It is my pleasure to share with you the results achieved by the Bank during the third quarter, ending 30 September 2020.
As we are entering the last quarter of 2020, low oil prices and challenges due to COVID-19 continue to influence business and the economic environment in Oman. While the safety of our customers and staff remain our utmost priority, Oman Arab Bank (OAB) continues to be open for business by working closely with all the Omani communities especially in these difficult times. Strategic initiatives implemented earlier in the year continue to be our focus and our objectives realigned to ensure business continuity.
Integration with Alizz Islamic Bank
During Q2 2020, the Bank completed its merger with Alizz Islamic Bank (AIB). OAB acquired 100 per cent of the shares in AIB and became a public joint stock company (SAOG). We have successfully completed the integration of Al Yusr Islamic Banking window of OAB with AIB in Q3 2020. This includes the migration and integration of customers, services, employees, assets, and liabilities resulting in a larger Islamic banking entity with a larger market share.
This merger has created a strategic platform to expand the scope of our services as well as enabling us to reach more customers through our expanded network. The synergies within the Group will allow us to provide an enhanced customer experience.
National Day Campaign
Towards the end of Q3, OAB launched ‘The Power of 50’ campaign to mark Oman’s 50th National Day and reward existing customers that refer a friend or family member. The intention of the campaign is to increase the customer base as well as market share and brand awareness.
The Bank posted a net profit of RO 13.7 million for the nine month ended 30 September 2020, compared to RO 20.2 million (Solo) reported during the same period in 2019, a decrease of 32 per cent.
Net interest income from conventional banking and income from Islamic financing stood at RO 61.6 million for the nine months period ending 30 September 2020, compared to RO 56.6 million for the same period in 2019, reflecting a strong increase of 9 per cent through a balanced growth in assets and maintaining the margins.
Non-interest income was RO 11.7 million for the nine months period ending 30 September 2020, as compared to RO 13.3 million for the same period in 2019, a decrease of 12 per cent reflecting reduced business volumes on account of businesses interruption during the COVID19 lockdowns and reduced business activity on account of lower oil prices.
Operating expenses for the nine months period ending 30 September 2020 was RO 43.0 million, compared to RO 37.7 million for the same period in 2019, an increase of 14 per cent.
Net impairment for credit and other losses for the nine months period ending 30 September 2020 was RO 13.7 million as compared to RO 8.1 million for the same period in 2019. This increase is mainly due to the additional provisions by management as OAB continues to take a more prudent approach, considering the impact from COVID-19 on the economic environment and the current stress on business and market conditions.
Net loans and advances, including Islamic financing receivables, increased by 32 per cent to RO 2,596.8 million, compared to RO 1,965.1 million as of 30 September 2019. The increase in the loan and financing book is mainly the result of the acquisition of Alizz Islamic Bank and consequent consolidation of accounts.
Customer deposits, including Islamic customer deposits, stood at RO 2,709.5 million by the end of Q3 2020, an increase of 41 per cent compared to RO 1,926.8 million as of 30 September 2019. Similarly, this increase is mainly attributable to the acquisition of Alizz Islamic Bank.
Given the current situation, most large scale events and volunteering initiatives have been cancelled or postponed. Therefore OAB has accelerated a number of its online initiatives to help those who need it most. Through OAB ATM’s and the OAB Online App, we continue to encourage donations to the Ministry of Health and six other charities to help those in need.
To showcase our appreciation for frontline workers dealing with the impact of COVID-19 in Oman, OAB has launched in Q3 an exclusive credit card scheme, which offers 0% interest rate and other benefits to those that are placing their own lives at risk for the greater good.
Towards the end of August we supported a virtual fundraiser organized by the Environmental Society of Oman (ESO) and which was hosted by Her Highness Sayidda Tania Al Said and Omani Football legend Ali Al Habsi. OAB is proud to support ESO’s work for many years, as they are the only non-profit organisation in Oman dedicated to conserving the environment.
On behalf of the Board of Directors, I would like to thank all our stakeholders for their continued confidence and their commitment to Oman Arab Bank. As our nation progresses through these unprecedented times, the Bank continues to support the Government of Oman in its efforts to keep Oman safe and forward-thinking and we very much appreciate the Government of Oman on the various measures taken to manage the current financial crisis.
May the Almighty Allah keep us all safe and blessed.