- aofsoman@omantel.net.om
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ECONOMY
The global economy has shown significant resilience despite multiple shocks, but the outlook remains volatile due to ongoing geopolitical conflicts, trade tension, climate risk and fiscal pressures. The global growth projected to 2.8 per cent in 2025, the same as in 2024, but lower than the pre- pandemic 10 years average of 3.2%. Most developing regions are expected to see an uptick in economic growth in 2025 and 2026.
Though global inflation has eased with headline inflation falling from 5.6 per cent in 2023 to an estimated 4.0 per cent in 2024 and is projected to decline further to 3.4 per cent in 2025 although this outcome will depend on how trade restrictions evolve. The upward risks to the inflation outlook remain significant as renewed supply shocks in global commodity markets and trade restrictions could drive up energy and food prices.
Many economies are experiencing currency depreciation, which could potentially become disruptive, especially for emerging market economies. New policies could lead to new trajectories for inflation, borrowing costs, production costs, currency values, trade & capital flows. Meanwhile, governments and central banks continue to navigate a balance between a desire to suppress inflation and a goal to boost growth.
The economies of Oman and the GCC are undergoing profound transformations as they deal with fluctuating oil revenues, climate change and shifting global economic dynamics working towards diversifying their economies and reduce dependence on hydrocarbons. Oman’s economy continues to perform modestly supported by high oil prices, favorable gas production and fiscal consolidation under the Medium-Term Fiscal Plan and Vision 2040. Oman’s 2025 budget is based on an assumed oil price of $60 per barrel with GDP growth expected to reach 2.4% in 2025.
FINANCIAL HIGHLIGHTS
The company achieved Net Profit after tax of RO 3.569 million for the year 2024 compared to RO 3.201 million for the same period last year, showing an increase of 11.5%. The company’s Net Installment Finance Receivables stood at RO 124 million as of 31 December 2024 as against RO 127 million last year. The non-performing assets coverage including the specific reserve for non-performing assets are more than 500%. The company has followed a conservative and pragmatic policy in writing new businesses with a focus on maintaining the asset quality besides scouting for quality assets. The Total ECL and reserve interest on Instalment Finance Receivables stands at RO 14.75 million as on 31st December 2024.
PROPOSED DIVIDEND
It is the intention of the company to continue the sustainable dividend policy that it has been following since inception. The Board of directors have proposed a dividend of 14% of the paid-up capital for the year 2024, after considering the CBO guidelines, comprising 9% cash and 5% unsecured non-convertible redeemable bonus stock bonds. This will be paid from the company’s retained earnings, thus maintaining its track record of paying consistent dividends without interruption since inception. This will be submitted for the formal approval of the shareholders at the AGM of the Company to be held in March 2025. This takes the cumulative dividend paid to shareholders to 505.83% since inception.
CAPITAL ENHANCEMENT
The company’s equity capital stands at RO 31,541,700/- which is well above the regulatory requirement. The company is well capitalized and the capital adequacy stands at a healthy 32.94%. The company has issued compulsorily convertible bonus stock bonds in the earlier years which are listed. One of the existing convertible bonus stock bonds (listed in 2019) got converted to Equity Shares in 2024 leading to further Capital enhancement.
CONCERNS
Oman is working to reduce its dependence on oil by implementing robust fiscal reforms, prioritizing diversification and investing in renewable energy to build a sustainable future. Given the country’s dependence on imports for meeting a large part of day-to-day requirements, the global inflation condition continues to impact prices in Oman. Expected delinquencies due to reduced cash flow at the borrower’s level may reduce the net margins and result in dilution of the NPA coverage. The challenging geopolitical situations are an added cause of concern.
CORPORATE SOCIAL RESPONSIBILITY
The Company continues to contribute to social causes as part of its Corporate Social Responsibilities in line with the corporate objectives during the current year.
PROGNOSIS
We continue to foresee a challenging year ahead tempered with optimism. The company is resilient, proactive and fundamentally strong with solid net worth, clean loan book, the lowest Non-Performing Loans, high NPA coverage and a robust liquidity buffer in the form of liquid deposits with commercial banks which is being leveraged for effective treasury management.
We assure the shareholders that, as outlined in the Report on Corporate Governance and the Management Discussion and Analysis Report by the Chief Executive Officer, the company has adequate internal control systems and processes and has good governance systems in all the areas of management. The company has the ability and acumen to continue as a going concern and the company is cautiously optimistic about posting satisfactory performance in the coming years. The Board also understands its responsibility for the preparation and fair presentation of the financial statements in accordance with IFRS and the relevant requirements of the Commercial Companies Law and the Financial Services Authority of the Sultanate of Oman.
ACKNOWLEDGEMENT
On behalf of the company and the Board of Directors, I would like to express my deep gratitude and appreciation to His Majesty Sultan Haitham bin Tarik for continuing to lead the Sultanate on the path of development and prosperity.
We are also grateful to the Central Bank of Oman, Financial Services Authority and other regulatory authorities for their guidance and support. We also thank our shareholders, bankers, dealers and customers for their continued trust, confidence and support. Last, but not least, we acknowledge the dedication and commitment of the management and staff of the company.