On behalf of the Board of Directors, it is my privilege to present to you the Annual Report of Oman Arab Bank for the financial year ending 31 December 2018, together with relevant financial statements reflecting the Bank’s results and achievements over the past year.
I am pleased to report that Oman Arab Bank has ended 2018 with a very strong performance. The year culminating with the Bank’s total income increasing by nearly 13 per cent to OMR 87.6 M, with the cost lens controlled increasing by only 3.4 per cent. This resulted in a consolidated net profit, after tax milestone, north of OMR 30 M. Furthermore, our Islamic offering (Al Yusr) also surpassed another milestone by achieving a net profit, after taxation, of OMR 1.1 M.
This positive growth was in part a result of the ongoing recovery of Oil prices, which has continued to rise consistently throughout the year. Another major contributor has been the Bank’s transformation strategy, one that has seen the Bank continue to enhance, develop, and incorporate new state-of-the-art systems, platforms, and services focused on enhancing customer experience and satisfaction across all touch points. With each new launch of the bank’s initiatives, Oman Arab Bank continually sets new benchmarks for technological advancement and customer excellence.
Throughout 2018, the Corporate Banking Department, continued to support its partners in the public and private sectors, financing several energy, infrastructure, and large scale projects in the Sultanate, as well as boosting its support of small and medium enterprises.
The Retail Banking Group delivered a sound performance as well, despite ongoing headwinds from tighter regulation and the need to keep pace with technological advancement. As it continues to grow, the Group continues to be recognised for ensuring customer experience remains at the forefront of its DNA. In 2018, the Group won a number of awards and accolades against its peers in Oman and across the Region.
As highlighted earlier, the Bank’s consolidated net profit increased by 13.5 per cent year-on-year to reach OMR 30.1 M by the end of 2018 compared to OMR 26.5 M reported in 2017. Net Interest Income increased by 19.6 per cent culminating in a strong OMR 66.5 M. Loans and Advances increased by 10.8 per cent to reach OMR 1.8 billion, while core underlying funding from Customer Deposits increased by 7.1 per cent to OMR 1.9 billion.
Given the above, it was pleasing to see that the Bank’s Total Assets increased by nearly 9 per cent, reaching OMR 2.3 billion by the end of 2018 while its Capital Adequacy Ratio was maintained at a healthy 16.54 per cent, well above the regulatory requirement of 13.25 per cent.
During 2018, we continued on our branch transformation journey, which began back in 2017, to revamp our branches across the network. A number of branches were transformed to refresh the brand, provide a more efficient customer queuing system, offer new and updated services, and ensure more streamlined operation to enhance customer experience. In fact, 2018 saw us transform three branches, of which two are now elevated as “flagship”.
In addition, our digital channels have enjoyed wide acceptance and praise from our clients, which has motivated us to continue to update and add new features and facilities to the platform and create an efficient omnichannel experience. These include updates and enhancements to our Mobile Banking Application and Internet Banking and the launch of new facilities such as the recent addition of ‘Tap and Go’ facilities at ATMs and Point of Sale (POS) machines together with automated OAB Rewards redemptions on POS machines.
In fact, our unique digital platform has further reinforced Oman Arab Bank’s position as one of the pioneers of digital banking in the local market. That said, this is an ongoing journey with many more launches in the pipeline that, when launched, will further consolidate the Bank’s position at the forefront of digitalisation. It will also create a new retail paradigm that elevates the experience for customers, especially for those demanding a unique and integrated service delivered through every channel.
Ultimately, however, the value of our products and services to customers depends entirely on the ability to unlock the full potential of our staff. At OAB, we value our staff highly and recognise the importance of creating a vibrant workplace that embraces innovation and allows employees to energise each other and aim for ambitious targets. The Bank prides itself in the various talent management initiatives and training programmes that are tailored to accelerate this cultural transformation. This includes our LEAD programme, which has seen the successful completion of LEAD 2 in 2017, and with LEAD 3 having just been launched recently for more of the Bank’s high potential employees. In addition, we have the Mutamayizoon award for outstanding performance, the ‘Insights’ Workshops to promote a culture of ongoing learning, a comprehensive training and development calendar, and other internal initiatives that create a platform for our staff to engage and continue to develop their careers.
Reinforcing our commitment to Omanisation is key and the Bank also recorded a remarkable milestone in terms of citizens employed across all levels, achieving a percentage close to 96 per cent, making it one of the leading Banks in the Sultanate to employ, engage, and develop Omanis.
Looking ahead, the Bank has exited 2018 with a renewed focus towards innovation and has set the barrier high with the Bank’s ‘24-Hour Innovation Hub’ weekend. Oman Arab Bank continues to accelerate its innovation journey through the minds of clients, staff and the community to drive innovative thinking and progressive ideas from concept to reality. As such, we expect 2019 to be yet another eventful year for us as we continue in our efforts to reaffirm the Bank’s position as a leading Omani banking institution that will elevate the customer banking experience across all touchpoints and platforms.
I wish to express, on behalf of the Board of Directors, our gratitude and appreciation to His Majesty Sultan Qaboos bin Said for his wise leadership and vision, which has contributed to the prosperity of our great nation. Likewise, we extend our thanks to His Excellency the Governor of the Central Bank of Oman, Tahir Salim Al Amri, for the continued support and guidance. Lastly, I wish to thank our clients, customers, partners, and shareholders for their faith in the Bank, which has been the cornerstone of our continued success.
I could not end without a word of thanks to the executive management of the Bank and all of our employees for their hard work and dedication towards achieving a strong 2018 performance. The Board of Directors is truly indebted to the commitment and professionalism of all our staff.