The Business Year

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Ramy F. Zambarakji

Managing Director, Bank of Beirut

When we first came here, two years before the global financial crisis, the economy was booming, and it was lucrative to open a business in the GCC countries. We moved to Oman and were licensed by the Central Bank of Oman (CBO), opening in December 2006. We are the only Lebanese bank operating in Oman and our relationship with Lebanon is extremely close. Our banking activity is mainly concentrated on the corporate side, oriented toward trade finance and project finance. In the first three years, we financed a total of around OMR450 million worth of projects. We mainly service corporate clients, but we do offer retail banking for our corporate clients and our VIPs. We cater to their personal banking needs, housing finance, and credit cards. We now average about 15% of our business in retail and 85% in corporate. In 2012, we established a new department for SMEs and plan on focusing more and more attention on them. This requires more employees and human resources. For retail, we can compete in the market since the CBO has put forth new rules and conditions for retail banking. However, it is not our priority; we are not a local bank. You need a huge operational backbone to do retail banking.

Ewan Stirling

CEO, HSBC Bank Middle East Limited, Oman

It is a very liquid market at the moment, with a substantial increase in the number of players in a short space of time. We have seen Bank Nizwa and alizz Islamic Bank open in the Islamic banking space, and so a larger number of banks are competing in what is undoubtedly a growing economy. There are big-ticket infrastructure projects being launched by the government, for example at Duqm Port, the railway, and investment in the airports. We are operating in an environment of significant investment, in a market that is already highly liquid, so there is margin compression. At the same time, there has been regulatory tightening on the personal assets side, where margins were reduced by 100 basis points, and we are continuing to feel the effects of this. However, HSBC Bank Middle East Limited, Oman is very well positioned to take advantage of the opportunities in the market. The Oman banking sector is very competitive and well capitalized. All the domestic banks remained profitable throughout the financial crisis as a result of the strong and prudent regulatory framework of the Central Bank of Oman (CBO). Statistics from the CBO indicate that the capital adequacy ratio (CAR) was maintained at a reasonably high level of over 12% through 2004 to 2010, with an average CAR of 14.3% at the end of 3Q2011.

Lamin Kemba Manjang

CEO, Lamin Kemba Manjang

Personal loans have grown very fast in the market to the extent that it began to create worry at the policy level that perhaps people had gotten too heavily indebted and were therefore beginning to face challenges in repaying their loans. The Central Bank of Oman (CBO) came up with guidelines. One is to cap the debt-burden ratio to 50%, so you cannot have reductions of more than 50% of your income. Also, there was a cap on the number of times you can top up your loan. Then, of course, the capping of interest rates to make sure that they are affordable to the clientele at 7%. Because of those initiatives, we have seen a slowdown in the rate of growth. It is still growing, but the pace has slowed down since 2012. The consumer base is also becoming more sophisticated. Islamic banks are a new phenomenon in the Omani banking scene. For now, I think their impact is moderate, but they are growing. Just like in other countries, the sector will have its own niche in the market. There have been studies with different speculations suggesting Islamic banking could take up to 20% of the market share. However, it is still too early to tell.



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