During these unstable times, Oman Arab Bank had the highest return on equity, highest return on assets among all banks in Oman during 2008. This achievement was primarily due to the sound banking and lending policies of the bank and its active participation in infrastructural and developmental project.
Oman Arab Bank is expecting to have its 2009 results almost the same like those of 2008. It enjoys a good performance and it does not have any technical or financial hurdle. “We are very keen in preparing the 2010 budget. We are optimistic, we are expecting to increase our 2010 results at least by 15 %, because recently we have put in place certain regulations in our overall operations, and we’re minimizing our exposure in the real estate which has been affected by the financial crisis. But in general, we are still involved in the real estate operations and projects and we will continue to follow up all the projects which will be executed in 2010 because as I mentioned, we’re very keen to finance projects either directly or through other contractors. We have to concentrate on improving our services and establish up to date technology. Moreover, we will continue to open branches because we are going to increase our network in the area where Oman Arab Bank is not available. We will open a complete branch in DuKom and another branch in the Batena region. We’re planning to open a call center to serve our customers. This center will cater to the problems and needs of all customers. And we’re also going to support as much as possible our investment group. We are creating Al Arabi Fund which is managed by Oman Arab Bank. This fund is expected to earn for its participants not less than 21% income because now we have a good experience in managing these funds. We also want to increase our participation in the egovernment. Probably, Oman Arab Bank is the first bank to start this electronic service, which has been put in service since 2001. The bank wants to improve this electronic method of payment and make it more popular in order to be used by most of the people who are going to pay their dues to the government,” Askalan explains.
Presently, the government is thinking of adopting such method of payment in all the government entities and ministries and probably Oman Arab Bank will be an import part of this plan.
Oman Arab Bank is not involved in Dubai’s recent financial crisis because its policy is not to invest outside the border of Oman. Nevertheless, there are 3-4 major Omani banks that are involved in Dubai’s problem and also in the Al Qusaibi financial problem. These problems affected the profitability of these banks but it did not put them in a wobbly situation. Commenting on Dubai World financial crisis and Kuwait recent news, Askalan believes that Dubai should handle the problem in a professional way because the problem is not that much serious but the media exaggerated the news. It is the norm that some times banks reschedule certain loans. “By announcing that Dubai was not going to pay its bonds on time, aroused panic especially among the British Banks in Dubai which are involved heavily in this matter. Consequently, this affected the stock market.”
Kuwait’s government doesn’t have serious problems but the Kuwaitis are affected by their foreign and local investments. Kuwaitis are affected because they have investments everywhere in the Gulf and internationally. “Kuwaitis are more advanced in their thinking, and they like to speculate and do their business accordingly,” he adds.
Seemingly, the year 2010 is bringing a lot of opportunities. Hariri Group will start soon new huge projects in Qantab, Oman on a lot of about 6 - 7 hundred million square meters. This huge project is a joint venture with the Omani government where the government owns 50% and the balance is owned by the Hariri group. Presently, Hariri Group is discussing the project’s financing issues with Oman Arab Bank. “We’re also looking very actively to increase our portfolio and increase our activity.”
Regarding mergers and acquisitions, Askalan strongly believes that it is a good policy for banks to merge because this step provides banks with the ability to compete with the international banks. These banks can provide most of the big financing to the entire region while regional banks are unable to do so because of their small capital. “We have investors’ problem, the shareholders actually don’t like to reduce their shares especially if they are making profit but when their investments incur losses then they look for a merger opportunity,” Askalan concluded.
