It is my pleasure to share with you the results achieve by the Bank during the second quarter, ending 30 June 2020.
The COVID-19 pandemic continues to be a major impediment to the business and operations of the Bank. As we assign utmost priority to the safety of our customers and staff, complying with directives of Supreme Committee, our agile approach to implement strategic initiatives is enabling us to weather the crisis by realigning our priorities and ensuring uninterrupted delivery of objectives.
The Bank posted a net profit of RO 10.38 million for the period, compared to RO 14.74 million reported during the same period in 2019, a decrease of 29.6 per cent.
Net interest income from conventional banking and income from Islamic financing stood at RO 39.66 million for the six months period ending 30 June 2020, compared to RO 37.06 million for the same period in 2019, an increase of 7 per cent.
Non-interest income was RO 7.88 million for the six months period ending 30 June 2020, as compared to RO 9.97 million for the same period in 2019, a decrease of 20.9 per cent.
Operating expenses for the six months period ending 30 June 2020 was RO 25.76 million, compared to RO 24.82 million for the same period in 2019, an increase of 3.8 per cent.
Net impairment for credit and other losses for the six months period ending 30 June 2020 was RO 9.23 million. It stood at RO 4.67 million for the same period in 2019. This increase is mainly due to additional provisions captured under a prudent approach, considering the impact COVID-19 has on the economic environment and the stress it puts on business and market conditions.
Net loans and advances, including Islamic financing receivables, increased by 32.3 per cent to RO 2,586 million, compared to RO 1,954 million as of 30 June 2019. The increase in the loan book is mainly the result of the acquisition of Alizz Islamic Bank.
Customer deposits, including Islamic customer deposits, stood at RO 2,580 million by the end of Q2 2020, an increase of 33.2 per cent compared to RO 1,937 million as of 30 June 2019. As with the net loans above, this increase in customer’s deposits is mainly attributed to the acquisition of Alizz Islamic Bank.
Merger with Alizz Islamic Bank
The Bank successfully completed the merger with Alizz Islamic Bank (AIB), with Oman Arab Bank (OAB) acquiring 100 per cent of the shares in AIB and transforming OAB into a public joint stock company (SAOG). Shares were officially listed on the Muscat Securities Market (MSM) on 6 July 2020. Al Yusr, the Islamic Banking window of Oman Arab Bank, is currently being integrated into AIB.
The completion of this merger, with the approval from the Central Bank of Oman, the Capital Market Authority and relevant shareholders, is an important strategic step that will lead to the creation of a strong banking group, providing both Islamic and conventional banking services to new and existing customers.
CSR & Sustainability
Corporate social responsibility remains a fundamental pillar in the Bank’s operational strategy. With the introduction of the Istidama initiative, the Bank now has a dedicated focus on projects in the fields of environmental responsibility, community partnerships and financial inclusion.
One of the projects saw a collaboration with an established restaurant and other brands, to distribute Iftar meals to front line workers during Ramadan. Through this initiative, over 1,000 meals were distributed to those that worked tirelessly for the sake of our health and safety.
The Bank also cooperated with Innotech, an an Omani company specialising in 3D printing, by supplying three new printers. This enabled them to increase their production capacity for critical medical supplies by over 30 per cent, meeting the growing demand for face protectors and ventilator components by healthcare personnel.
In addition, the Bank supported national efforts to fight the COVID-19 pandemic by donating RO 500,000 to the dedicated Ministry of Health (MOH) Fund. Customers were invited to donate to the cause using the OAB Online mobile app.
The Bank also continues its collaboration with the Royal Oman Police (ROP), raising awareness about fraud and other security threats through various communication channels.
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, we continue to support the Government of Oman in its efforts to keep Oman safe and forward-thinking.
May the Almighty Allah keep us all safe and blessed.