Bank Sohar: 7 Years… Going From Strength To Strength

The year 2013 was yet another exceptional year for Bank Sohar as it continued to evolve and make its mark on the banking and financial landscape of Oman. In a very short span of time, Bank Sohar has managed to grow to become the fourth largest and one of the most profitable banks in Oman.

Despite the banking industry in Oman becoming increasingly competitive, Bank Sohar built on the previous year’s outstanding performance and garnered key gains in a number of core areas of its business in 2013. Boosted by its strong performance, Bank Sohar registered a net profit of OMR 26.871mn for the financial year 2013 compared to OMR 23.011Mn in the previous year, entailing a year-on-year increase of 16.77%. The operating profit for the financial year 2013 witnessed a growth of 10.79% from OMR 28.644Mn in 2012 to OMR 31.735Mn

Foreseeing the growing challenge of increased competition, Bank Sohar continues to diversify its revenue streams. To this end, the Bank has already initiated key projects that will drive future revenues and profitability.

As a reflection of its growth and achievements, Bank Sohar has received 11 prestigious foreign, regional and local awards over the past year. These encompass the ‘Best Corporate Social Responsibility Bank Oman 2013’ award by renowned UK based Global Banking & Finance Review; the ‘The Golden Award for Quality & Business Prestige’ by Otherways Management & Consulting Association in Rome; the distinguished Tatweej Academy’s ‘Golden Order of Merit’ in the field of ‘Prudent Management and the Best Supportive Bank for Tourism Projects in the Arab World’; ‘Fastest Growing Bank In Oman’ by UAE-based CPI Financial; the ‘Majestic Five Continents Award for Quality & Excellence’ by Otherways International Research & Consultants; the ‘Golden Excellence Award for Corporate Social Responsibility’ for the second year in a row by Arab Organisation for Social Responsibility in Dubai; and the `Best Enterprise’ and ‘Best Manager of the Year’, for Bank Sohar and Dr. Mohamed Abdulaziz Kalmoor respectively, by the Europe Business Assembly (EBA). In addition, Dr. Mohamed Abdulaziz Kalmoor was also honoured as the ‘CEO of the Year 2013’ while the Bank was awarded as one of the ’Top Five Large Corporate Enterprises in Oman’ by the leading Arabic business publication in Oman – Alam Al Iktisad Wal Amaal (AIWA). Bank Sohar was also recognized by Oman’s leading English economic and business publication – Oman Economic Review (OER) – as one of the top 20 corporate performers listed on the Muscat Securities Market (MSM) at the OER Top 20 Awards.

Commenting on this occasion, Dr. Mohamed Bin Abdulaziz Kalmoor, CEO, Bank Sohar said: “We are proud to complete seven years of success despite facing tough competition in the banking sector. The success is due to the trust of our stakeholders and commitment of our staff and the bold vision set forth by our Board. Constant innovation and effectively capitalizing on new opportunities has been the driving force in our quest for operational excellence.”

 

CORPORATE BANKING

The exceptional shimmering growth of Bank Sohar over the past seven years and CBO’s recognition of the relevance diversification and growth of the local economy brought the need for essential restructuring of the Corporate Banking Division in 2013.  The restructuring was introduced to address the requirements of a broader range of customers and to apply a more focused approach on domestic business, ranging from Large, Mid, Emerging Corporate and SMEs to Project Financing.

The SME sector has invested significant time to analyze local market needs and ensure that a clear segregation of responsibilities is established among Micro and Small SMEs. Through the Emerging Corporate Banking (ECB) unit, Bank Sohar is able to focus its efforts on extending value added products and services to mid corporate clients. The ECB unit is also well positioned to tap the synergy of combined operations of the other Corporate Banking units’ viz. large corporates, SMEs and project finance.  Mid Sector Corporate Banking (MSC) and Large Corporate Banking (LCB) units of the bank, focus their efforts on the growth segmentation of the economy, with a majority going into three primary target areas – Oil & Gas, Hospitality and Education.

RETAIL BANKING

The Retail Banking Division has always been one of the cornerstones of Bank Sohar’s success in the country and continued to show significant growth and progress. This is evident from the growing financial results and the ever-increasing customer confidence in its products and services. Over the course of 2013, the division strived to offer higher levels of customer service and has implemented new technology to build and enhance customer relationships.

In order to achieve these goals, the entire organizational structure of the Bank’s Retail Division was revamped. This was done to enable the bank to take a more customer focused approach and to achieve three primary goals – improved customer service, product Innovation, and strengthening of sales and distribution. Furthermore, the Retail Banking Division was also categorized into three zones to further streamline operations. And this type of focused restructuring has enabled the Retail Banking Division to give particular focus to each and every facet of the business, rather than all functions being grouped under one person.  The strategy has enabled better business development, improved monitoring of customer preferences and also nurture a positive and competitive spirit within the team.  In addition to the restructuring, the Head Office now has three new Business Support Divisions – Consumer lending; Liability products; Credit Card and other new products.

As mentioned above, product innovation was a key objective for the retail division in 2013. With that in mind the focus was centered on developing their portfolio of credit card services and products. The first of these products was the introduction of the Excel Diamond Infinite Credit Card – the first of its kind in the market to include an actual diamond embedded within the card. The bank also launched a unique ‘Easy Payment Plan (EPP)’ for its growing credit card customer base.

Other products introduced by the bank in 2013 included gold loans and auto loans, while personal loans were enhanced to better serve both Omani and Expat customers. The Bank also setup a new Micro and Small Enterprise Division (MSE) Looking ahead; steps are being taken by the Bank to upgrade Internet and SMS banking systems through a phased approach.

CORPROATE BUSINESS & CAPITAL MARKETS GROUP

In 2013, Bank Sohar had obtained an Investment Banking License from the Capital Market Authority (CMA) and the Central Bank of Oman (CBO), enabling it to provide a range of products and services to its existing clients as well as attract new clients.

Introduced in 2013, the Oman Development Fund is an innovative Private Equity vehicle that seeks to encourage the mid-sector manufacturing sector through significant minority stakes in various companies. In addition, the Capital Markets team seeks to provide asset management solutions to cash surplus entities. They also attract investments into the Muscat Securities Market from regional and international investors. The Wealth Management team seeks to source and provide international investment opportunities for local investors.

The Correspondent Banking Unit on the other hand, continued to strongly support the Bank with its growing network of foreign correspondents and relations. In addition to forging new relationships with additional banks, a whole new network of regionally and internationally active Islamic Banks had to be set up so as to support the Bank’s new Islamic window – Sohar Islamic.

The Financial Institutions (FI) unit expanded support to Treasury by seeking and establishing new credit lines for the Bank’s inter-bank business with foreign banks. The unit also supports the newly formed Islamic Window of Bank Sohar, with establishment of credit lines for its operations.

The Bank’s strategy to keep a dedicated unit to address the banking needs of this important segment has been very well appreciated by the market. Currently, nearly all leading PSGs and Government Departments are associated with Bank Sohar. The Bank has set up a dedicated unit to cater to the needs of Government entities/bodies and thus ensuring a fast credit approval process and efficient service to its esteemed client group.  The group also continues to work closely with the retail department to provide tailor-made products and solutions. By doing so, the unit is well equipped to meet the specific needs of clients as well as their staff.

The Trade Finance Team at Bank Sohar prides itself in being one of the most responsive and client-driven trade teams in Oman. Further, a separate system provides similar services to clients of the Islamic window of Bank Sohar. In fact, even overseas corporates and banks wanting to do business in Oman, find Bank Sohar’s trade services to provide a compelling solution at reasonable cost.

The Treasury Group, the final unit under the division, continues to provide customers with the best and most innovative financial and system solutions, thereby assuring them the best possible way to manage their wealth.

ISLAMIC BANKING – SOHAR ISLAMIC

Islamic Banking as an industry has continued its growth in acceptability and market size in various countries across the world. Bank Sohar increased its capital base in order to launch Sohar Islamic in line with CBO’s stipulation.  After obtaining its license from CBO in 2013, the first Sohar Islamic Branch was opened in Falaj Al Qabail, Sohar Region.  The Islamic window has since added three more branches to its network in Muscat, Nizwa & Salalah Regions

Sohar Islamic has been set up to operate as a bank functioning within the Bank on the basis of Islamic principles, providing banking facilities and services to the entire population of Oman with the viability and capability to sustain itself and grow in the process. Its objective is to undertake all banking business and services which are permitted for banks under the applicable laws and regulations, and subject to Islamic shari’ah principles. During the previous year , Sohar Islamic rolled out a comprehensive suite of products and services for retail and corporate segments of the market.

HUMAN RESOURCES

The previous year can truly be considered as the ‘Year of Talent’. Throughout the year, the Human Resource Department (HR) continued to play its pivotal role in enhancing the competencies and skills of the Bank’s employees towards developing the leaders of tomorrow.  The Department continues to innovate and develop new methods and techniques in its approach towards employee development.

Last year the bank organized 225 training programs of which, 120 were conducted by the Bank’s in-house Learning Centre. In addition, the Bank continues to train new employees through its successful ‘Branch Banking Program’. The Human Resource Department has also been supporting Bank Sohar’s Islamic Banking initiative right from its inception. Last year Bank Sohar also introduced the ‘Erteqa’a Program’, which was specifically designed to hone the leadership skills and competence of the Bank’s Managers.

Omanisation continues to be the HR’s cornerstone of all future strategies. At the end of 2013, the bank maintained a rate of 91% Omanisation amongst its workforce. The Bank has also shown an improved Omanisation ratio within the bank’s Islamic Banking window, climbing to 82% at the end of 2013.

The HR department initiated a large scale project to revamp its current recruitment strategy and has introduced Psychometric tools and practices to streamline their recruitment process. Such practices are considered to be amongst the best predictors for future employee performance.