWER OF BUSINESS INTELL IGENCE

EDITORIAL

Beginning of change

After one of its worst years in 2008, the global banking industry is limping back to recovery. The world’s

500 most valuable banking groups, in 2009, have grown by 62 per cent in terms of market capitalisation

and their brand values have cumulatively increased by 49 per cent, according to the fourth edition of

the BrandFinance Global Banking 500, an annual review of the top banking brands in the world.

The survey indicates that Middle Eastern brands, and more specifically in the GCC region, have notched up

a strong performance increasing in brand value by 78 per cent. Apart from the bouncing back of oil prices,

the growth of Islamic banking is also one of the key reasons behind the success of GCC banks.

In an expected development, US is losing its sheen in the global banking industry. Only 85 US banks

made it to the list. Last year, the figure was 95. The number of UK banks has also gone down to 22 from 24.

Following the US and UK, Japanese banks’ brand value declined by 3 per cent. On the other hand, rest of

the Asian banks did well. The brand value of India and China went as high as 137 per cent and 58 per cent

respectively. In another pointer towards the changing order of the global banking industry, a Russian bank

Sberbank entered the Top 20 list for the first time. It had a growth of 160 per cent over the previous year and

its brand value was estimated to be $11.7 billion.

David Haigh, CEO of Brand Finance plc. stated, “The value of the Top 500 global bank brands is now 4 per

cent higher than in 2008, prior to the banking crisis. The total value of the top 500 global bank brands is

$716 billion, an increase of 49 per cent. There has been a significant shift in the balance of power globally

away from the US and towards banks in emerging markets.”

He added, “Investors that suffered from the credit crisis sought the comfort of stricter lending rules imposed

by Islamic law. It will be interesting to see if other big international banks will begin to offer Islamic banking

services in 2010 and try to make inroads in the Middle Eastern market in addition to providing their existing

customers with greater choice.”

In the case of Oman, it has been a year of mixed performance for different market players but overall the

sector has managed to overcome the challenges with great success. In the current issue of OER Dossier, we

are showcasing the developments that have marked the year 2009 in the banking, finance and insurance

sectors in Oman.

Enjoy reading!

Akshay Bhatnagar

[email protected]

OER DOSSIER February 20102

CONTENTS

Virtue of resilience18 For Oman, a sound and resilient financial system is an essential precondition to promote economic growth especially under the current global environment

O P I N I O N S

28 Philipp E. BaertschiChief Strategist of Bank Sarasingives global view for 2010

14 HE Hamood Sangour Al Zadjali, CBO CBO’s key areas of focus in 2010

16 HE Yahya Bin Said Abdullah Al-Jabri, CMAThe current capital market

20 Bank Muscat

22 National Bank of Oman

24 Bank Sohar

42 National Bank of Oman

25 Bank Dhofar

29 Oman International Bank

30 Ahli Bank

6 News in Brief

34 Pragmatic Approach

38 NBFC Overview

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CONTENTS

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R I S K M A N A G E M E N T

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Sponsored features


NE WS IN BRIEF

Offering a lifetime chance to experience the

electrifying live action of the FIFA World Cup

2010 in South Africa, BankMuscat in associa-

tion with Visa is offering an opportunity to

existing and new cardholders to win tickets

and witness the matches in South Africa.

Seven lucky BankMuscat customers will be

awarded a fully paid package to the FIFA

World Cup through a prize draw. The package

includes return economy class air tickets for

two to South Africa, hotel accommodation at

4 star hotel for two, and tickets to watch one

match besides city tour. Six packages are to

witness the preliminary round games while

one package is for a quarter final game. Bank-

Muscat’s new and existing Visa credit card-

holders can participate in the draws.

Adding momentum to the campaign, Bank-

Muscat has also re-branded its ePayment pre-

paid card and issued a limited edition series

with the World Cup 2010 theme. The objec-

tive of this campaign is to support the gov-

ernment’s e-Governance initiative. The ePay-

ment card can be used locally and around

the world. The Bank will give away LCD TVs

to 5 lucky winners from among customers

who apply for this card through a ‘scratch &

win’ scheme. The BankMuscat Visa FIFA World

Cup credit card acquisition-cum-usage cam-

paign will run from 27 January, 2010 to 10

May, 2010.

Oman Arab Bank has signed an agreement

with Bahwan Contracting Company for the

construction of the bank’s new head office

building in Al Ghubra North. On behalf of

Oman Arab Bank, the agreement was signed

by Rashad Al Zubair, Chairman of the Bank

and by S.K. Virmani, Managing Director of

Bahwan Contracting Co.

OAB’s new head office building will be con-

structed using the latest in technologies and

office ergonomics, stated a press statement

from the bank. The new building will cater

to OAB’s current and future requirements

and consolidate all its departments in one

convenient location with ample car parking

space. The project is expected to complete

in 18 months.

Abdul Kader Askalan, CEO of OAB said: “This

prestigious project of our future head office

building will not only be a work of art in

terms of architecture, but also means of con-

venience that will enable our customers to

transact their business with ease and effi-

ciency as the design approach is very cus-

tomer centric”. The engineering and design

consultancy for the building is done by

Khatib & Alami and Partners.

BankMuscat Visa card’s FIFA offer

OAB in agreement with Bahwan Contracting

BankMuscat has announced support to

Hamed Al Harthy, an ardent Omani moun-

taineer, on an attempt to conquer Mount

Aconcagua in Argentina. The 6962-meter

peak is the highest mountain outside Asia

and one of the seven summits of the world.

Salim Al Kaabi, Assistant General Manager

- HR, BankMuscat, said: “BankMuscat is asso-

ciated with inspiring achievements and the

decision to support Al Harthy’s mountain-

eering expedition stems from the Bank’s

commitment to encourage extraordinary

exploits which will bring glory to Oman. As

Al Harthy embarks on this grueling expedi-

tion, BankMuscat is proud to support him in

his mission driven by passion to overcome

challenging situations. Reflecting the enter-

prise, grit and determination of adventurers,

BankMuscat always leads with innovative

products and services.” Mount Aconcagua’s

appeal to mountaineers lies in its physical

and psychological demands on climbers,

climate and the surrounding scenery. Its

elevation and weather conditions call for a

preparation for exacting challenges. Acon-

cagua has different routes with several lev-

els of difficulty. Al Harthy will be taking the

Aconcagua Ameghino Valley and Upper

Guanacos traverse route which will provide

him with the opportunity to improve climb-

ing skills.

Al Harthy does not underrate the task ahead

of him despite having previous experience

and adequate preparation. The expedition,

according to him, had more to do with the

desire to test oneself in extreme conditions,

stretching the limits of mental/physical

endurance and perseverance while at the

same time enjoying the excitement of explo-

ration itself. The value he sees in this attempt

is to inspire young Omanis. The expedition is

expected to take around 20 days.

BankMuscat supports expedition

Salalah House, CBD Area, P.O. Box: 264, PC 112, Ruwi, Muscat, Sultanate of OmanTel: +968 24704232/233 Fax: +968 24701580 Email: [email protected], [email protected]

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National Bank of Fujairah records profitNational Bank of Fujairah PSC (NBF) has

announced its results for 2009 which have

been submitted for Central Bank’s approval.

The highlights of the results: NBF recorded

profit of AED 104.3 million compared to a

loss of AED 50.3 million in the same period

last year. Results reflect the strength of core

customer base and were achieved despite

difficult credit conditions during the year.

H.E. Sir Easa Saleh Al Gurg, Deputy Chairman

of NBF commented:“The Bank’s progress

amidst the global financial crisis is a testa-

ment to its prudent & balanced approach

to these challenging times . The Bank has

grown its core earnings which, coupled with

the recovery of the investment portfolio,

helped in absorbing credit losses and main-

taining profitable operations.


NE WS IN BRIEF

Oman International Bank along with

MasterCard Worldwide recently held a usage

promotion drive on OIB-MasterCard product

to recognize customer loyalty. The theme

of the promotion was ‘Spend on your OIB

MasterCard and win instantly in Scratch-N-

Win coupon’. The promotion was recently

held at Al Araimi Complex and lasted for

15 days attracting good response from the

credit card members, according to a company

release. Anyone spending 10 rials or more at

any of the outlets in Al Araimi complex got a

scratch-n-win coupon and also got a chance

to enter the raffle draw.

OIB-MasterCard on a promotion drive

NBO’s World Cup Football Promotion

Arab Bank

awarded ‘Best

Bank in MENA’

With the 2010 World Cup Football fever

building up, National Bank of Oman (NBO)

in association with Visa has launched the

‘Go Fans’ promotion during the period 15

January-28 February, 2010. Any customer

using their NBO credit or debit card will be

entered into a draw to win an ‘all expenses

paid’ trip for two to South Africa for the World

Cup. During this promotion, customers who

use their card will automatically be entered

in the draw. Asif Redha Hussein, NBO’s

Assistant General Manager–Consumer

Banking said: “We hope our customers will

get lucky to win the two tickets to South

Africa for the World Cup Football. Recently,

a NBO card member was the only winner

across Oman to have won a ‘Go around the

world trip’.

Global Finance, one of the lead-

ing global magazines, awarded

Arab Bank the title of ‘Best Bank for

Trade Financing in the Middle East

and North Africa’, for the year 2010.

Abdel Hamid Shoman, Chairman &

CEO of Arab Bank said: “This award

confirms our premier position in the

field of Trade Financing in the MENA

region.

Trade Financing at Arab Bank is

supported by our extensive global

network and financial strength in

ensuring continuous support to our

clients.”

A Global Finance’s spokesperson

commented, "We awarded the

banks that stood by their clients at a

time of a lending crisis, were able to

find innovative means to reduce the

risks at hand and enhance liquidity

via international deals.”

Nadia Al Talhoni, Manager of Treas-

ury and Trade Financing at Arab

Bank said: “Our proactive approach

is the key behind our success.

International commerce may be

complicated and risky, however by

adopting a proactive and dynamic

approach, we have been able to

assist our clients, more effectively,

by allocating the required resources

and emphasizing on the basic

requirements that their business

relies on.”


BankMuscat successfully closed its 10th Certif-

icate of Deposit (CD) auction which attracted

bids totalling 34.5 million rials against the

issue size of 15 million rials. There was a good

mix of applications for the one year and five

years’ CDs. The oversubscription is a reflec-

tion of the liquidity in market and lack of safe

avenues to deploy resources in short term. The

weighted average yield accepted for one year,

three and five years are 4.10 per cent, 5 per

cent and 5.50 per cent respectively. The yields

of one, three and five-year maturity for the first

round of CDs launched in September 2008

were 5.23 per cent, 5.59 per cent and 6.01 per

cent respectively. The comparison to the latest

round of CDs points to a fall in interest rates at

the shorter end of the Omani yield curve.

BankMuscat expects the interest rates to fur-

ther soften as rial liquidity continues to put

pressure on the shorter end of yield curve.

However, longer tenors, namely three and

five years, are expected to remain stable. The

recent spate of bond issues within the GCC

and ample liquidity have all contributed to

the overwhelming response evoked by the

CD issue. The spread between traditional

bank deposit and CD is expected to narrow

as market participants utilize the higher yield

being offered by CDs. Till date from 10 rounds

of CD auctions, BankMuscat has accepted

bids worth 167.40 million rials against the

subscription of 335.60 million rials.

The outlook for corporate credit quality in

the Gulf region going into 2010 is one of slow

recovery or at least stabilisation, says Moody’s

Investors Service in its New Special Comment

entitled “Arabian Gulf Corporates: Review

2009 & Key Themes for 2010”. Overall, Moody’s

expects fundamental corporate credit to sta-

bilise, in line with a gradual recovery of the

global economy, but also on the back of some

more rapidly recovering domestic economies.

The report identifies six key themes that will

drive credit quality among Gulf corporates in

2010. “The main drivers of credit quality will be

industry-specific fundamentals as well as the

companies’ ability to improve liquidity pro-

files and to extend debt maturities, which have

remained comparatively short and clustered,”

explained Philipp Lotter, Dubai-based Senior

Vice President in Moody’s Corporate Finance

Group and co-author of the report. Another

key theme for 2010 is Moody’s expectation of

an increase in corporate issuance among high-

quality issuers as companies replace shorter

tenors with longer maturities, and reduce their

historically heavy reliance on rollover bank

lending whilst continuing with their invest-

ments. Other themes include government

support, which will remain under scrutiny, and

transparency levels at both corporate and gov-

ernment level, which need to be enhanced for

investor confidence to be restored.

In its review of 2009, Moody’s new report says

that it was a testing year for the Arabian Gulf

corporate landscape. “In previous years, the

number of publicly known corporate defaults

in the region had been negligible and the

GCC demonstrated a highly interventionist

and creditor-friendly track record,” said Raf-

faelle Semonella, Associate Analyst for corpo-

rates in Dubai and co-author of this report.

However, by the end of 2009, a number of

high profile-defaults had started to change

this picture. A sharp deterioration in corpo-

rate credit quality due to a combination of

weaker fundamentals and sovereign support

uncertainty led to a substantial downward

ratings migration, with a total of 34 rating

actions of which all but two were in a nega-

tive direction. “Indeed, the average rating in

the Gulf has migrated from A1 in 2008 to Baa1

in 2009,” said Lotter.

Fincorp has appointed Samer E. Amireh as

General Manager of its Brokerage Division.

Jordan- born Amireh has been in the bank-

ing and finance industry for more than 12

years. His previous experience includes

holding General Manager Brokerage posi-

tions at DAMAC Securities in UAE and AB

Invest in Jordan. His last assignment was

in Damascus where as GM of Global One

Financial Investments, he established one of

Syria’s first brokerage companies.

BankMuscat’s 10th CD oversubscribed

Gulf Corporate Credit quality to stabilize in 2010: Moody’s

Fincorp appoints new Brokerage GM

NE WS IN BRIEF

“I look forward to utilizing my leadership

and technical international experience in

this new role, and I aim not only to maintain

the excellent reputation of the Fincorp Bro-

kerage Division, but also improve upon the

speed and efficiency of our service. I have

already begun by restructuring the divi-

sion and enhancing, for example, the exist-

ing facility to directly place trading orders

on-line and access portfolio statements on a

real-time basis to our clientele,” he said.


Bank Sohar has launched ‘2010 Al Mumayaz

Savings Scheme’ offering the single larg-

est prize money in Oman in 2010. The new

scheme will commence in February and con-

tinue till the end of the year. Every month,

there will be 40 prizes of 400 rials each with

a minimum of two assured prizes for custom-

ers of every branch. Average balance of 100

rials in the account entitles customers to par-

ticipate in this prize draw.

In addition, there will be a celebratory prize

of 40,000 rials every month for all customers

who maintain a qualifying average balance

of 1,000 rials in their accounts. The rewards

on the prize cheque escalate every quar-

ter. The March quarter Big Cheque prize of

140,000 rials scales up to 240,000 rials for the

June and September quarter and becomes

a Super Cheque Prize of 440,000 rials for the

December quarter. To participate in the quar-

terly Big Cheque and in the year-end Super

Cheque Prize draws,

customers need to maintain a minimum

average balance of 2,000 rials in their savings

account, over a period of 30 days prior to the

draw date. “We are a new commercial bank in

Oman; we started the Al Mumayaz Savings

Scheme soon after we opened for business

in 2007. From the beginning, we have been

talking to our customers, both big and small

and listening to what they want and what

they would appreciate in a Savings Scheme.

Our 2010 Savings Scheme reflects the aspira-

tions of our customers,” said Khalfan Rashid

Al Taley, DGM-Retail Banking at Bank Sohar.

Commemorating 40 years of the glorious

Renaissance march under the leadership of

His Majesty Sultan Qaboos, BankMuscat has

launched a major national campaign envis-

aging year-long celebratory initiatives, pro-

grammes and activities.

Titled ‘Oman Celebrates’, the objective of

the campaign is to initiate programmes

that celebrate and mark the country’s

achievements during the last 40 years.

BankMuscat will focus and convey the

‘Oman Celebrates’ theme to distinguish

all its branding and communication cam-

paigns during 2010.

The announcement of all-new al Mazyona

savings scheme offering exciting daily,

monthly and jackpot prizes every four

months marked the first in the series of

the celebratory initiatives. Sulaiman Al

Harthy, Group DGM – Consumer Banking,

BankMuscat said: “The all-new al Mazyona

reaches out to all citizens, offering an excit-

ing line-up of prizes for different segments

of savers at an unbeatable frequency.

The underlying theme is the generous

use of the theme of 40 and its multiples

thereof, establishing al Mazyona’s status

as the savings scheme for the nation. For

almost 20 years, the al Mazyona brand has

made dreams of innumerable customers

come true.”

BankMuscat will offer a daily prize of 4000

rials, which will be available to all custom-

ers maintaining a minimum balance of 100

rials. There will be a winner for every work-

ing day of the week starting from Sunday

to Thursday. With daily draws, customers

can improve their chances to win prizes.

The Bank has introduced a new monthly

prize of 40,000 rials. The climax of al Maz-

yona will build up with a jackpot prize of

400,000 rials.

National Bank of Oman has

announced Murray Sims, CEO of the

Bank since April 2008 will be leav-

ing on the expiry of his contractual

term. NBO has appointed Salaam Al

Shaksy as his successor.

Al Shaksy has been the CEO of

Dubai Banking Group and Dubai

Bank since May 2005, and prior to

this, was the CEO of Dubai Islamic

Investment Group. He has more

than 23 years experience in bank-

ing, including previously working in

senior positions in various banks in

Oman.

He currently has a number of board

memberships and affiliations in

Oman and elsewhere. He is expected

to assume his duties as CEO of the

bank at the end of March.

Bank Sohar launches single largest prize offer

BankMuscat's 'Oman Celebrates’ campaign

runs successfullyNBO appoints

new CEO

NE WS IN BRIEF


INTERVIE W

Banking Sector Holds GroundHE Hamood Sangour Al Zadjali, Executive President of the Central

Bank of Oman, speaks to Sushmita Sarkhel about the ups and downs

experienced by the banking sector and CBO’s key areas of focus in 2010

How has the Banking sector in Oman fared

in the past year?

The banking sector in Oman continued

its growth pattern during 2009 as it regis-

tered increase in all major banking aggre-

gates such as deposits, credit and capital

and reserves. Commercial banks' total credit

expanded by 7.2 percent which stood at 9.8

billion rials as at the end of November 2009.

Aggregate deposits witnessed a growth of

5.3 per cent over its corresponding period

in 2008 to reach 9.1 billion rials. Core capital

and reserves of commercial banks at the end

of November 2009 amounted to 1.64 billion

rials, roughly representing 12 per cent of total

assets. Provisional figures of net profits of

the commercial banks amounted to 249 mil-

lion rials for the period January to November

2009.

Has entry barriers for new entrants deterred

them? What has been the scenario since

these barriers were introduced last year?

The impression that Central Banks raise mini-

mum capital requirements to bar new entrants

is not well founded. This is particularly high-

lighted by current developments when, glo-

bally, quantity and quality of capital require-

ments are being reviewed in the context of

financial crisis and erosion in capital levels.

Central Bank of Oman has been raising mini-

mum capital requirement over a period of

years to make our banks strong, resilient and

competitive in the light of global competi-

tion. The move has stood the banks in good

stead and they have had increased business

reach and staying capacity. In the above con-

text, new entrants, serious in business and

having good vision and strategies, have been

there and will always be there depending

upon the dynamics of the market.

Many local banks have been looking at

growth plans. What has been the trend

with regards to overseas growth in the

last year? Has the economic slowdown

impacted growth for the banks?

The year 2009 witnessed reduced growth in

business and banking sector globally and

the emphasis has been consolidation and

recovery of confidence. The final results for

2009 are not out but commercial banks in

Oman recorded, as of November 2009, 4.2

per cent increase in assets, 5.3 per cent rise

in deposits and 7.2 per cent rise in credit –

when compared to November 2008. Liquid-

ity has been comfortable for extending

credit.

So far as growth overseas is concerned,

Omani banks tended to be watchful in

2008 itself even as the financial turmoil was

unfolding. In fact, it was relevant to note that

Central Bank of Oman’s prudential restric-

tions and supervision contained possible set

backs which could have occurred otherwise.

We believe that banks need to observe cau-

tion still in overseas operations, awaiting

business turnaround. It may be added that

banks, which had initiated branch opening

in GCC countries, are pursuing the same.

What will be CBO’s main strategy and area

of focus for 2010?

Some of the regulatory measures taken by the

CBO in the recent past insulated our economy

from the adverse effects of contagion. In pur-

suance of its commitment to adopt global best

practices, the CBO mandated the implementa-

tion of Basel II from the year 2007. Consider-

able progress has been made in designing

the Risk Based Supervisory (RBS) framework

and the road map is being finalized for imple-

mentation. Significant advances are taking

place in the area of payments and settlements

with regard to mitigating systemic risks and

increasing financial transaction efficiency.

His Excellency Hamood Sangour Al Zadjali,

Executive President , CBO


INTERVIE W

MOVING WITH THE TIMESCMA has upgraded its regulations as per international standards

to satisfy global needs and investors’ ambitions. HE Yahya Bin Said

Abdullah Al–Jabri, Executive President, shares with Susmita De more

about CMA and the current capital market

What measures have you taken to upgrade the

regulatory framework consistent with international

standards and practices to ensure financial sound-

ness in the capital market?

The Capital Market Authority (CMA) is a member in

The International Organization of Securities Commis-

sions (IOSCO) which provides international norms for

rules and regulations of capital markets. IOSCO has 30

fundamentals divided into different sections, such as,

Regulations, Self Regulation, Enforcement of Securi-

ties Regulations, Co-operation in Regulation, Issuers

Collective Investment Schemes, Market Intermediaries

and Secondary Markets. Adding to that, the CMA often

upgrades its regulations according to international

standards to satisfy global needs and investors’ ambi-

tions. In order to do so, CMA continuously requests all

listed companies in the capital market sector to fol-

low the fundamentals and regulations in order

to insure implementing those standards.

What are your expectations from the

market in 2010?

Any expectations from the market

is dependent on factors that could

impact the market performance such

as the growth of oil prices, country’s

economic performance, investor

behavior, performance of compa-

nies, and many other internal and

external factors that control the

market. However, when we look back

at the market performance in 2009,

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we see that the market performed positively

and most companies listed in MSM were try-

ing to get past the effects of financial crisis

and become more efficient and profitable.

From that perspective, we expect that the

market will improve further as most inter-

national reports also indicate that the world

economy is gradually recovering from the

global financial crisis.

What is the significance of new listings in

the market? Will the year 2010 see further

listings come onto the market across the

banking, power, telecommunications and

manufacturing industries?

Listing new companies in our market will

provide significant diversifications to invest-

ment markets and to the investors. In addi-

tion, new listed companies will benefit

from regulations that protect the current

owners, shareholders and the companies

themselves.

At the moment there are some requests which

are being studied and hopefully we should

see the listing of Al-Nawras from the telecom-

munications sector by the middle of 2010.

It should be mentioned here that CMA

continuously encourages all major compa-

nies especially family businesses, which are

not listed in the market, to grab this great

opportunity to increase their liquidity and

take the chance to share their experiences

and achievements with the society.

How has the MSM performed in 2009? How

has it grown in terms of market value and

capitalization?

The MSM 30 index had performed posi-

tively last year with an increasing growth

rate of 17 per cent against 40 per cent in

2008 and reached 6369 points compared

to 5441 points in 2008. The market capitali-

zation increased from US$20bn in 2008 to

US$23.6bn in 2009; the number of securi-

ties traded was US$6.1bn through 888,000

trades and the turnover was US$9.5bn.

What was the most notable thing that

happened on the MSM in 2009?

The most important event for MSM in 2009

was the decision to establish the Invest-

ment Stability Fund to restore confidence

in the market and to limit the market vola-

tility through policies that ensure success

to this initiative. In addition to this, MSM

website got two Arabian awards that are

considered additional to the previous MSM

achievements of launching MSM website at

the local or regional levels. This indicates the

level of development that MSM has attained

and the extent of fulfilling investors’ needs.

Furthermore, the Sa’ad and Qusaibi crisis

was the most risky crisis that was faced by

the Omani market in 2009, but MSM was

able to overstep it. The listed companies

did not face real risk in the international

financial crisis, but it was noticed that most

Omani companies recorded better results

in the third quarter of 2009. On the other

hand, the market witnessed a remarkable

growth in market values with an increase

of 18 per cent with comparison to 2008. The

performance of the companies and their

financial results improved in comparison

with those of 2008. We also have to mention

here that the MSM has marked its 20 years

since establishment in 1989 and I seize this

opportunity to tell you about all the efforts

that have been made to help develop a

strong market.

Is there any impact of the global downturn

on MSM? Does Dubai debt crisis have any

negative sentiment on the market here?

All markets were influenced by the global

crisis though variably as international capital

markets faced intense reduction, followed

by a fall in the US markets. The Arabian mar-

kets in general and Gulf markets, in particu-

lar, were negatively affected by this crisis as

they witnessed a remarkable fall back.

MSM has also been affected, but at a lower

degree, as the financial status in the Sul-

tanate was really maintained well against

negative falters of the sharp break in the

international markets. Regarding Dubai cri-

sis, MSM might have been affected for moral

reasons resulting from the investor’s fear

of the Omani banks being exposed to the

crisis. However, the Capital Market Author-

ity has always encouraged the importance

of transparency and disclosure in order to

achieve fairness. To establish security and

stability in the market, CMA had requested

all listed banks and companies to reveal

all the information they have, directly or

indirectly, of operations with Dubai World

Group. In response to CMA’s request, data

showed that the total exposures of local

banks to Dubai World Group are 29.55mn

rials distributed by three banks. In fact,

Dubai crisis contributed indirectly to boost

investors’ confidence in the market and pre-

sented the market in a glamorous way in

respect of transparency and disclosure com-

pared to some other markets that took no

steps to observe the effect of the crisis on

companies.

Vis-a-vis the other GCC markets, how has

MSM performed?

Most Gulf markets ended 2009 at high rates

after gross loss in 2008 due to the interna-

tional financial crisis. Comparing MSM’s per-

formance in 2009 to the other Gulf market’s

performance, MSM closed at 6369 points

with an increase at 17 per cent. The market

receded 39.8 per cent in 2008. According to

index growth in 2009, MSM was the second

among Gulf markets after the Saudi market,

the largest Arabian market, as the trading

index closed at 6121 points with an increase

of 28 per cent during the year. Abu Dhabi and

Dubai stock markets grew by 15 per cent, 10

per cent, respectively, and Doha market grew

slightly by 1 per cent only, while Bahrain and

Kuwait markets declined by 19 per cent and

10 per cent, respectively.

The Capital Market

Authority has

always encouraged

the importance of

transparency and

disclosure in order to

achieve fairness


BANKING – OVERVIE W

Driving the growthIn the years ahead, the economy will rely on the ability of financial

markets to allocate resources adequately and efficiently towards

productive purposes

The global monetary and financial

conditions changed dramatically

during the course of 2009. After a

phase of high economic growth

and bullish asset prices, the global

economy continued to encounter sharp cor-

rections in asset prices, which in turn led to

growing concerns about the health of the

financial systems and deceleration in eco-

nomic growth.

Oman’s banking system remained relatively

insulated though there were few areas

of concern for some of the banks. Liquid-

ity conditions remained, by and large,

comfortable despite continued decelera-

tion in the growth of monetary and bank-

ing aggregates. Total assets of commer-

cial banks registered a moderate growth

of 4.2 per cent to 14,234.4 million rials

in November 2009 compared to 13,656.7

million rials in November 2008. Commercial

banks’ assets in the form of cash and depos-

its with the Central Bank of Oman (CBO)

amounted to 970.3 million rials at the end

of November 2009 compared to 732.2 mil-

lion rials in November 2008. Total outstand-

ing credit rose modestly by 7.2 per cent to

9,812.2 million rials at the end of November

2009 from 9,157.4 million rials at the end of

November 2008 reflecting the slowdown of


the economy. Outstanding investments in

securities (domestic and foreign) decreased

by 4 per cent to 1,564.6 million rials from

1,629.4 million rials a year ago.

Investments in CBO CDs increased to 1,086.5

million rials at the end of November 2009

from 831 million rials at the end of Novem-

ber 2008. Commercial banks’ outstanding

investments in foreign securities declined

to 197.1 million rials from 523.3 million rials

during the same period on account of an

expected turnaround in interest rates.

On the liabilities side of the balance sheet,

aggregate deposits (Rial Omani plus for-

eign currency) registered a modest growth

of 5.3 per cent to 9,065.4 million rials over

the twelve month period ending November

2009 compared to an increase of 38.7 per-

cent to 8,610.2 million rials a year ago. Gov-

ernment deposits with commercial banks

increased by 9.7 per cent to 1,844.8 million

rials, while deposits of public enterprises

rose by 1.1 percent to 695.5 million rials.

Private sector deposits, which constituted

72 per cent of total deposits with banks,

recorded an increase of 4.6 per cent to

6,525.1 million rials by the end of November

2009 from 6,240.5 million rials a year ago.

The increase was mainly reflected under

demand and saving deposits. Demand

deposits increased by 158.1 million rials,

a rise of 9.9 per cent, while saving depos-

its rose by 159.1 million rials (9.7 percent).

Foreign currency designated deposits of

the private sector declined by 249.8 million

rials (31 per cent) due to lower interest rates

offered on such deposits.

Core capital and reserves of commer-

cial banks at the end of November 2009

increased by 9.8 percent to 1,634.6 million

rials, representing 11.5 percent of commer-

cial banks’ total assets, while provisions and

reserve interest were augmented by 24.7

percent to 276.2 million rials. Outstanding

provision and reserve interest constituted

2.8 per cent of credit to private sector and

public enterprises as at the end of Novem-

ber 2009 compared to 2.4 per cent a year

earlier. Provisional figures on profits of com-

mercial banks (after provisions and taxes) as

at the end of November 2009 amounted to

249.6 million rials compared to 246.2 million

rials at the end of November 2008 despite

the notable increase in provisions and

reserve interest.

Broad money (M2) increased by 4.5 per cent

to 7,919.1 million rials in November 2009

over the same period in 2008. Money sup-

ply as represented by narrow money (M1),

comprising currency held by the public and

local currency demand deposits, expanded

by 19.7 percent over the twelve month

period ending in November 2009 to reach

2,470.7 million rials. Quasi money (compris-

ing Rial Omani savings and time deposits,

certificates of deposit issued by commer-

cial banks, margin deposits and foreign cur-

rency denominated deposits) declined mar-

ginally by 1.2 per cent to 5,448.4 million rials

in November 2009. As regards the sources of

broad money supply (M2), domestic assets

of both commercial banks and the Central

Bank of Oman increased by 19.5 per cent

to 3,525.1 million at the end of November

2009, while combined net foreign assets of

CBO and commercial banks decreased by

5 per cent to 4,394 million rials during the

same period.

CBO’s policy interest rate for absorption of

surplus liquidity in the form of CBO CDs of

28 days maturity moderated significantly

from 0.850 per cent to 0.050 per cent over

the twelve month period ending Novem-

ber 2009. Furthermore, CBO’s policy rate

for injection of liquidity –the average rate

for repos with CBO– declined to 2 per cent

from 2.744 per cent during the same period

under reference. Similarly, the overnight

domestic inter-bank lending rate declined

to 0.085 per cent in November 2009 from

0.341 percent in November 2008, suggest-

ing comfortable short term liquidity in the

banking system.

In respect of domestic interest rate structure

of commercial banks, the weighted average

interest rate on RO deposits (demand, sav-

ings & time deposits of all sectors) decreased

from 2.305 per cent in November 2008 to

2.260 percent in November 2009, while the

weighted average RO lending rate increased

from 6.955 percent to 7.435 percent during

the same period.

For a small open economy like Oman, a

sound and resilient financial system is an

essential precondition to promote economic

growth especially under the current global

environment. It has to shift emphasis from

growth as a source of profit to soundness

and stability as the means to contain the

adverse effects of contagion from the glo-

bal crisis. In the years ahead, the economy

will rely on the ability of financial markets to

allocate resources adequately and efficiently

towards productive purposes. With a wider

range of instruments and market players in

the financial sector, it needs to be ensured

that development takes place in an efficient

and orderly manner.

In recent years, the financial sector in Oman

has undergone major structural transforma-

tion leading to greater deregulation, finan-

cial innovations, tailor made credit products,

advances in technology, risk–based supervi-

sion and most modern payment and settle-

ment systems. If we look at prospects for the

banking sector in 2010, economic recovery

is expected to aid in improved credit addi-

tion. The higher fiscal spending will enhance

private sector investments and employment

generation will benefit the personal segment.

Total assets of

commercial banks

registered a moderate

growth of 4.2 per cent

to 14,234.4 million

rials in November

2009 compared to

13,656.7 million rials

in November 2008


BANKMUSCAT

The Bank’s core business income during 2009 was strong and stable

in spite of the global financial crisis

CORE BUSINESS INCOME STABLE

BankMuscat has proposed a payout

of 45 per cent dividend. Subject

to approval of the Annual General

Meeting and regulatory authorities,

the Board of Directors have recommended

20 per cent cash and 25 per cent bonus

stock for shareholders. The cash dividend

works out to 20 Baiza per ordinary share of

100 Baiza each aggregating to 21.54 million

rials on the Bank’s existing share capital and

stock dividend in the proportion of one

share for every four ordinary shares.


UP

Operating Profit 36.9%

Net interest income 7.6%

Impairment for credit losses on loans portfolio 98.2 million rials

Gross loans and advances portfolio 5.2%

Savings and demand deposits 9.6%

DOWN

Net profit 73.7 million rials

Customer deposits 3,068 million rials

The Bank achieved a net profit of 73.7 million

rials in 2009 as against 93.7 million rials reported

in 2008. The operating profit stood at 208.9

million rials for the year ended 31 December,

2009 as against 152.6 million rials for the year

ended 31 December 2008, an increase of 36.9

per cent. During 2009, the Bank disposed of its

investment in HDFC Bank, India and recognised

a pre-tax profit of 60.5 million rials. Operating

profit excluding the gain on HDFC Bank

investment was marginally lower by 2.7 per

cent in 2009. This demonstrates that the Bank’s

core business income during 2009 was strong

and stable in spite of the global financial crisis.

Net interest income increased by 7.6

per cent from 162.1 million rials in 2008

to 174.4 million rials in 2009 supported

by a combination of asset growth and

improvement in net interest margin. Non-

interest income grew from 74.7 million rials

in 2008 to 116.7 million rials in 2009 mainly

on account of the gain on sale of HDFC Bank

.investment during 2009.

AbdulRazak Ali Issa

BankMuscat, Chief Executive

THE BANK’S GROSS LOANS AND

ADVANCES PORTFOLIO GREW BY

199 MILLION RIALS OR 5.2 PER CENT

TO 4,052 MILLION RIALS AS ON 31

DECEMBER 2009 COMPARED TO 3,853

MILLION RIALS AS ON 31 DECEMBER

2008



NATIONAL BANK OF OMAN

The bank has taken impairment provisions against its investment portfolio of 4.1

million rials and provisions of 8 million rials against three specific bank exposures

NET INTEREST INCOME UP

The National Bank of Oman achieved

a net profit after tax of 26.1 million

rials for the twelve months ended 31

December 2009 compared to 45.4

million rials for the same period in 2008.

Notwithstanding very testing global market

conditions, the Bank’s operating income was

down only by 7 per cent to 81.9 million rials

compared to 2008, the latter reflecting a

significant one-off gain on investment sales of

6 million rials. On a like for like basis, operating

income was broadly flat. The Bank successfully

grew its net interest income by 20 per cent to

56.8 million rials from 47.5 million rials in the

prior year period through focused balance

UP

Net interest income 19.5%

Operating expenses 3%

DOWN

Total Assets 9.1%

Loans & Advances to Customers (net) 2.5%

Customers’ Deposits 6%

Net profit after tax 42.5%

THE BOARD HAS RECOMMENDED A

CASH DIVIDEND OF 0.175 RIAL PER

SHARE THIS YEAR BASED ON THE

DIVIDEND POLICY APPROVED BY THE

BOARD OF DIRECTORS

sheet management. Net spreads have also

improved to 3.24 per cent in 2009 up from

3.08 per cent in 2008, reflecting an improved

return from existing assets.

Trade related activities and investment income

were both lower than in the comparative

period in 2008 and contributed to the decline

in the ratio of non interest income to total

income from 46 per cent to 31per cent as a

result of lower volumes of lending related fee

income and investment related revenue, which

was largely attributable to factors associated

with the global financial downturn. The cost

to income ratio for the period increased to

42 per cent from 38 per cent in December

2009 mainly as a result of the decrease in non

interest income and also as a consequence

of a significant amount of investment in the

business as the Bank substantially increased

its distribution footprint and rebranded

the bank. The investment in its distribution

network will deliver long-term benefits for the

bank and its customers by bringing the bank

closer to where its customers live and work.


BANK SOHAR

Despite global financial crisis, Bank Sohar was able to overcome many of the

obstacles and achieve favorable results

FOCUS ON BANKING FUNDAMENTALS

Bank Sohar achieved a Net Profit of

8.022 million rials for the year 2009

compared to a Net Loss of 2.264

million rials for the year 2008. This is a

clear turning point and a shining milestone

for the bank for achieving net profit for the

whole year despite being in operation for

less than three years. The operating profit

for the year was 11.916 million rials which

was 131.47 per cent higher than 2008. The

net interest income during the year 2009

of 22.858 million rials was 111.47 per cent

higher than 2008. The Operating Income for

the year 2009 increased to 29.131 million rials

which was 64.31 per cent higher than 2008.

The Cost to Income ratio has improved from

71 per cent in 2008 to 59 per cent in 2009.

Net loans and advances grew by 24 per cent

during this year to reach 787 million rials at

the end of the year, while customer deposits

grew by 52 per cent to reach 832 million rials

during the same period. The bank’s market

share of Private Sector Credit stood at 8.33

per cent while the Private Sector Deposit

share was 6.86 per cent as at November

2009. Despite the challenging economic

environment that the global economies are

facing as a result of the global financial crisis,

the bank was able to overcome many of the

obstacles and achieve favorable results. The

bank has taken a string of precautionary

measures during this period to protect the

shareholder and depositor interests and

avoid any negative repercussions emanating

from the continuing global financial crises.

In addition to that, the bank has focused on

improving the yield on assets, controlling

the cost of funds and operating expenses

and protecting the lending portfolio from

impairment.


UP

Total Assets 21.6 %

Net Loans & Advances 24%

Deposits from Customers 51.9 %

Operating Income 64.3 %

Dr Mohamed Abdulaziz Kalmoor,

CEO, Bank Sohar

BANK SOHAR IS FOCUSSED ON

IMPROVING THE YIELD ON ASSETS,

CONTROLLING THE COST OF FUNDS AND

OPERATING EXPENSES AND PROTECTING

THE LENDING PORTFOLIO FROM

IMPAIRMENT


BANK DHOFAR

Bank Dhofar has posted a very healthy net profit after tax of 28.06 million rials,

an increase of 18.5 per cent over 2008 figure of 23.68 million rials

HEALTHY PERFORMANCE

Bank Dhofar continued to achieve

good results during the year 2009

despite the global financial crisis. The

financial indicators reflected decent

growth as the total assets increased from

1,323.82 million rials at the end of 2008 to

1,489.99 million rials in December 2009, a

growth of 12.6 per cent. The net loans and

advances to customers improved by 17.6 per

cent from 1,018.44 million rials to 1,197.31

million rials. Also, the customer deposits

raised by the Bank recorded a growth of

13.3 per cent and increased from 971.59

million rials to 1,101.267 million rials.

Further, the Bank performed well on other

financial indicators also. The operating

income increased by 15.8 per cent from

56.16 million rials to 65.02 million rials.

However, the operating expenses also went

up at the same time by 12.1 per cent from

UP

Total Assets 12.6%

Net Loans and advances to customers 17.6%

Deposits from Customers 13.3%

Total Shareholders’ Equity 9.7%

Operating Income 15.8%

Operating Expense 12.1%

Net profit after Tax 18.5%

21.10 million rials to 23.65 million rials.

Overall, the Bank posted a very healthy

net profit after tax of 28.06 million rials, an

increase of 18.5 per cent over 2008 figure of

23.68 million rials.

The Bank has proposed a cash dividend of 15

per cent amounting to 11.09 million rials and

bonus share issue of 10 per cent amounting to

73,958,653 shares of 0.100 rial par value each.

Kris Babicci

CEO, Bank Dhofar

THE CUSTOMER DEPOSITS RAISED BY THE

BANK RECORDED A GROWTH OF 13.3 PER

CENT AND INCREASED FROM 971.59 MN

RIALS TO 1,101.267 MN RIALS. THE BANK

PERFORMED WELL ON OTHER FINANCIAL

INDICATORS ALSO



OMAN INTERNATIONAL BANK

The total income of the Bank reduced marginally from 44.92 million

rials to 43.05 million rials

MIXED BAG

Oman International Bank achieved a

Net Profit of 21.52 million rials in 2009,

down from 29.47 million rials in 2008.

The Bank’s Interest Income decreased

to 40.23 million rials but as a result of lower

interest expense, the Net Interest Income

grew from 29.75 million rials to 31.85 million

rials. The total income of the Bank reduced

marginally from 44.92 million rials to 43.05

million rials.

UP

Net interest income 31.85 million rials

Total Assets 1,039.33 million rials

Deposits from customers 729.88 million rials

DOWN

Net Profit 21.52 million rials

Total Income 43.05 million rials

Loans and Advances 614.61 million rials

The loans and advances went down

marginally from 626.78 million to 614.61

million rials. However, the total assets of the

Bank increased slightly from 1,018.19 million

rials to 1,039.33 million rials.

The deposits from customers shot up a bit

from 729.31 million rials to 729.88 million

rials. The Bank has proposed a cash dividend

of 22 per cent to be distributed in 2010.

The Bank has

proposed a cash

dividend of 22% to

be distributed

in 2010

THE DEPOSITS FROM CUSTOMERS SHOT

UP A BIT FROM 729.31 MILLION RIALS TO

729.88 MILLION RIALS. THE BANK HAS

PROPOSED A CASH DIVIDEND OF 22 PER

CENT TO BE DISTRIBUTED IN 2010



AHLI BANK

Ahli Bank’s loan book continues to be of high quality as reflected in

its NPL ratio

ON THE GROWTH PATH

Ahli Bank’s customer deposits have

grown year over year by 46 per cent

in line with its strategy to build a

stable low cost deposit base. Asset

growth, under the new business model,

has been managed with a prudent risk

management approach undertaken in view

of the prevailing global financial crisis and its

implication. The loan book continues to be of

a high quality as reflected in its NPL ratio of

0.32 per cent in 2009 (2008:0.19 per cent).

Net Operating Income has increased year

over year by over 26 per cent to 17.90 million

rials and Operating Expenses (excluding

loan impairment charge/recoveries) were

controlled at 7.92 million rials resulting in a

lower cost to income ratio of 44.3 per cent

(2008 : 54 per cent). Overall, the Net Profit

after Tax rose by 44 per cent to 8.54 million

rials (2008: 5.93 million rials).

The Tier I Capital as at year end 2009

amounted to 83.50 million rials up from

81.21 million rials in 2008 and the Capital

Adequacy ratio is at 17.62 per cent (2008 :

23.36 per cent), well above the mandatory

10 per cent minimum requirement of

Central Bank of Oman. The Bank’s Earning

Per Share (EPS) for 2009 has risen to 12.6

Baizas from 8.7 Baizas during 2008.The bank

has recommended 7 per cent cash dividend

and 5 per cent bonus shares.

UP

Loans and advances 18%

Customer Deposits 46%

Total Assets 35%

Net Operating Income 26%

Profit after Tax 44%

Abdul Aziz Al Balushi

CEO, Ahli Bank

THE BANK’S EARNING PER SHARE (EPS)

FOR 2009 HAS RISEN TO 12.6 BAIZAS

FROM 8.7 BAIZAS DURING 2008. THE

BANK HAS RECOMMENDED 7 PER CENT

CASH DIVIDEND AND 5 PER CENT BONUS

SHARES


The powerful cyclical recovery triggered

in H2 2009 by unconventional mon-

etary policies and fiscal policy stimuli

should continue into Q1 2010. None-

theless, this economic recovery will peter out

in H2 2010. The recovery will only turn into a

sustained upswing in 2011, with the support

of further fiscal stimulus. This is the conclu-

sion of the latest report on the economic

outlook, Global View, published by Bank Sar-

asin’s Research team for Q1 2010. Given this

economic backdrop, Bank Sarasin expects

equities, commodities and corporate bonds

to post a positive performance in Q1 2010.

However, the risk of setbacks will increase as

the year progresses. Bank Sarasin therefore

does not predict a significant rally in equity

markets over the full year and anticipates

marked regional differences, particularly in

Europe. With companies facing economic

uncertainty, skilful stock picking will be cru-

cial for investment success in 2010.

Various structural hurdles are blocking a

sustainable growth cycle. The reduction

of debt in the banking system, a process

known as deleveraging, will rein in lending

volumes. The mid-term economic outlook

is also overshadowed by the need to man-

age public deficits and restore the trade bal-

ances. The pattern of various leading indica-

tors, including the German ZEW Economic

Expectations Index, as well as the Consumer

Sentiment and Economy Watchers Index in

Japan, indicate with a usual six-month lead

time the possibility of slowing growth and

2010 will be not only a decisive year for the global economy, but in

particular for the GCC

Is recovery sustainable?

VIE WPOINT

a cyclical relapse as early as H2 2010. This

slowdown, which is expected to occur by

the end of 2010, will need to be cushioned

by further fiscal stimuli to lay the founda-

tions for a sustainable upswing from 2011

onwards.

Philipp E. Baertschi, Chief Strategist at Bank Sarasin


Jan Amrit Poser, Head of Research and Chief

Economist at Bank Sarasin said: “2010 will

determine whether or not the recovery

is sustainable. Even though Sarasin confi-

dently expects a positive answer, we are still

a long way from seeing a positive economic

trend with the power to sustain itself with-

out external assistance. We are convinced

that the economy will therefore still need

support in the form of monetary and fiscal

policy measures. With capacity utilisation so

low, deflationary risks will prevail over the

next two years.”

Philipp E. Baertschi, Chief Strategist at Bank

Sarasin added, “We expect a good first quar-

ter, so are starting 2010 overweight in equi-

ties. But the stock market rally is likely to run

out of steam quite quickly. We prefer shares

in companies from industrialised nations

which have a strong presence in emerging

markets. In our stock selection we focus on

well-capitalised blue chips that offer a high

dividend yield and higher than average

growth. Bonds offer only limited opportuni-

ties for returns because of low interest rates,

although they will become more attractive

over the course of the year.”

Low interest rate policies With the economy likely to slow down in Q2

2010, central banks should maintain expan-

sionary monetary policies through existing

interest rates. The rise in long-term interest

rates will only be temporary and rates should

fall back below the current annualised level

by the end of the year. This suggests a switch

from short- to long-duration bonds. In 2009,

the correction of the credit market anoma-

lies caused by the collapse of Lehman Broth-

ers was the main driver for the corporate

bond market. Now that the credit market is

stabilising, the focus is shifting back to fun-

damental data such as expected default

rates. As the economy recovers, credit con-

ditions become less restrictive, and corpo-

rate earnings improve, Bank Sarasin expects

the default rate to ease slightly. This decline

promises some upside potential for corpo-

rate bonds in the first half of the year. Based

on positive corporate profits and generous

liquidity combined with lower interest rates,

stock markets should also rally in the short

term. This is likely to tail off again from the

second quarter onwards. There will be no

dominant trend during 2010. It is therefore

important to review asset allocation contin-

uously in a critical light. In their regional and

sector allocation, equity investors should

take a defensive stance and avoid high indi-

vidual risks.

GCC: on the consolidation pathWhile the year 2008 conveyed the impres-

sion that there is no limit to GCC growth

thanks to surging oil prices and GCC’s ambi-

tious efforts to diversify from oil, the year

2009 brought two heavy dampeners for the

region. First oil prices temporarily fell to 35$

per barrel (down from 145$ in mid-2008)

and secondly Dubai World, the most pres-

tigious project in the region, appeared to

nearly default. 2010 will be not only a deci-

sive year for the global economy, but in par-

ticular for the GCC.

Though Sarasin’s outlook for Dubai is on

the cautious side it is more optimistic for

the region as whole. One has to keep in

mind that Dubai only adds 10 per cent to

GCC’s gross domestic product, while the

lion’s share of around 45 per cent comes

from Saudi-Arabia. The major driver for GCC

GDP growth remains the evolution of the oil

price. Sarasin expects oil prices to overshoot

Sarasin’s estimated medium-term price

band of 75$ to 85$ per barrel in the first half

of the year as the current global recovery

fuels demand for oil. However, in the second

half of the year Sarasin sees oil prices drop-

ping slightly below the mentioned price

band due to the global cooling towards the

end of 2010. This in turn bodes well for the

region in 1H10, but points to a slight down-

turn in 2H10.

While the GCC itself benefits from a stable

political environment we have to keep in

mind that it is surrounded by geopolitical

hot spots. While it is nearly impossible to

forecast the eruption of one of these hot

spots, Sarasin analysts predict that in such

a case, the impact on the region will be

limited. On the hand, Sarasin would expect

some capital outflows due to a rise in risk

aversion, on the other hand oil prices could

jump, which in terms of GDP growth could

partly offset the first effect.

Macro and micro risks within GCC may

dampen investor’s risk appetite for the

region in 2010. Sarasin is cautious for

emerging markets as a whole and think that

the potential for stock markets in the GCC

region is limited.

The heavy weighting of the financial sector

is a clear negative for the region. However,

a consolidation for equity markets in 2010

may set the stage for a more broad based

and sustainable recovery in 2011.

India: a bright 2010India weathered the deepest global reces-

sion since 1929 surprisingly well. GDP

growth is expected to advance by a healthy

7.9 per cent in Q3 2009. Strong long-term

fundamentals, a robust banking system and

fiscal impulses by the government kept the

Indian economy on a stable growth trajec-

tory. Furthermore, the receding inflation

allowed the Reserve Bank of India (RBI) to cut

key rates significantly in the last 12 months,

thereby shoring up the Indian economy.

The economic prospects for 2010 look

bright as well. As traditional markets for con-

sumption goods (US, UK, Spain) are losing

importance as households in these econo-

mies have to pare consumption in order to

restore their budget balances new markets

are taking centre stage. India, the economy

with the largest population, is in a pole posi-

tion. This is likely to fuel net capital inflow

this year despite a possible global downturn

in the second half of this year. The inflow of

capital in turn should propel fixed capital

investment. Low interest rates are also likely

to help consumption. With consumption

and investment in good shape, domestic

demand is expected to be the major driver

of Indian GDP growth in 2010.

According to Sarasin, net exports is an area of

concern for India. With a cooling of the glo-

bal economy towards the end of the year and

the Indian economy growing, Sarasin expects

net exports to deteriorate significantly and to

exert a drag on India’s GDP growth.


Robust domestic demand in combination

with a further increase in commodity prices

in the first of half of this year, which will

translate into higher prices for food and oil,

are likely to lead to a rebound in wholesale

price inflation in the course of 2010. How-

ever, as the slowdown of the global econ-

omy will also drag commodity prices down

in 2010 inflationary dangers in India are

clearly limited.

Healthy GDP growth and a rebound in infla-

tion will force the RBI to tighten its monetary

policy in the course of 2010. According to

Sarasin, a sharp tightening is not expected,

however, as the global downturn towards

the end of 2010 will bring (at least for the

RBI) a welcomed cooling of economic activ-

ity and prevent India’s economy from over-

heating in 2011.

Caution advised for emerging marketsGiven the likelihood of a mixed and by and

large not particularly dynamic share per-

formance, Bank Sarasin believes that regional

differences will become more important in

2010. Average earnings growth in excess

of 30 per cent seems possible for the over-

all market in Europe. Sarasin’s forecast here

is significantly higher than the market con-

sensus. European shares are looking increas-

ingly attractive to international investors

because the euro is expected to depreciate.

In the US market, Sarasin favours export-

driven companies who generate a large por-

tion of their sales in emerging markets.

Although global investors are still enthusi-

astic about emerging markets – despite or

perhaps because of their strong perform-

ance in 2009 – they have the biggest poten-

tial for a setback according to Sarasin. There

are already signs that the upturn in the

manufacturing industry is gradually fizzling

out in China and India.

The relative performance of emerging mar-

kets is therefore likely to falter significantly.

At the same time, however, a significant set-

back could present the ideal opportunity

for re-entering emerging markets. Sarasin

favours markets with a significant exposure

to commodities – especially Brazil. Demand

for energy sources will continue to drive

earnings forecasts upwards. Sarasin is taking

differences will become more important in

2010. Average earnings growth in excess

for energy sources will continue to drive

earnings forecasts upwards. Sarasin is taking

a cautious stance towards Asian emerging

markets in 2010.

Investors favour blue chips2010 will be a difficult year for companies.

They will need to find further cost savings.

Bank Sarasin sees very little evidence to sug-

gest that repeating the cyclical sector alloca-

tion would be a promising bet. Skilful stock

picking will therefore be crucial for invest-

ment success in 2010.

The bank identifies the following criteria for

success: large cap companies with attrac-

tive returns in the form of dividends and/

or share buy-back programmes, companies

with attractive valuation ratios and realistic

earnings forecasts, and firms focusing on

products and services in sectors that are

currently prospering. Infrastructure projects,

energy efficiency and ecology, meeting new

safety requirements, efficiency improve-

ments through technology, and service and

maintenance will be the prominent themes

of 2010. This means that companies in cycli-

cal sectors, where caution is advised from

the macroeconomic perspective, should

outperform the market.

Focus on skilful stock pickingIn its global sector allocation, Bank Sarasin’s

favourites include the Consumer Staples sec-

tor, where demand is very steady, Industrials,

where specific thematic drivers are creating

demand for new products, and Energy and

Technology. The Bank has a neutral weight-

ing in Healthcare, Commodities and Basic

Materials, Telecoms and Utilities. Bank Sara-

sin thinks that Consumer Discretionary will

be one of the losers in 2010.

Equally unattractive is the Financial Indus-

try which, as highlighted by recent events in

Dubai, suffers from persisting uncertainties

and is likely to underperform. While Bank

Sarasin advises underweighting banks in a

global portfolio, the climate for insurance

companies looks more positive and they

should therefore be given a neutral posi-

tioning versus the benchmark.

��

VIE WPOINT


VIE WPOINT

There has been a dramatic decline in fees

and deal activity according to an analy-

sis of the 2009 performance of the Mid-

dle East investment banking industry by

Thomson Reuters. At the height of the 2007

boom, Middle East mergers and acquisitions

exceeded $40 billion. In 2009, they fell to

less than $13 billion. The Middle East equity

capital markets, peaking in 2008 at more

than $36 billion, plummeted to only $6.89

billion in 2009. Overall fees of $599 million

paid to investment bankers and advisers in

2009 almost halved compared with 2008.

“These have undoubtedly been tough times

worldwide with the investment banking

business feeling the effects,” said Basil Mof-

tah, Managing Director of Thomson Reuters,

Middle East and Africa. “The Middle East

investment banking industry saw its fair

share of pressure in 2009 and will be looking

now for a period of consolidation.”

Thomson Reuters’ fourth quarter 2009

review of the Middle East investment bank-

ing industry covers the region’s debt and

equity capital markets, both conventional

and Islamic.

With the close of 2009, the analysis showed

HSBC holding the top spot in Middle East-

ern debt and equity capital markets’ fee

rankings with $13.4 million and $8.1 million

respectively. Credit Suisse came first in the

mergers and acquisition fee ranking with

$27.3 million and Calyon topped the syndi-

cated loan fee ranking with $11.3 million.

In mergers and acquisitions with any Mid-

dle Eastern involvement, Morgan Stanley

topped the rankings, advising on deals

worth $16.3 billion. Rothschild came second

with $15.42 billion. The top Middle Eastern

targeted M&A deal for 2009 was an equity

carve-out transaction in which the govern-

ment of Iran planned to divest its 50 per

cent interest, plus one share, in Iran Telecom-

munications to the public for $7.7 billion.

The top Middle Eastern acquisition of the

year at $9.5 billion was Qatar Investment

Authorities’ acquisition of an increased stake

in Volkswagen. In much-reduced equity issu-

ance, the top three spots in terms of deal

activity were taken by Riyadh Bank, HSBC

and Qatar National Bank respectively. The

largest equity issue of the year was the Gulf

Bank follow-on deal worth $1.3 billion.

Sovereign, government-related and invest-

ment grade corporate issues dominated

the Middle East debt capital markets which

soared in 2009 to $38.3 billion and were the

one bright spot for investment banker fees,

which increased compared with 2008. But in

the Islamic sector, debt issuance of 38 issues

worth $14 billion represented a fall of 44 per

cent over the previous year.

Top Islamic issuer was Malaysia with 31.2

per cent of activity, with the United Arab

Emirates second with 27.2 per cent. Gold-

man Sachs with five issues worth $3.55 bil-

lion topped the overall Middle East debt

rankings, while HSBC headed the Islamic

financed bond ranking for the year with

nine issues worth $1.88 billion. With loan

activity falling dramatically by more than 80

per cent, Middle Eastern issuers and borrow-

ers managed to raise a total of only $17 bil-

Fees and deals plummet Sovereign, government-related and investment grade corporate issues

dominated the Middle East debt capital markets which soared in 2009 to

$38.3 billion

Sovereign,

government-related

and investment

grade corporate

issues dominated

the Middle East debt

capital markets which

soared in 2009 to

$38.3 billion and

were the one bright

spot for investment

banker fees


Highlights:

• Investment banker and adviser fees at $599 million - down 46%

• Mergers and acquisitions stood at $12.7 billion - down 40%

• Equity issues dropped to $6.89 billion – down 81%

• Loans fell to $17.1 billion - down 81.5%

• Debt issues rose to $38.3 billion – up 151%

lion. In the overall Middle East loan ranking,

Standard Chartered topped the league with

eight deals worth a total of $1.91 billion. Al

Rajhi Banking and Investment Corporation,

Calyon and Banque Saudi Fransi, all ranked

first in the Islamic loan ranking with $833.3

million each, due to their work as book

runners on the top Islamic loan of 2009 –

the Zain Group loan of $2.5 billion. Islamic

financed loan activity reached only $5.4 bil-

lion in 2009, with Bahrain accounting for 46

per cent of issues and the UAE second with

38.5 per cent of activity. A detailed break-

down of the Middle East investment bank-

ing fee rankings showed HSBC rising from

third place last year to first place in 2009 for

debt capital markets. Samba Financial were

second, with Citi third. Credit Suisse jumped

from seventh last year to first in M&A fees in

2009. Morgan Stanley came second followed

by Goldman Sachs.

Similarly in the equity capital markets’ fee

rankings, HSBC rose from third place in 2008

to first in 2009, followed by Riyadh Bank and

Citi. In the syndicated loan fee league table,

Calyon rose from seventh last year to first in

2009, with Standard Chartered and Mitsubi-

shi UFJ Financial second and third.

Looking ahead, Moftah said: “As we begin a

new year, the road may remain bumpy for a

while. For a sustainable return to growth we

need to see an increase in investment bank-

ing activity with a revival in mergers and

acquisitions as well as renewed interest in

both initial public offerings and bond issues.”

Source: Thomson Reuters Deals Intelligence Middle

Eastern Investment Banking Analysis


Local banks have done considerable financing for large projects in the

Sultanate in the infrastructure and oil sector and have played a major role

in attracting banks from abroad to invest in these large projects

Pragmatic Approach

Over the past five years, project financ-

ing has been on the rise in Oman as

well as the rest of GCC. The reason lies

in the government’s thrust on infra-

structural development and the supportive

role played by local and foreign commercial

banks, and specialized banks. The Central

Bank of Oman (CBO) plays a pivotal role in

the entire process.

Though the global financial and credit

crunch has an important bearing on the

global project financing market, the Gulf

and the Sultanate in particular, remained

relatively unaffected due to the Sultan-

ate’s level-headed approach to economic

growth. Banks in Oman were well capital-

ized to brave the economic downturn and

the credit goes to CBO for ensuring compli-

ance with stringent measures at this point

of time.

Extending a helping handLater, to ensure greater flexibility for banks

in their credit deployment, the CBO in Oman

not only reduced the reserve requirements

for banks, it also eased the lending ratio limi-

tation for banks from 85 per cent to 87.5 per

cent with effect from January 2009.

The credit growth in recent times is sug-

gestive of the fact that banks are not wary

about corporate lending, as the growth of

the economy is sure to ride piggy-back on

this lending exercise. Projects of national

importance in construction, manufacturing,

hospitality and service sectors are mainly

considered for funding, the most crucial

areas for investment being infrastructure, oil

and gas, large scale industry and shipping

and aviation.

Major projects of national importance like

Sohar Port project and the Salalah power

project with large funding requirements

evoked good response from banks and finan-

cial institutions. The development of Duqm

Port and the expansion of Muscat Interna-

tional Airport have also generated interest

among bankers and funding agencies.

Oman Arab Bank (OAB), BankMuscat, NBO,

Bank Sohar, BankDhofar, Ahli Bank, OIB and a

few others play active role in Oman’s project

financing market in funding various govern-

ment-sponsored as well as private-spon-

sored projects.

PROJECT FINANCE


Sohar Power Company

Barka Power Plant

Al Sharqiyah Water projects,

Barr Al Jissah Resort

Sohar Aluminum

Oman Methanol

As global markets are gradually emerg-

ing out of the crisis of 2008/2009 economic

downturn, banks in Oman are now gearing

up in altering their terms and condition for

financing projects to suit the current market

environment. At this juncture, banks, in gen-

eral maintain a flexible stance for projects,

offering longer tenure of repayments. Banks

play the role of an advisor and support these

projects in various stages in different capac-

ity during the lifecycle of the project.

The local banks have one obvious advantage

over their international counterparts. They

have a better understanding of local environ-

ment, laws and regulations and other critical

aspects of the market. With the largest under-

writing capacity amongst the local banks

as well as strong corporate relationships in

the region, BankMuscat does considerable

value addition to projects through long-term

project financing.

Apart from commercial term loans, the local

banks also provide working capital facilities,

needed for post-commercial operation. This

multi-layered participation in projects puts

the banks in a pre-eminent position in project

financing in the Sultanate. All the banks have

a dedicated project finance desk with experi-

enced staff to operate in this niche segment.

However, in this situation, not all banks have

modified their terms and conditions. An OAB

spokesperson says: “Our bank has made no

major changes in overall policy to suit the

current market environment and continues

with a conservative lending policy to which

we owe our growth and success.”

Stringent MeasuresThough banks are altering their terms and

condition for financing projects to suit the

current market environment, the very process

for evaluation of projects has become strin-

gent now. The importance of the project for

the national economy, the technical expertise

of the promoters and the financial viability of

the project from a long term perspective are

the criteria to judge the strength of a project

proposal. The evaluation also considers the

underlying cash flow of the project or finan-

cial returns as a means for repayment of the

Sohar Power Company

Barka Power Plant

Al Sharqiyah Water projects,

Barr Al Jissah Resort

Sohar Aluminum

Oman Methanol

Bank Sohar: Steady approach

Sohar Port Special Projects – Development of marine infrastructure

Sembcorp Salalah Power and Water Company SAOC (Salalah IWPP) -- Gas-

fired Greenfield power generation (430 MW) and seawater desalination

plant in Salalah.

Oiltanking Odfjell Terminals Oman LLC – Construction of storage tanks in

Port of Sohar

Sohar Aluminium SAOC – Greenfield Aluminium Smelter project with

associated power generation facility in Sohar

Larsen & Toubro Heavy Engineering – Sole Bankers to Global sized

fabrication unit for local and re-export market.

National Bank of Oman: Primary focus

The Sohar Port project: NBO a major lender and Security Agent for

the project which is to construct marine infrastructure in the port for

exclusive use by Vale of Brazil which is putting up a iron ore pelletisation

and distribution facility in the Sohar Freezone.

Three major projects in power and petrochemical sectors: These

financings are expected to fructify in the early part of 2010.

BankMuscat: Multi-layered participation Oman Shipping Company’s Very Large Crude Carriers (125 million rials) --

Acquisition financing as a sole lender.

Salalah IWPP (100 mn rials term loan) --- as a mandated lead arranger,

onshore account bank.

Sohar Port Special Projects (76 million rials term loan) - As a financial adviser

and then as mandated lead arranger, facility agent and account bank.

OAB: Sustainable performance

Sohar Refinery

Oman Shipping (vessels),

SIPC- jetty project

Duqm Port

Expansion of Muscat International Airport

Snapshot of some of the projects financed by banks recently


loan. Needless to say, the creditworthiness of

the sponsor or promoter is of utmost impor-

tance. The other key areas evaluated from risk

management perspective are: commercial

and environmental viability of technology

transfer, offtake arrangements, generation of

jobs, criticality of the project viewed from the

import substitute angle to preserve Sultan-

ate’s the foreign exchange.

The key risk related to the industrial project

financing, however, lies in delay in project

completion, cost overruns, performance

short fall at completion, etc. To guard against

risks, commercial banks may not deviate

from the basic criteria of evaluation unless it

gets considerable support from established

promoters and government for mitigation of

project risks, particularly in green field areas

of national interest.

Hard TimesGiven that the real estate sector came under

pressure during this time, there were no

major launches of real estate projects dur-

ing the first three quarters of 2009 and there-

fore hardly any new real estate projects were

financed by the local banks. The year 2009

saw slower activity in this sector due to the

general global sentiment. When it came to

real estate and construction, due to asset

price deflation, banks have reacted swiftly by

curtailing credit growth and reducing loan

to value (LTV) proportion to 60-70 per cent

which was earlier above 80 per cent.

Most of the banks are experiencing a slow-

down in credit offtake as borrowers are

affected due to market circumstances and are

reviewing their debt raising and funding plans.

Banks are also treading cautious path and the

number of new projects has also plunged. “But

viable projects will continue to be financed

as we have seen recently with some projects

reaching financial closure in the last quarter of

2009,” assures a BankMuscat official.

Power of partnershipLocal banks have done considerable financ-

ing for large projects in the Sultanate in the

infrastructure and oil sector and have played

a major role in attracting banks from abroad

to invest in these large projects. International

banking resources are roped in for projects

where stakes and financial requirements

are high. “Most of the nationally important

projects seek funding in US Dollar to hedge

their currency risk and for better pricing.

These funding requirements are requested

for long tenor,” says Dr Mohamed Abdulaziz

Kalmoor, CEO, Bank Sohar.

Last year, CBO has stepped in to give a US

dollar line up to 50 per cent of the networth

of Bank Sohar, when the foreign banks with-

drew the same due to global economy fac-

ing a downturn. It needs to be mentioned

here that it has been a very daunting task

for banks to provide long term dollar-based

financing for major infrastructure projects

like power and water, the dollar resource in

the region being anticipated to be lean in the

coming months.”The recent events triggered

by property and asset valuation problems in

Dubai may affect the sentiment among for-

eign institutions in the short term but the

impact, if any, cannot be quantified at this

stage,” says an NBO official.

To create a balance, Oman’s upcoming

projects, therefore, is likely to have a blend of

Omani rials and US dollar funding. There are

possibilities for big ticket project financing in

Oman from EXIM, the World Bank, the Arab

Development Bank, financial institutions

and bi-lateral aid programs of other GCC

members and some European and Japanese

development organizations.

The banks in GCC often approach banks in

Oman, which has an excellent brand image

in the region, to give lead for participation in

Omani based companies. Oman’s economic

situation is perceived to be quite stable

and conducive for GCC companies. Omani

banks also receive some reciprocal offers

from these banks to participate in govern-

ment associated companies in GCC. Such an

arrangement mitigates the exposure of con-

centrated risks, apart from benefiting the cli-

ents by getting cheaper resources of funds

from overseas banks. Oman government is

following the privatization path decisively to

encourage foreign investors to generate sur-

plus for domestic project financing and share

international technology know-how.

Locally, tie-up is happening between private

and the national bank. The government’s

main goal is that the private sector play an

active role in spurring growth in Oman’s

economy. Therefore national bank and pri-

vate banks joint ventures play a major role

in boosting the economy by making credit

available in the form of project financing.

In current circumstances, many feel, project

financing in local currency is likely to be more

preferable. As a major bank in the country,

BankMuscat is successfully closing for the

first time a long-term RO project financing.

Going strongIn line with Vision 2020, many infrastructure

developments are planned which would boost

Oman's economy by bringing in more indus-

trial activities, foreign investments and gener-

ating employment. The situation may not be

picture perfect, but the effort and the resources

that Oman’s banks are deploying for focusing

on future projects and for supporting the same

together with the government, will bode well

for Sultanate’s economy in coming years.

Whatever may have been the market oppor-

tunities, banks maintained a sustainable per-

formance in 2009, especially in project financ-

ing, which is becoming an important source of

both fee and interest income for these banks.

But there are issues involved that need to be

resolved. Project Finance involves long term

exposure whereas commercial banks’ major

resources are, by way of deposits, mostly at a

tenor of two years. Thereby the banks have to

take deliberate mis-match in funding, which

poses a challenge in their endeavour towards

maturity matching of funds.

PROJECT FINANCE

The government’s

main goal is that

the private sector

play an active role

in spurring growth

in Oman’s economy

Shelter under our UmbrellaCover with the reassurance of a Standard & Poor’s BBB - (Rated Good)

Al Khuwair: 2469 6509 Al Qurum: 2456 2105 Barka: 2565 0105 Darsait: 2470 3990 Ibra: 2557 2386 Nizwa: 2541 0330

Salalah: 2329 5040 Seeb: 2442 1771 Sohar: 2684 1533 Sur: 2554 3229 Suwaiq: 2686 0498

P.O. Box 1522, Ruwi, Sulatante of Oman

Tel: 2447 7300, Fax: 2447 7323

E-mail: [email protected]

Oman United Insurance CoS.A.O.G ش.م.ع.ع


There are currently six finance and leas-

ing companies operating under the

license of the Central Bank of Oman.

They mainly operate in three market

segments, namely, retail financing, where the

financing is to individual customers for pur-

chasing automotive and electronic goods;

equipment leasing, where the financing is

to small and medium enterprises (SMEs) for

expansion, modernization and replacement

requirements; and factoring and working

capital financing to SMEs for domestic as

well as cross-border trade or for the execu-

tion of projects, usually against assignment

of receivables.

Historical PerspectiveThe retail vehicle financing industry contin-

ues to be the most competitive segment of

the market. The SME equipment finance mar-

ket also witnessed significant growth and

strong business confidence. FLCs continued

to pursue their geographic expansion plans

with the number of branches increasing to

33 in 2008 from 31 in the previous year. Total

combined assets of finance and leasing com-

panies increased to 577.1 million rials in 2008

from 413.8 million rials in 2007, constituting

a rise of 39.5 per cent. The continued govern-

ment thrust on economic diversification and

development of infrastructure to meet the

needs of industrialization, tourism, commer-

cial projects etc. opened up opportunities for

diversified growth and further credit outlays.

Total outstanding credit (net of provisions)

extended in the form of hire purchase, lease

financing and factoring rose by 40.3 per cent,

from 398.2 million rials in 2007 to 558.5 mil-

lion rials in 2008.

Further, the overall performance of FLCs

improved in 2008 with profits and asset qual-

2009 had been a tough year for the six finance and leasing

companies in Oman

Under pressureNBFC OVERVIE W


ity indicators showing significant improve-

ments. Net profit after tax of FLCs amounted

to 17.2 million rials in 2008 as against 13.1

million rials in 2007, reflecting an increase of

31.3 per cent. The quality of FLCs loan portfo-

lio also improved during 2008 with gross non

performing loans (NPLs) declining to 24.5

million rials or 4.1 per cent of the gross loan

portfolio compared to 25.7 million rials or 6

per cent of gross loans in the previous year.

Further, the level of loan loss provisioning

earmarked for finance and leasing activities

stood at 30.8 million in 2008 as against 24.4

million in 2007. On the liabilities side, the FLCs

have been steadily increasing their paid up

capital primarily through stock dividends and

right issues in order to meet the minimum

paid up capital requirement of 10 million rials

before the end of June 2009 as stipulated by

the CBO. The consolidated paid up share cap-

ital of all six FLCs amounted to 73.3 million

in 2008 as compared to 57.5 million in 2007,

up by 15.8 million rials (27.5 per cent). The

aggregate capital and reserves as at the end

of 2008 increased even faster at 40 per cent,

from 87.9 million rials in 2007 to 123.1 million

rials as at the end of 2008. The deposit base of

the industry also rose from 40.5 million rials

in 2007 to 63 million rials in 2008 but was still

within the limit within which FLCs are author-

ized to accept deposits from corporates. It

may be noted, however, that while FLCs have

sought new avenues for diversifying borrow-

ing portfolios and optimizing interest costs,

borrowings from banks and other financial

institutions continue to remain the main

source of funding for the sector, increasing

from 223 million rials in 2007 to 325.8 million

rials in 2008. As regards the annual interest

rate charged on credit, the weighted average

rate of interest charged per annum moder-

ated to 11.1 per cent during 2008 as against

11.4 per cent in 2007.

The institutional and regulatory framework

of the financing and leasing industry has

been strengthened over the past few years

with the phased introduction of strength-

ened capital norms and stricter provisioning

requirements. FLCs were mandated in 2008

to raise the minimum paid up capital to 20

million rials before the end of June 2012 with

2009 2008

Total Assets 116,861 123,584

Net leased assets 114,518 119,001

Total Revenue 12,472 11,700

Profit after Tax 3,675 3,302

Al Omaniya Financial Services (Rial thousand)

Taageer Finance (Rial thousand) 2009 2008

Net Investment in Finance Leases 72,451 71,082

Net Assets 18,823 17,251

Gross Income 8,786 7,583

Net Profit 2,202 2,401

Muscat Finance (Rial thousand)2009 2008

Gross income 8,651 7,427

Total Expenses 5,948 4,867

Net anticipated profit after tax 2,703 2,560

Total assets 77,501 71,056

Oman ORIX Leasing Company (Rial thousand) 2009 2008

Net investment in leases 62,557 66,735

Net assets 18,031 16,028

Net lease income 3,908 4,457

Net profit for the year 2,003 2,437

United Finance (Rial thousand) 2009 2008

Total Assets 111,831 160,908

Loans & Advances 104,260 154,854

Total Income 13,758 16,719

Net profit 937 4,478

Na onal Finance (Rial thousand) 2009 2008

Total Assets 72,150 80,359

Income from financing activities 8,539 7,837

Total Income 5,224 5,166

Net profit 2,321 1,995


2004 2005 2006 2007 2008

Total Assets (Liabilities) 189.0 219.7 277.6 413.8 577.1

Loan/Lease Portfolio (net of provisions and reserve interest) 175.3 201.2 267.3 398.2 558.5

Cash and bank balances 8.7 13.0 2.8 4.7 5.9

Loan Loss Provisions (net of reserve interest) 19.6 22.1 24.1 24.4 30.8

Loan loss Provisions (net of reserve interest) as % of Gross Financing and Leasing Activities (net of reserve interest)

10.1 9.9 8.3 5.8 5.2

Borrowings from Banks and Financial Institutions 97.7 113.4 115.3 223.0 325.8

Paid Up Capital 39.3 48.0 49.6 57.5 73.3

Capital & Reserves * 57.8 69.9 73.5 87.9 123.1

Net Profit After Tax 6.5 7.7 8.6 13.1 17.2

Weighted Average Rate of Interest Charged (% per Annum) 12.0 11.1 11.3 11.4 11.1

Number of Branches (Including Head Office) 24 27 27 31 33

a view to strengthen the financial stability of

the industry.

Performance in 2009It has been a tough year for the six finance

and leasing companies in Oman. Sometime

back while talking about his concerns for the

industry, a senior person from a large finance

and leasing firm said: “Low liquidity and high

lending rates by banks are a matter of con-

cern to NBFC’s due to the limited availabil-

ity of non bank sources of funds. The impact

of liquidity crunch and slow recovery of the

economy could increase the delinquencies

resulting in dilution of the NPA coverage and

sharp decline in margins and profitability.”

If we take the performance of each of the

six players, it has been a year of mixed bag.

Al Omaniya Financial Services, the largest in

terms of assets in its segment, experienced

a contraction of its total assets from 123.58

million rials in 2008 to 116.86 million rials in

2009. The company however managed to

increase its total revenue and profit after tax.

Taageer Finance registered growth in net

assets (9.11per cent) and gross income (15.86

per cent) but its interest expenses went up by

48.26 per cent. The net profit was also hit by

a negative growth. In a recent development,

the company has signed a three year man-

agement and technical agreement with Arab

Leasing, a new company in Sudan. Taageer

has committed an investment of 5 per cent

in the new firm. Muscat Finance managed to

grow its net profits and total assets though

its total expenses increased by 22 per cent.

On the other hand, Oman Orix Leasing faced

a negative growth in its net profits. United

Finance was hit hard in 2009. The company’s

total assets and net profit suffered badly.

National Finance’s total assets shrank by 10.2

per cent but its net profit increased by 16.3

per cent.

FLC INDICATORS RIAL MILLION

* Includes proposed cash dividends Source: FLC Annual Reports, 2008

NBFC OVERVIE W


A large number of companies from

within Oman and from other coun-

tries worldwide have once again

signed up for the next edition of Inte-

riors & Buildex, which will be held on 15-17

March 2010 at the Oman International Exhi-

bition Centre.

With still over a month to go before the three-

day exhibition, more than 150 companies

have already confirmed their participation to

showcase their range of products and serv-

ices, which are now in high demand with the

implementation of multimillion-dollar devel-

opment projects in many parts of the sul-

tanate. Among the major Omani companies

that will be taking part include the Al Sulaimi

Group, Windows 2000, Dosteen Doors & Engi-

neering Services, Kehlan Trading, Al Anwar

Ceramics, Al Turki, OMASCO, Nuhas Oman,

and Darwish ast.

In addition to the strong presence of leading

local companies, a large number of interna-

tional firms will also be taking part in the event

to take advantage of major opportunities in

Oman’s building and construction industry.

Leading the list of international participants

are the national pavilions of Turkey, Egypt, Italy,

UK, and the UAE. Other countries that will be

represented at Interiors & Buildex 2010 include

Belgium, Germany, India, Jordan, Korea, Leba-

non, Malaysia, Malta, and Saudi Arabia.

“Now on its 7th edition, Interiors & Buildex

has truly become an international trade

event with the participation of many local

and foreign companies that serve the grow-

ing needs of Oman’s building and construc-

tion industry,” said Nasser Diab, general man-

ager of Omanexpo LLC, the leading organiser

of trade shows in the sultanate.

Interiors & Buildex 2010 is officially sup-

ported by the Oman Chamber of Commerce

Highlighting the Growth of Oman’s Building & Construction Industry

Interiors & Buildex 2010

& Industry (OCCI), Oman Society of Contrac-

tors, Oman Society of Engineers, UK Trade &

Investment, and the Embassy of the Republic

of Turkey. For the third straight year, the event

is also being supported by Windows 2000

as the platinum sponsor. The gold sponsors

are Panorama Windows and Dosteen Doors

& Eng. Services, while Darwish AST Services,

V-Kool Oman and IQue serve are the silver

sponsors. The event’s visitor badge spon-

sor is Mohammed Riaz & Partner LLC. The

media sponsors of the event include Arab

Construction World as the official magazine,

Construction World as the international offi-

cial magazine, and Al Maskan Magazine, OER

Dossier – Construction, Times of Oman and

Al Shabiba as the media partners. For stand

reservations or for more information, please

contact Omanexpo at +968-24660124, or Mr.

Abdullah Beg, project manager, at mobile no.

+968-95140104 or e-mail abdullah@oman-

expo.com.

OER Dossier is the Strategic Media Partner of

Interiors & Buildex 2010

EXHIBITION


Contact: Tel- 80077077www.nbo.co.om

2010 scheme is even more powerful than last

year and we are confident that our custom-

ers will be even more enthused to increase

their savings with Al Kanz 2010. Our intent is

to continue to provide customers with the

opportunity to transform their lives and we

believe that the 2010 scheme will reach out

to an even wider cross section of the commu-

nity and continue to touch the lives of many.

We are also pleased to announce that the

scheme has been designed after an exhaus-

tive customer research process which has

incorporated all of our client’s suggestions”.

National Bank of Oman (NBO) has

launched the new Al Kanz Savings

Scheme for 2010. The new savings

scheme offers total prize money of 3.6

million rials in a span of 12 months. The Sul-

tanate’s most popular scheme, Al Kanz, has

been spreading cheer amongst thousands of

families, since it was launched last year, with

the offer of a half a million rials, which was the

biggest prize money in Oman in 2009. It has

also helped many families during the recent

harsh economic times to transform their lives.

During the final quarter of 2009, the Bank

commissioned an in depth customer

research survey, across the Sultanate, to

better understand what Omani residents

were looking for from a prize linked savings

account. Based on the market feedback, the

new proposition is structured to appeal to

all income segments in the country with the

following prize structure:

• 10 weekly prizes of 1000 rials each with

two winners per region guaranteed;

thereby ensuring that the customers in

every region have an equal chance of win-

ning irrespective of where they live.

• Two additional prizes of 50,000 rials every

month.

• Grand prizes every quarter that keep

doubling every quarter. These start from

200,000 rials in the first quarter going up

to 600,000 rials in the third quarter.

• Come December, the scheme culminates

with one million rials of prize money that

will be distributed equally to four winners.

NATIONAL BANK OF OMAN

The overwhelming success of Al Kanz in 2009 has encouraged NBO

to improve the existing scheme and to offer its customers even more

opportunities to win mega prizes

AL KANZ 2010 – 3.6 MN RIALS TO BE WON

The most unique feature of the new Al Kanz

Scheme is the popular Loyalty Programme.

This feature gives every Al Kanz customer

more chances of winning for every month

they stay in the scheme. For example, a cus-

tomer who deposits 1000 rials in month one

will have 10 chances of winning the monthly

prize in that month, 20 in the next month, 30

in the next, going up to 60 chances for the

December Mega Prize.

David Power, NBO’s General Manager and

Chief Retail Banking Officer said: “The response

to our unique and successful Al Kanz Savings

Scheme during 2009 was fantastic and way

beyond our best expectations. The Al Kanz

David Power, General Manager and Chief Retail Banking Officer, NBO

SPONSORED FEATURE


SPONSORED FEATURE

THE COLLEGE OF BANKING AND FINANCIAL STUDIES

The Annual Training Plan of the College for 2009-10 envisages

conducting about 100 courses for the banking and financial sector

IN SEARCH OF EXCELLENCE

Human capital is the key element in

banking and financial sector. There

is a strong demand for academic

and training courses to meet the

emerging developmental needs of the

Sultanate in the financial services industry.

The College of Banking and Financial

Studies (CBFS), a government organization

established by a Royal Decree in 1983, is

here to fulfil that requirement. With the

chief objectives of education, training

and encouraging research in banking

and financial subjects, CBFS is under the

jurisdictional supervision of the Central

Bank of Oman (CBO) and is supported by

all banks operating in the Sultanate. The

College has been an active partner in the

country’s thrust towards Omanization of the

banking sector.

The College presently has about 1600

students pursing various courses in English

Language Centre, professional and graduate

studies and post graduate studies.

Academic and Professional Affiliations:

• Strathclyde University, UK (MBA)

• University of Bradford, UK (Bachelor in

Accounting & Finance and in Business &

Management)

• ACCA, UK (CAT and ACCA)

• CSI, Canada (Associate, Institute of Cana-

dian Bankers)

• IIA, USA (Certified Internal Auditor)

Contact details: Tel: 2450 2288/ 2450 5843 Ext.104Email: [email protected]: www.cbfs.edu.om

• Edexcel, UK (Higher National Diplomas in

Business, Computing and Management)

• CIMA, UK (Management Accountants

Certificate).

Corporate TrainingAnother focal area of the College is corporate

training. The Annual Training Plan of the

College for 2009-10 envisages conducting

about 100 courses for the banking and

financial sector, covering a wide variety of

topics in functional and managerial (soft)

skills. For the first time, the training plan also

includes courses on insurance for the benefit

of banks and insurance companies in Oman.

These courses are designed and delivered

by faculty with immense operational and

training experience across various regions/

markets. The College has also tied up with

Queens School of Business, Canada and the

Arab Academy of Banking and Financial

Sciences, Jordan, for offering specialized

training and Executive Development

programs suitable for all sectors.

In addition, the College sponsors the

following professional bodies in their

initiatives to develop professionals in Oman

in their respective areas through periodical

seminars/workshops.

• ISACA (Information Systems Audit and

Control Association), Muscat Chapter

• ICAI (Institute of Chartered Accountants

of India), Muscat Chapter

• IIA (Institute of Internal Auditors), Muscat

Chapter

All the activities of the College are operated

from its well-equipped campus at Bausher,

which houses over 38 classrooms and

seminar halls, four computer labs with

Internet connectivity, wi-fi facility, a well

stocked library with over 10,000 books,

periodicals and subscriptions to online

search engines, and a multipurpose hall,

atrium and a cafeteria.

According to Dr. Ashraf Nabhan Al Nabhani,

Dean, CBFS, the College is committed

to partnering with the banking and

financial sectors and is looking forward

to engaging more in supporting their

human development strategies for an ever

changing operating environment.

Dr Ashraf Nabhan Al Nabhani,

Dean, CBFS


Contact: Tel: (968) 24839806

Website: www.taageer.com

budgeted projections and is continuously

working on sourcing new credit lines and

Corporate Deposits to optimize the cost of

funds.

Convertible Bonds :In line with requirements of the Central

Bank of Oman to increase the paid-up capi-

tal to RO 20 million, Taageer came up with

the issue of RO 5 million unsecured com-

pulsory convertible bonds on rights basis,

which was subscribed for RO 4.316 million,

with conversion due in June 2010.

Strategic Tie-upA new “Non Banking Finance Company” has

been set up in Sudan along with The Arab

Investment Company (TAIC), and Taageer is

offering advisory services and investment

of upto 5% of the capital of the new leasing

company.

Q. What is your product portfolio?

At Taageer Finance Company, we believe in

offering a wide array of products to suit the

needs of various customer segments. More

broadly speaking, the products offered by us

are Retail Financing for finance of vehicles,

Corporate Financing for finance of heavy

equipments, Al Hal Financing which are basi-

cally consumer loans, Working Capital, Factor-

ing, Bill Discounting etc. Our clients include

individual, SME and Corporate segments.

Taageer caters to the ever increasing needs

of the business segment / consumers

thereby playing an active role in contribut-

ing to the socio-economic development of

the Sultanate of Oman by offering the fol-

lowing products :

• Auto Finance for passenger cars, com-

mercial vehicles (Prime movers, trucks,

trailers & pickups, etc.)

• Industrial Equipment and Machinery

• Home appliances, furniture, computer

and other electronic items

• Heavy Equipment, Plant & machinery

(dozers, shovels, cranes, crushers, etc.)

• Working Capital through Debt Factoring

/ Bill Discounting of receivables.

• Corporate Deposits.

What are your specializations?

Taageer offers the following specialized

financial products:

• “Al-Tayeb” Structured Finance.

• “Al Hal” Consumer Loans for financing of

home appliances, furniture, computers

and other electronic items.

• “Al Sahal” Insurance.

TAAGEER FINANCE COMPANY, SAOG

Since 2001, Tageer Finance has shown a steady growth in its asset base,

income and profitability

CONSISTENT GROWTH

What are the features that set you apart

from other players in the industry?

Taageer Finance Company offers schemes that

are tailored to suit the requirements of various

customer segments. We have five branches

which are strategically spread across the Sul-

tanate of Oman providing a greater reach for

our customers. Taageer is the first NBFC and

market leader in "Al-Tayeb" Structured Financ-

ing in the Sultanate of Oman.

What growth have you achieved since

establishment?

Taageer is a non-banking finance company

operating in Oman, licensed by the Central

Bank of Oman in 2000, underwrote its first

lease in September 2001. Since then shown

a steady and consistent growth in its asset

base, income and profitability. The Company

currently has a book size of USD 200 million

as on 31st December 2009.

Resources :The Company has available credit lines to

meet its business commitments as per the

Sanjeev Kumar Chadha, Chief Executive Officer

Mohammed A. Al Kharusi, Chief Operating Officer

SPONSORED FEATURE

Insurance Sector

The impact of the global financial crisis on

Oman’s Insurance market is negligible

Minimal Impact


INSUR ANCE OVERVIE W

Global insurance premiums grew by 3.4 per

cent in 2008 to reach $4.3 trillion. For the

first time in the past three decades, premium

income declined in inflation-adjusted terms,

with non-life premiums falling by 0.8 per cent

and life premiums falling by 3.5 per cent. The

insurance industry is exposed to the global

economic downturn on the assets side by

the decline in returns on investments and on

the liabilities side by a rise in claims. So far the

extent of losses on both sides has been lim-

ited although investment returns fell sharply

following the bankruptcy of Lehman Broth-

ers and bailout of AIG in September 2008.

The financial crisis has shown that the insur-

ance sector is sufficiently capitalised. The vast

majority of insurance companies had enough

capital to absorb losses and only a small

number turned to government for support.

Advanced economies account for the bulk

of global insurance. With premium income

of $1,753 billion, Europe was the most

important region in 2008, followed by North

America $1,346 billion and Asia $933 bil-

lion. The top four countries generated more

than a half of premiums. The US and Japan

alone accounted for 40 per cent of world

insurance, much higher than their 7 per cent

share of the global population. Emerging

markets accounted for over 85 per cent of

the world’s population but generated only

Protected from risks

The impact of the global financial crisis on

Oman’s insurance market has been minimal

around 10 per cent of premiums. Their mar-

kets are however growing at a quicker pace.

Insurance in OmanThe insurance market in Oman is regulated

by Capital Market Authority (CMA). The

industry has achieved remarkable progress

in the regulatory supervision through the

application of international standards and

continued enhancement of legislative infra-

structure and building institutional capa-

bilities of the sector, diversification of the

services provided to the participants of the

sector, easing the processes and upgrading

the skills and efficiency of the employees.

According to ‘Insurance Market Review’

published by CMA in 2009, the impact of

the global financial crisis on Oman’s insur-

ance market has been minimal and far less

than the financial markets, banking and real

estate sectors because insurance companies

have diversified investments. The compa-

nies maintained their solvency that enabled

them to continue their business without any

exposure to the credit crunch.

Total gross direct insurance premium increased

in 2008 to 212 million rials compared to 168

million rials in 2007. The figure was pegged at

184 million rials towards the end of the third

quarter of 2009 and the total 2009 figure is

expected to be much higher than 2008 figure.

Total assets of insurance companies hiked up

in 2008 by 18% to 423 million rials and invest-

ments of over 251 million rials.

To boost the insurance services provided by

insurance companies and to enhance com-

petition which would lead to the provision

of better insurance services and benefits, the

number of insurance companies increased

to 23 companies comprising 11 national and

12 foreign insurance companies, according

to the CMA report. Despite a good progress

made by the sector, there is a need of mass

awareness of the necessity of insurance and

insurance products in Oman.


All Figures in Rials

Source: CMA

DATA MONITOR - INSUR ANCE




Source: CMA




Source: CMA

For Advertising in OER Dossier

Please Contact :

ShivKumar Gaitonde

GSM - +968 9926 7159


The Insurance sector has been steadily

growing in the Sultanate. Total assets

of Insurance companies have grown

from 175 million rials in the year 2004 to

424 million rials in the year 2008. Gross pre-

mium increased from 102 million rials to 208

million rials during the same period.

The industry provides employment to 1600

people of whom about 1000 are Omani

nationals. These figures do not include

employees of agencies of Insurance com-

panies and insurance advisors employed by

various companies. Considering these total

number should reach to about 1700.

Insurers paid claims amount to 491 mil-

lion rials in the five years commencing

from 2004. Claim payout was particularly

high during the years 2007 and 2008 due

to widespread damages caused by Tropical

Cyclone Gonu that hit the Sultanate on 6th

June 2007.

Motor is the highest premium earner as

compared to other classes of business.

Gross motor premium for 2007 and 2008

amounted to 154 million rials. Claims paid

during this period was 142 million rials. After

considering costs and expenses, Insurers

suffered a loss of 27 million rials. In the year

2007 out of 13 companies writing motor

business 11 suffered losses. In the year 2008

out of 15 companies writing motor business

11 suffered losses. There is no much reinsur-

ance support for this class of business and

hence losses hit the bottom lines of insur-

Insurance – A Growing IndustryA growing industry indeed but has its own complexities making it harder to

earn decent returns to investors

GUEST COLUMN

2004 2005 2006 2007 20080

10

20

30

40

50

60

70

80

90

100

Milli

on R

ials

Classwise Premium Growth

Life Property Miscellaneous Motor Marine

Walter Pereira, MD, Prudent Loss Adjusters


ance companies operating in Oman directly.

Results for 2009 are expected to be equally

damning and this will result in hardening of

premium rates in the year 2010.

Property insurance premiums for 2007

and 2008 was 63 million rials; claims paid

amounted to 130 million rials. After con-

sidering costs and expenses loss sustained

by companies operating in the Sultanate

worked out to 57 million rials. Bottom lines

of those companies who have high reten-

tion capacities were hurt badly during this

period. Tropical cyclone Gonu inundated

this class of business. Favorable results are

expected in the year 2009.

Marine and Miscellaneous classes of busi-

ness has been profitable during the year

2007 and 2008. However profits earned

in these classes is 9 million rials, miniscule

compared to the losses sustained in Motor

and Property classes.

Life insurance sector has shown steady and

decent returns to Insurers. Premiums have

grown from 17 million rials in 2004 to 41

million rials in the year 2008. There has been

a consistent profit since the year 2005.

In the year 2009 the industry attracted three

new entrants. There is severe competition in

the market due to which insurers are finding

it difficult to earn underwriting profits. Insur-

ers cannot depend on investment income

as past experience has proved that such

income is not steady. Insurers have to revert

to generating healthy profits from their core

activity. Insurance companies are neither

charitable institutions nor companies incor-

porated by Government to provide subsidy.

These are business organizations estab-

lished to earn profits by the investors and

sooner or later the investors will pressurize

the managements to earn returns on their

investments. This is likely to bring about

hardening of premium rates and imposition

of stricter terms especially on motor and

property classes.

Number of Employees

1200

1000

800

600

400

200

0

2004 2005 20072006 2008

ExpeatriateOmani

Premiums in all classes of Insurance during 2007

PropertyMotor Others LifeMarine

Premiums in all classes of Insurance during 2008

PropertyMotor Others LifeMarine


Quite interestingly, the history of Royal

& Sun Alliance Insurance Company

dates back to early 18th century with

modest beginnings in London’s cof-

fee shops. This company today is rebranded

as RSA. In keeping with the changing times,

this shift was necessary to develop a new

brand strategy for supporting the company’s

growth plans. RSA now has over 20 million

customers across the globe, operating across

the world in about 130-odd countries.

In Oman, RSA had a branch office since

1972. In 2004 a new joint venture company,

RSA Oman was instituted. With a 67 per cent

stake RSA is the majority shareholder, while

the remaining lies with leading business

houses including W. J. Towell & Company

and Oman Holdings International.

A wide range of productsRSA offers a wide range of insurance prod-

ucts. Both commercial and personal insur-

ances are included in the RSA repertoire to

meet the requirements of a growing number

of commercial and personal lines clients.

One of the leading non-life players in the

world and also in Middle East, RSA’s big port-

folios are property insurance, marine insur-

ance, motor insurance and construction engi-

neering. Others are project insurance, group

insurances like personal accident, workmen’s

compensation, medical Insurance and travel.

Crafted and aligned to the culture and tra-

dition of the Sultanate, RSA’s products are

most importantly tailored to give the best

value for money.

One of the leading non-life players in the world and also in

Middle East, RSA’s big portfolios are property, marine, motor and

construction engineering insurances

STEADY GROWTH

Sanjeev Jha, Manager Director, RSA

Core strengthsRSA is operating in the Middle East over five

decades and prides in a strong lineage. One

of the most active commercial insurers in the

region, first class security, a strong corporate

governance structure, underwriting excel-

lence and strong risk management capabil-

ity have led to RSA’s involvement with many

of the leading enterprises in Oman.

It is noteworthy that the professional exper-

tise and high service standards, coupled with

extensive local knowledge and vast experi-

ence enables RSA to mitigate any techni-

cal risks arising in this market. Its position is

further bolstered by concrete support from

group corporate office in London and by the

vast network of offices across the globe.

At RSA, employees, Omanis and expatri-

ates are motivated to learn and develop,

and give their best to the customers. Its

reputation to ensure prompt and efficient

claims settlement along with an experi-

enced and efficient teamwork make RSA

‘the most preferred insurer’ in Oman. RSA’s

rating by global credit rating company

Standard & Poor’s has been raised to an

‘A’ (A stable) from a previous rating of ‘A’ -

which is a clear indication of the vertical

mobility of RSA.

Customer Proposition It is important to understand that at RSA,

a customer proposition goes beyond

mere product features and benefits. RSA

believes in offering a total ‘service-wrap’

that includes relationship management,

unique products, service, price and com-

munication which result in total customer

satisfaction.

The Oman business of RSA witnessed steady

growth despite stiff competition in the mar-

ket. Sanjeev Jha, managing director, RSA, is

optimistic about RSA. “We are very excited

about our future as we are operating in a

young economy like Oman. Despite eco-

nomic downturn we managed to do well

and grow in our chosen segments. RSA

has been awarded the Middle East General

Insurer of the Year title for 3 years in succes-

sion. A testimony to the progress we have

made in this region,” says Jha.

RSA INSURANCE COMPANY

Contact: Tel: 24478318Website: www.rsa.com.om

SPONSORED FEATURE


branches, eight sole agents and brokers

all over the Sultanate. The company is also

looking at the possibilities of expanding

beyond the borders of Oman. For its interi-

ors and towns, Al Ahlia’s has launched the

first mobile branch recently.

Multi-qualified workforceOne of the unique strengths that make Al

Ahlia the leading player in the market is its

human capital. In the insurance sector, it has

the largest concentration of multi-qualified

workforce, like engineers, accountants, legal

professionals, etc. The training imparted

comprises in-house courses on insurance

and management. The employees are also

sent for trainings abroad with reputed

reinsurers. The ministry of manpower has

awarded Al Ahlia for excellence towards

employment and training initiatives imple-

mented for Omani nationals in the private

sector.

Al Ahlia’s long exposure to the market has

helped it to harness clients and develop

a good network. “We have a strong know-

how of the insurance craft. We have a solid

name in the market which people can bank

on. We would like to offer the clients a wide

realistic applicable gamut of options which

they actually require and enjoy being their

trusted advisor,” says Khalil Ahmed Al Harthy,

asst general manager, Al Ahlia Insurance Co.

Even in a market where competition is scal-

ing down margins, Al Ahlia is enjoying 25

per cent growth—which by any standard is

a healthy growth.

T he market leader in industrial insur-

ance, Al Ahlia Insurance Co is a pre-

dominantly general insurance com-

pany, which also transacts group life

insurance. Established in 1985 as a public

joint stock company, it is the oldest amongst

national insurance companies in the non-

life insurance sector in Oman. Revamped in

1988, Al Ahlia Insurance Co enjoys a sub-

stantial growth in invested funds.

A 100 per cent insurer of the major prestig-

ious companies like Sohar Aluminium, Sohar

Urea, Aromatics Oman, Al Ahlia is also the

insurer for companies like OMIFFCO, OLNG,

Oman Cement, Oman Mining, Al Khaleej Poly-

propelyne, the world’s biggest producer of

polypropylene film, and medium-scale enter-

prises like Nabil, National Detergent, etc.

Product portfolioNo matter how small or big a business

entity is, Al Ahlia offers a one stop shop for

its 25 products to suit individual industry’s

requirements and provide the best possi-

ble response to managing business risks at

affordable premium.

Al Ahlia historically has been strong in the cor-

porate insurance category, for which it enjoys

the largest market share; this category is suit-

able for large, commercial and industrial risks,

helping to protect buildings and contents in

case of direct physical loss or damage.

In general, fire/industrial All Risks insurance,

marine insurance for imports and exports and

goods in transit, auto insurances, personal

accident/ workmen compensation, medical

and life insurances, public liability, money–in–

transit insurance, plant and equipment insur-

AL AHLIA INSURANCE CO. SAOC

No matter how small or big a business entity is, Al Ahlia offers a one stop

shop for its 25 products to suit individual industry’s requirements

PRACTICAL WISDOM

ances, professional indemnity insurances and

travel insurances are offered.

Branch network and expansionAl Ahlia’s emphasis in the past four years

had been to grow its retail business and

currently operates through its head office in

Muscat and a network of 24

Khalil Ahmed Al Harthy, Asst General manager, Al Ahlia Insurance Co. SAOC

Contact: +968 2476 6910www.alahliaoman.com

One of the unique

strengths that make

Al Ahlia the leading

player in the market is

its human capital.

SPONSORED FEATURE


When the market still sees insurance as

a commodity to a large extent, how Al

Madina Gulf Insurance is creating a differ-

entiation for its products?

Insurance in certain segments are com-

moditized especially when it comes to retail

but what drives the business is the promise

that we sell. As the industry doesn’t have set

standards or benchmarks, we are focusing

on the issues which are not addressed by

other market players. Our endeavour is to set

a certain standard of excellence and set-up

a process that could deliver it. We have been

fairly successful in this direction but there

is a lot more that we need to achieve as we

move forward. We are not in the business of

generating short term sales, we are here to

create and build long-term relationships.

On the corporate solutions, we have the abil-

ity to listen to our customers, the experience

to understand their needs and the skill-set

to devise the right solution that they require.

That’s the key differentiator for us.

The insurance industry can do a lot more in

improving standards of service to its custom-

ers. The insurance companies have relied on

the reinsurance market to support their solu-

tions as the industry doesn’t have the scale

to allow them to do everything on their own.

We also understand that we can’t have exper-

tise in everything but our focus on the above

two points is helping us to carve a niche for

our self and set new benchmarks by provid-

ing the right solutions in the best way.

On the retail side, we are pleased with our

performance so far as we understand that it

AL MADINA GULF INSURANCE

Gautam Datta, the new CEO of Al Madina Gulf Insurance, talks

about how the three-year old company is making a difference to the

insurance sector in Oman

BUILDING LASTING RELATIONSHIPS

takes some time to build this segment as it

requires a certain level of penetration which

happens over a period of time. We have to

build on our success.

In which verticals you are stronger?

We are stronger in life, medical and property

side if I talk purely from the ability perspec-

tive. From the business perspective, we have

been fairly successful in life and medical

segments. On the property side, I think we

need to grow and develop it further.

What is going to be your focus area in

2010?

We provide a decent range of standard

products addressing the insurance needs of

the broad spectrum of the market. We will

focus on realizing the full potential of the

market in alignment with our overall busi-

ness objectives.

On the new products front, we will focus

on an interesting product – professional

indemnity for financial institutions and

D&O liability. I‘ve worked closely on this

product with Chubb in my previous assign-

ment. Chubb is one of the leading financial

risk insurers in the world. With growing

stress on corporate governance, the sen-

ior management is being held responsible

for all the management decisions. A com-

pany’s directors and officers can be sued

over their management decisions by a

whole host of constituents – shareholders,

employees, customers, suppliers, competi-

tors, and even the government.

Apart from the D&O and professional indem-

nity products and other verticals, we will

also be looking at tailor-made solutions for

small-to-medium enterprises by building a

product around their specific requirements.

Contact: Tel 24771888www.amgioman.com

Gautam Datta, CEO, Al Madina Gulf Insurance

SPONSORED FEATURE


LEBANESE INSURANCE COMPANY (S.A.L)

Right now Lebanese Insurance Co is concentrating on consolidation.

It has survived the recession which is no mean achievement for a

company which is only a year old

MEASURE OF GOOD PERFORMANCE

Since its inception in 1950 in Lebanon,

Lebanese Insurance Company (S.A.L)

has come a long way and has suc-

cessfully established itself through-

out the insurance market in the Middle East

and GCC Countries, achieving a pride of

place in the insurance sector in the region.

The Company writes all classes of Insurance

and Reinsurance through a Network of 20

branches in Lebanon, one branch in Kuwait

and four branches in United Arab Emirates.

In 2009, the Company opened its first outlet

in the Sultanate of Oman.

Middle East operations

Lebanese Insurance Co provides profes-

sional and prime quality services in the field

of insurance, offering wide range of insur-

ance products on Property, Financial, Engi-

neering, Marine, Professional and various

other classes of insurance to meet the spe-

cific requirements of the customers.

The Company’s Management Team com-

prises reputed and well-connected profes-

sionals in insurance and reinsurance indus-

try in Lebanon and Middle East, whose

commitment in providing security of the

highest standards on the products offered

by the company is well-appreciated by the

customers. The well experienced and effi-

cient team also plays an advisory role for

their benefit on all insurance matters, in line

with the latest developments in interna-

tional insurance industry.

The Company’s “All Risks” Policy is designed to

cover the valuables and personal belongings

against accidental loss or damage from any

cause, anywhere within the territorial limits. It

runs with a fully paid-up capital of Lebanese

Pounds 22.5 Billion. With a huge potential of

marketing and an actual growth rate aver-

aging 30 per cent, Lebanese Insurance Com-

pany (S.A.L), is bound to go places.

The Oman office

In Oman, though the company’s first year

target was Rial 1mn, it has surpassed its

target long before the year–end. Lebanese

Insurance Company covers all kinds of gen-

eral insurance products, including medical

and group insurance.

SMEs form the major clientele of Lebanese

Insurance Co in Oman for whom the Com-

pany plays an advisory role through its

brokers. Complete solution on insurance is

given to the enterprises. It deals with major-

ity of brokers across the Sultanate. 40 per

cent of the business comes from motor

insurance, 30 per cent from medical insur-

ance. And the rest comes from property,

engineering insurance, etc.

Now that the new avenue for business is

shifting towards Duqm and Sohar and Sala-

lah, Lebanese Insurance will also expand in

this direction in future. But right now the

Company is concentrating on consolidation.

It has survived the recession which is no

mean achievement for an enterprise which

is only a year old. The standard of service is

worth-mentioning.

The credit for this goes to the team which is

young and energetic and to the leadership

that has clear understanding of the rules of

success. “People believe us and we deliver

to their expectations. So far the Company

does not keep any claims pending. This is

the measure of our good performance,” says

Kasim Srinivas, branch manager, Lebanese

Insurance Co, Oman.

Contact: Tel: 2470 5030Website: www.lebaneseinsurance.com

From L-R: Mahdi Al Harthy, Business Development Manager;

Kasim Srinivas,Branch Manager & Abdullah Al Hatmi, Finance Manager

SPONSORED FEATURE


One of the leading national insurance

companies in the Sultanate, Oman

United Insurance Company (OUIC)

is reputed for the knowledge and

understanding of the day- to-day insurance

needs of the general public, and also that

of the industrial, commercial and medical

sectors. Needless to say, the company has

undergone a steady business growth since

1986 in the insurance market.

Offerings in the basketIn keeping with the modern business

demands and the individual’s interests and

safety, OUIC has designed new insurance

packages with wide coverage for industry

and commerce, lenders and individuals alike.

Its categories of coverage are varied. Some

of its preferred industry sectors are property

ownership, clinics and medical facilities, pro-

fessions, enterprises, marine, transit and life.

For small & medium enterprises, OUIC offers

All Risks covers that include shops, hotels,

office etc. Both SMEs and commercial estab-

lishments benefit from OUIC as it offers indi-

vidual attention to customers’ needs, does

personalized claims handling, offers prod-

ucts to suit individual needs. OUIC is one of

the largest insurers of personal property in

Oman. The reinsurance program, supported

by global leaders enables the professional

OUIC team to write feasible business in a

flexible way with minimal referral which has

helped it to earn the goodwill of its clients.

Competent team workOUIC has an experienced and dedicated team

of professionals, who are able to make a quick

Insuring with OUIC has manifold advantages. First, all insurance solutions

are available under one roof, second, customers get quick claim settlement

and the third, customers have easy access through branches and agents

COVER FOR ALL AND SUNDRY

OMAN UNITED INSURANCE CO. S.A.O.G

Contact Details: Tel: 2447 7322Website: www.omanutd.com

decision to serve the clients with complete

protection. With good reasoning and valued

advice, they provide the customers with the

best insurance, keeping in mind their safety at

all times. As OUIC’s growth curve has moved

up the trajectory, its premium increased

manifold, the staff strength multiplied and

reached 210, in addition to 13 branches and

22 agents.

The company has experienced financial

growth leading to an enhanced stature. Insur-

ing with OUIC has manifold advantages. First,

all insurance solutions are available under

one roof, second, customers get quick claim

settlement and the third, customers have

easy access through branches and agents.

What sets OUIC apart from its competitors is

its customer-friendly approach. Customised

offerings, a top-down risk appraisal by pro-

fessionally qualified team of chartered Insur-

ers and risk managers for designing the right

program of insurance protection and playing

the role of an advisor – all this attributes to

the visibility of OUIC in the Oman market.

Its physical presence across the length and

breadth of the Sultanate and its deep pen-

etration through branches, agents, brokers

and marketing staff, has helped to meet

needs of all types of customers, individuals,

corporate, government, SMEs, industries and

non-profit organizations. And as mentioned

before, there is something for everybody

in OUIC portfolio. Herein lies its strength to

compete in the insurance market. Though

the company bigwigs do not anticipate

major changes in insurance industry, the

company has strategy and appropriate pol-

icy in place to deal with the dynamics of a

changing market.

S.F. Fernandes,

Acting Chief Operating Officer

Nassir Bin salim Al-Bussaidi,

Chief Executive Officer

SPONSORED FEATURE


Contact: Tel: 24700383 Fax: 24705637e-mail: [email protected]: www.prudentadjusters.com

respective fields and insurance. It is a team

work at Prudent.

Kindly tell us a little about Prudent Loss

Adjusters LLC.

The company was established as per laws

prevailing in the Sultanate on 23rd June

2004. Before this date we were providing loss

adjusting services through a well respected

multifaceted Omani company since 1990.

Our range of services comprise of survey and

claims related operations in both marine and

non-marine insurance fields. We handle pre-

shipment/discharge surveys, accident investi-

gation, damage surveys and loss adjustments

of fire and allied perils, theft, accidental dam-

age, engineering, marine and surface trans-

port, money, fidelity guarantee and business

interruption claims.

What is the role of loss adjusters?

In the case of insurance claims, instead of

employees of insurance companies assessing

the losses, an unbiased, third party involve-

ment is preferred. We act predominantly, but

not exclusively, on the instructions of insur-

ance companies. Our first task is to investi-

gate the facts in order to ascertain if there is

policy liability. We then check the accuracy of

the claim and negotiate equitable settlement

of the claim with the policyholder. Where

found necessary we guide the claimant in

presentation of the claim and in protecting

his rights against third parties.

Where is your firm based and where all are

your services available?

We operate from Muscat and handle claims

throughout the Sultanate. Our associates

Charles Taylor Adjusting have operations in

major cities across the Globe. Through our

membership with International Institute of

Loss Adjusters we can help in finding survey-

ors across the Globe.

PRUDENT LOSS ADJUSTERS LLC

Walter M. Pereira, Managing Director of Prudent Loss Adjusters, tells us

why loss adjusters play a crucial role in settlement of insurance claims

IMPARTIALITY IS THE KEY

Tell us about the team at Prudent.

We are a unique team of individuals hail-

ing from diverse backgrounds. We have a

mechanical engineer, a civil engineer, pecu-

niary loss experts and general surveyors

all with considerable knowledge in their

TESTIMONIALS:“We’ve worked with Prudent Loss Adjusters for over 10 years now and I can genuinely say that

they are extremely hard working and professional. The team, with diverse specialisations, has

the ability to handle all kinds of claims and their standard of work is unparalleled. We look for-

ward to maintaining a positive and productive relationship in the future with them.”

- Maurice Shaheem, Manager, Arabia Insurance Company (Muscat Branch)

“I was thoroughly impressed with their quality of work and attention to detail. The entire team

was extremely professional and forthright during the entire process. I would like to extend my

best wishes to Mr. Pereira and his entire team and commend them on a job well done.”

- Sadiq Al Azzawi, Diamond House

“Our company has been working with Prudent Loss Adjusters for 15 years, and I personally

have been working with them for 5 years. Not only do they try and resolve all issues proficiently

and quickly but also provide invaluable guidance to their clients regarding the claims. They

handle everything impartially and are always ready to go an extra mile to get the job done.”

- A. Mohan, Assistant General Manager, Claims Department, Royal Sun Alliance

Our first interaction with Prudent was in 2003 when our insurance company appointed them

to assess the losses incurred during a fire. Right from the beginning, Walter was empathetic

and polite but at the very same time, extremely professional. Over the years we have worked

with him on other claims and have grown to develop a lot of respect and regard for him.

- S. Gopalan, Reem Batteries and Power Appliances Co. SAOC

SPONSORED FEATURE

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