It is no secret that Dr. Mohamed Abdulaziz Kalmoor, Chief Executive Officer of Bank Sohar has a long experience in the Central Bank of Oman and this is one of the reasons why he led Bank Sohar to be among the giant banks that have been in the market for ages. He started the interview by explaining why the current Omani economy was not hit in the global crisis and shed some light on his bank’s operations, performance and future prospects. He also spoke on the factors that shielded Oman from the worst fallouts of the crisis.
The Omani economy has been immune from the effects of the crisis. However, there are two aspects that should be taken into consideration: a financial one and an economic one. "Financially, you could speak about our investments and placement abroad and of course the foreign investments in Oman. "With regards to investments abroad Bank Sohar has not suffered and I think there is only one local bank that was hit, as it is the largest bank and has aggressively invested outside," Dr. Kalmoor added. Moreover, Bank Sohar did not suffer from any other elements. In terms of credit lines, there were some issues at the beginning of the crisis, but the Central Bank of Oman and the government intervened to secure more capital and that was solved. Additionally, Dr. Kalmoor believes that there are two additional local elements: 1- concerning the real estate market, there was a bubble and it had to burst-2-similarly, the stock market which witnessed one of the highest growth rates in the world. "Therefore, a correction was needed". The banks have been suffering form their own investments in the stock markets. Furthermore, Oman was affected by the drop in the price of oil. But oil prices can only affect the local economy if the government cuts down its expenditure. "This year, the government adopted a strategy of growth and business development as usual and this had a positive impact on the non oil economy. Therefore, the fiscal stimulus continued to provide a strong support for the local economy. All in all the banks are in a very healthy situation," he said.
The CEO spoke about his bank’s operations and its future expansion plans, stating, "We are only a two years old bank. Our initial strategy for phase one, when we opened the bank, was based on what we learned of the history of the other banks in Oman.
We found out that the banks which stayed small could not survive and were merged or assimilated by other larger banks. Therefore, Bank Sohar decided to start strongly in phase one in order to achieve a respectable market share. "Especially that we need a minimum volume to reap the benefits of the economies of scale and scope, which are very important for a bank’s competitiveness.
The other aspect is perception, when a bank has a large size then people take it more seriously. Then we identified the gapes of the corporate and the retail side and designed our strategy," noted Dr. Kalmoor. These were the factors that shaped Bank Sohar strategy for the first years of its operations. Bank Sohar has twelve branches and its top management plans to open three more branches by the end of the year. Bank Sohar is spread all over the Sultanate of Oman and Dr. Kalmoor said that they will open more branches if the bank’s management feels the need or finds a good opportunity. "We are a full fledge commercial bank, with a strong retail business." Additionally, we are currently studying the possibility of opening an investment branch.
Oman was not hit as heavily as the other countries in the region because of several reasons, explained the CEO, adding "among these reasons is the solid and strong financial Omani sector which supported its economy. In the other countries, the financial sector suffered and dragged the economy with it. Secondly, the government continued with its development projects, such as the two new airport and Dokum project. That was possible because the government set aside a hefty amount of capital when the oil price was at its highest level. In short, we are gradually but surely growing, most of our sectors have registered positive growth, including the tourism sector."
Moreover, the banks in Oman have been quite alert to what is happening globally and that is why they were easily able to study the best way to counter the effect of the crisis and were able to implement it in a rapid way. Additionally, I think that our banking system is quite advanced and that helped in the crisis. But I believe that we need to take a more proactive role concerning the economy and the needs of the market."
Finally, Dr. Kalmoor spoke about his bank position in the market and his plans for the future saying that "as a lending bank, we are number four in our lending portfolio. But for me personally it is not about market share but about leaving an imprint on society and the economy. It is about quality banking and not only an issue of size, but we are keen to look at how our customers and shareholders evaluate us. That for me is much more important." Growth will come in its own time.
