Muscat Finance SAOG (MFCI) Earnings Call Transcript & Summary

Good afternoon, everyone. Sorry, there was a technical glitch. A very warm welcome to all the participants who have joined us for today's online MSX session in order to discuss the 6-month 30th June 2025 period ended results. First of all, I would like to introduce myself. My name is Tammar, Tammar Hassan. I'm the Head of Finance and Accounts. With me, I have Mr. Rashad Al Shaikh, the Chief Executive Officer of the company. We will directly be going to our investors' presentation for today's session. Let's begin with that. The presentation starts with the normal disclaimer. We basically state that this presentation contains a statement relating to Muscat Finance business, financial condition and results of operation from published information. Any statement or comment which has a meaning of prospect of forward-looking are only predictions and are not guarantees of future performance and does not constitute any solicitation to buy or sell any products, services, stocks or to engage in any trading strategy and should not be relied upon or considered as evidence for making any investment this year. As due caution must be exercised that any such forward-looking statement or comment are and will be subject to both known and unknown risks, uncertainties and factors relating to the operations and business environment of the company that may cause the actual results of the company to be materially different from future results expressed or implied in such forward-looking statements. This presentation and discussion are for information purpose only. And the recipient of this presentation and discussion media must not be communicated, reproduce, distribute or disclose through media or refer to them publicly or privately in whole or in part any time without written consent from the company. After our disclaimer, we will explain you the history of the Master Finance, specifically to those who would have joined us for the first time. We will present you the branch network, workforce and the other areas. Then we will draw your attention to the snapshot of the H1 2025 performance. We will discuss regarding the 6-month performance for the period ended 30th June 2025, the way forward and the annexures what we have prepared in relation to this particular presentation. With respect to our first slide regarding the Muscat Finance history, as most of you would be knowing it that Muscat Finance is the first NBFC in Oman to launch corporate and lease scheme. The company is engaged in vehicle and equipment financing for retail and corporate customers. The company was established in the year 1987. After 8 years, the company was listed on the Muscat Stock Exchange in the year 1995. In the year 1996, the company has launched the working capital finance scheme for the SME's customers. During the year 2013, Muscat Finance raised approximately OMR 7 million through nonconvertible bond issuance. In the year 2019, Muscat Finance was the first FLC to partner with Omantel to offer seamless payment capabilities. In the year 2024, Muscat Finance has moved to a newly acquired self-owned head office in Bawshar. We have introduced a fully automated kiosk, which operates 24/7. We are also providing a drive-through experience for our customers' for better satisfaction. In the year 2025, we have focused on the funding diversification, including the issuance of the bond program and deposit mobilization, along with the digital transformation. After this, we'll go to our branch network and the workforce and other areas. We operate through a network of 6 branches, which are located in different parts of the saltanat, namely Burka, Sur, Sohar, Nizwa, Ibri and Salalah. We have 90-plus percent of Omanization among all our workforce, approximately 43% plus are the female staff. We have 24/7 automated kiosk and our drive-through services. As at June 30, 2025, we approximately retain the portfolio of 10% among as market share. The shareholding as at H1 2025 still dominates with the Omani shareholding, which is approximately 97.2%. After this, we will go to the snapshot of H1 2025 in terms of the overall performance of the company as in relation to the year H1 of 2024. During 30 June 2025, the net investment in the finance debtor has increased from OMR 91.64 million of H1 2024 to OMR 97.52 million. Our product includes vehicle financing, equipment financing, working capital and home plans. The corporate deposits have also increased by OMR 6.6 million from OMR 19.2 million in the H1 2024 to OMR 25.81 million. We have a very strong equity base, which stood at OMR 39.7 million as of 30 June. The leverage ratio of the company is standing at 1.86x versus the maximum of 5x allowed as per the regulatory limit, which means that we have ample space to grow our loan books. The gross income has also increased significantly as compared to H1 2024, which has moved from OMR 4.57 million to OMR 5.62 million. The net interest income has also increased from OMR 2.4 million of previous year H1 2024 to OMR 3.2 million. The company's net profit has amounted to OMR 520,000 as in relation to H1 2024 of MR 149,000. The provision coverage as of 30th June is 79%, which is bumped up by 10% approximately as compared to H1 2024. The total provision is standing at OMR 35.1 million as compared to OMR 31.54 million in the year 2024. After the snapshot of H1 2025, we will present to you the overall financial performance for the 6-month period ended 30th June 2025. If you look at this, the net investment in the finance debtor has hiked up by 6.4% from MR 92 million to OMR 97.5 million. There is also an increase in the corporate deposits by OMR 6.62 million, representing approximately 35% increase as compared to H1 2024. The company has been prudent in providing the ECL in accordance with the ECL model and the provision coverage is greater than 78% as at 30th June 2025. The operating profit has also increased from OMR 898,000 to OMR 1.7 million, which represents approximately 90% increase. The net profit has significantly increased as compared to H1 2024, which was standing at OMR 149,000 to OMR 520,000 in H1 2025, which is approximately 3.5x as compared to the previous year. After this, we would like to present to you the profit and loss statement in terms of the graphical presentation, which shows that the interest income has drastically increased from OMR 2.4 million to OMR 3.1 million, which represents 31% hike. The interest expense has also marginally up as compared to previous year, which is OMR 260,000 more as compared to previous year, which is primarily because of the utilization of the STLs, LTLs and the corporate deposits. The operating expenses, however, remains at a controlled level, which has slightly dropped by 1%. Our operating profit has marginally up by OMR 808,000 from OMR 898,000 to OMR 1.7 million. We have provided adequate ECL in accordance with ECL model, which was OMR 1.2 million approximately as at 30th June 2025 as in relation to OMR 749,000 provided in the previous year H1 2024. The net profit has also increased from OMR 149,000 to OMR 520,000 as compared to previous year H1 2024. Now regarding the way forward, we would basically be focusing in order to grow the volumes of all products. We will try to regain the market share with an improved yield. We are focusing on the collection and recoveries by managing the stressed accounts. We will try to manage the overall overhead cost of the company. We are doing a funding diversification through a bond program and deposit mobilization. We are trying to increase the new booking loans with a focus more on the retail and the vehicular business. So these are the annexures, which we have prepared in respect of the investor's presentation, which is a comparison of financial statement as at 30th June 2025. Overall assets have increased by OMR 4.3 million as compared to H1 2024, which was standing at OMR 98.2 million, an increase up to OMR 102 million. Our equity has also improved from OMR 38.3 million to OMR 39 million in H1 2025. Our liabilities has increased slightly from OMR 59.8 million to OMR 63.4 million, which represents 6% increase in the overall liabilities. As mentioned earlier in the previous slides that the interest income has increased by OMR 1 million from OMR 4.2 million to OMR 5.2 million, and our net interest income has also improved from OMR 2.4 million to OMR 3.2 million in H1 2025, which represents 31% growth on a year-on-year basis. Our expenses more or less remain controlled as compared to previous year. This has helped us to achieve the profit before ECL at OMR 1.7 million as compared to previous year, OMR 898,000, which has increased by 90%. Despite of the fact that we have increased the ECL from OMR 749,000 to OMR 1.2 million in H1 2025, the profit what we have reported is OMR 520,000 as compared to OMR 149,000 in H1 2024, which represents approximately 249% increase in the net profit on a year-on-year basis. So this is the presentation. We are more than happy to answer any questions if you have...

Thank you, Tammar, for the presentation. We're ready to answer any questions, as Tammar said. Thank you.

Ikhlas, we will probably wait for another 2 minutes in order to address any of a concern or a questions that anyone may ask. If not being asked, then we will -- we can probably close and exit the session after 2 minutes. Thank you Ikhlas and Chief, probably there are no questions, and we can probably exit the session now.

Yes, I think maybe we'll close the session because there's no questions. And thank you, everybody, for attending.

Thank you. Thank you, Chief. Thank you.