Muscat Finance SAOG (MFCI) Earnings Call Transcript & Summary

Ladies and gentlemen, I extend a warm welcome to all of you to the MSX discussion session focused on the financial results on the company's unaudited financial results for the 6-month period ended 30th June 2026. We sincerely appreciate your presence with us today and look forward to a productive and constructive discussion through your valuable questions and inquiries regarding the company's financial performance during the period. Before we begin, allow me to introduce my executive colleagues joining us today, Mr. Rashad Al Shaikh, Chief Executive Officer; and Mr. Tammar Hassan Zaidi, Head of Finance and Accounts. Thank you once again for joining us, and we are excited to start this informative and interactive session. I will now hand over the floor to Mr. Tammar to begin the presentation, and thank you once again for joining us. And the floor is yours, Mr. Tammar. You can start.

Thank you, Lamees. Good evening, good evening to everyone, and I would like to thank everyone for joining this particular session, the financial statements performance of the company for the 6 months period ended 30th June 2026. In this presentation, we will be discussing about the branch network, our workflows and other areas, along with a snapshot performance for the H1 2026. We will also discuss about the overall financial performance of the company till 30th June 2026 as in relation to H1 2025. We will also be presenting you the way forward of the company. So let's begin the presentation with the disclaimer. This presentation contains statements relating to Muscat Finance business financial condition and results of the operations from published information. Any statement or comment which has a meaning of prospectus and forward-looking are only predictions and are not a guarantee of the future performance and does not constitute any solicitation to buy or sell any products, service, stocks or to engage in any trading strategy and should not be relied upon or considered as advice for making any investment decision. As due caution must be exercised that any such forward-looking statements or comments are and will be subject to both known and unknown risks, uncertainties and factors relating to the operations and business environments of the company that may cause the actual results of the company to be materially different from the future results expressed or implied in such forward-looking statements. This presentation and discussion are for information purpose only. Any recipient of this presentation and discussion media must not communicate, reproduce, distribute or disclose through media or refer to them publicly or privately in whole or in part any time without written consent of the company. So basically, Muscat Finance is the first NBFC in Oman to launch a corporate lease scheme, and the company was registered in the year 1987. The company was listed on the stock exchange in the year 1995. We are currently operating from 6 branches, which are located in different wilayah of Oman, Sur, Sohar, Barka, Salalah, Nizwa and Ibri other than the head office branch. We have approximately 124 full time employees with 90% plus of Omanization with 44% of the female staff. We have 24/7 of the fully automated kiosk, which is first in the FLC sector, which is accompanied by the drive-through service, which is also for the first time in the FLC sector. During H1 2026, the market share of Muscat Finance at a gross loan is approximately 10%. The other area that I would like to highlight is that the gross income has increased approximately 18% on a year-on-year basis. The net interest income has also increased by 23%. The increase in the operating profit was witnessed to be 57% with an increase in the gross loan book of 11% on a year-on-year basis. We follow the highest level of corporate governance standards. The major investors are the Omanis, which constitutes approximately 97%. Coming to the snapshot of H1 2026 as in relation to H1 2025. The net loan and advances of the company was reported to be at OMR 107 million as in relation to OMR 97.52 million in H1 2025, which is approximately an increase by 10%. Our product includes vehicle financing, equipment financing, working capital and home plan loans. The corporate deposits have also increased by 32% as in relation to H1 2025, where it used to stand at OMR 25.8 million. And as at H1 2026, it is reported to be at OMR 37.9 million. We have a strong equity base, which is approximately OMR 39 million. Our leverage ratio remains to be within the regulatory limit, which provides us ample space to grow the loan book. Our gross income has increased to OMR 6.6 million from OMR 5.6 million. The net interest income has increased from OMR 3.2 million to OMR 3.9 million. The net profit before tax for H1 2026 is OMR 550,000 as compared to OMR 520,000 in H1 2025. The provision coverage is approximately 82%, including the impairment reserve as at June 2026. And the overall NPA coverage is approximately 78% as in H1 2026. The overall financial performance for the 6 months period and here is basically a dashboard which basically provides an overall snapshot of the performances. If you look at the net loan and advances, which has grown by OMR 9.8 million on an absolute level, which represents 10%, the other assets has also grown by 78%, which is primarily comprising of the investments. The total asset base has increased by approximately 12%. In the similar fashion, if you look at the income statement, the operating income has increased by approximately 18% from OMR 5.6 million to OMR 6.6 million. The overall expenses have been maintained and controlled by the company, which has basically dropped down by OMR 22,000, which represents approximately 1%. The profit before impairment has significantly increased from OMR 1.7 million to OMR 2.680 million in H1 2026. At the same time, the ECL provided in the profit and loss account, which is charged for the H1 2026 has also increased by 80% from OMR 1.2 million to OMR 2.1 million. This is the glance of the profit and loss account for H1 2026, which we have tried to demonstrate from H1 '24 to H1 '25 and H1 '26. If you look at the net interest income, that has grown 23% on 2026 as compared to '25 and from '25 '24, that was 32%. If you look at the overall CAGR, which is compound annual growth rate that represents approximately 27%. However, the interest expense has reduced despite of the fact that the borrowings has increased by 1%. The operating expense remains to be controlled as in relation to the overall gross income has increased for the company as compared to the previous period. The operating profit has also increased by 57%. And if you look and compare from H1 2024 to H1 2026, which was approximately OMR 900,000 has grown to OMR 2.6 million, which overall gives you a CAGR over the 2 years of 73%. At the same time, the ECL charge for H1 is OMR 2.1 million as compared to OMR 1.1 million of previous year. The profit before tax over the period of 2 years has been increased approximately by 92% as in relation to CAGR. The net interest income has increased by approximately 27.1% on a year-on-year basis for the last 2 years. However, the overall operating expenses remained controlled, which is approximately at 1%. This demonstrates that the income growth has materially outpaced the underlying cost base. Operating profitability has strengthened substantially, operating profit recorded at 73%, increasing from OMR 900,000 to OMR 2.6 million in H1 2026. Now we will discuss about the way forward. Our primary objective as of now and the business strategy remains to be the same what we have been following for the last 2 years consecutively, which is to grow the business volume and focusing on all products. We will be gaining the market share by improving the yield, and we are strongly focusing on the collection and recoveries by managing the stressed account efficiently. We are also diversifying the funding base with the bond program and deposit mobilization. The focus is remaining to be on increasing the loan book with focus on the retail in the vehicular business. Here is the annexure of the statement of financial position, which is basically a movement on a head-on-head basis from H1 2025 to H1 2026. The overall asset base has increased by approximately 13% and 10% out of that has been contributed by the [ loans and ] advances and the remaining asset base has been increased majorly because of the investment in the investment securities. The overall snapshot of the profit and loss account has been mentioned over here, which shows a 28% growth in the overall income after interest expense and the expense remains controlled with an increase of 2% and the ECL has increased by approximately 80% from OMR 1.2 million to OMR 2.1 million. So the net profit remains to be at -- profit before tax remains to be at OMR 550,000 as in relation to OMR 520,000 of the previous year. An ad hoc provision for the income tax has been provided. whereafter we have provided the net profit after tax at OMR 468,000 as in relation to OMR 520,000 the previous year. This is the end of the presentation. If anyone is having a question, we will be more than happy to answer.

Yes. Rao.

Can you hear me?

Yes, we can hear you.

This is Rao Aamir Ali from Ubhar Capital. I have a couple of questions, if you allow me.

Now you are from -- Sorry, I couldn't hear you.

I'm from Ubhar Capital.

Ubhar Capital, yes. Welcome, welcome Rao.

So my first question is like your gross NPL ratio is one of the highest in the sector, which is around 35%, if I'm not wrong. So can you please tell us what is this NPLs are specific for one client or exposure is like spread or multiple clients? Can you spread?