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
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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OER DOSSIER February 20104
CONTENTS
Protected from Risks
The impact of the global financial
crisis on Oman’s Insurance market is
negligible
46
R I S K M A N A G E M E N T
47 Insurance update 50 Insurance – a growing industry
52 RSA Insurance Company
53 Al Ahlia Insurance Co SAOC
54 Al Madina Gulf Insurance
55 Lebanese Insurance Co
56 Oman United Insurance Co SAOG
57 Prudent Loss Adjusters LLC
Sponsored features
OER DOSSIER February 20106
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.
OER DOSSIER February 20108
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.”
OER DOSSIER February 201010
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.
OER DOSSIER February 201012
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
OER DOSSIER February 201014
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
OER DOSSIER February 201016
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,
ave
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What measures ha
regulatory framewo
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ness in the capital m
The Capital Market A
The International Or
sions (IOSCO) which
rules and regulations
fundamentals divide
Regulations, Self Reg
ties Regulations, Co-
Collective Investmen
and Secondary Marke
upgrades its regulat
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tions. In order to do
listed companies
low the fundam
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What are
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Any
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17OER DOSSIER February 2010
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
OER DOSSIER February 201018
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
19OER DOSSIER February 2010
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
OER DOSSIER February 201020
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.
FINANCIAL PERFORMANCE
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
OER DOSSIER February 201022
FINANCIAL PERFORMANCE
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.
OER DOSSIER February 201024
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.
FINANCIAL PERFORMANCE
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
FINANCIAL PERFORMANCE
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
OER DOSSIER February 201026
FINANCIAL PERFORMANCE
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
27OER DOSSIER February 2010
FINANCIAL PERFORMANCE
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
OER DOSSIER February 201028
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
29OER DOSSIER February 2010
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.
OER DOSSIER February 201030
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
OER DOSSIER February 201032
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
33OER DOSSIER February 2010
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
OER DOSSIER February 201034
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
35OER DOSSIER February 2010
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
OER DOSSIER February 201036
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
OER DOSSIER February 201038
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
39OER DOSSIER February 2010
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
OER DOSSIER February 201040
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
OER DOSSIER February 201041
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
OER DOSSIER February 201042
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
43OER DOSSIER February 2010
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
OER DOSSIER February 201044
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
OER DOSSIER February 201046
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.
47OER DOSSIER February 2010
All Figures in Rials
Source: CMA
DATA MONITOR - INSUR ANCE
OER DOSSIER February 201048
All Figures in Rials
DATA MONITOR - INSUR ANCE
Source: CMA
49OER DOSSIER February 2010
All Figures in Rials
DATA MONITOR - INSUR ANCE
Source: CMA
For Advertising in OER Dossier
Please Contact :
ShivKumar Gaitonde
GSM - +968 9926 7159
OER DOSSIER February 201050
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
51OER DOSSIER February 2010
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
OER DOSSIER February 201052
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
53OER DOSSIER February 2010
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
OER DOSSIER February 201054
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
55OER DOSSIER February 2010
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
OER DOSSIER February 201056
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
57OER DOSSIER February 2010
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