Oman Arab Bank SAOG (OAB) Earnings Call Transcript & Summary

So good afternoon, ladies and gentlemen. I hope you are able to hear us and we will start. We are just waiting for 2, 3 minutes. I think now we can start without further delay. So I am C.B. Ganesh. I'm Deputy CEO for Oman Arab Bank, present here as well as I have my colleague, our CFO, Mr. Ahmed Rizk El Damaty is also present. So Mr. Damaty will take us through the presentation. And thereafter, we'll be happy to take your questions. So with your permission, I'm requesting Damaty to take us through the presentation.

Thank you to C.B. [Foreign Language]. Good afternoon everyone, and thank you for joining our half year investor's call. Before we start, I would like to remind you that today's session is recorded, the recording and a copy of the presentation on the screen will be made available on our website. Today's session is split in two parts. In the first part, we will take you through our financial performance for the first half of 2026. And as C.B. mentioned, the second part will be indicated for Q&A. As always, before we start our presentation, we'll start with some housekeeping. I would like to draw your attention to the disclaimer on the screen. This presentation and the following discussion are to discuss the performance of Oman Arab Bank. It's not an invitation to buy or sell any of the bank's securities or products. The discussion also will contain forward-looking statements, and these are based on the current available information. We're going to start our presentation with the [ month ] review. Maybe one of the highlights of this period is the uptick that we have seen in the inflation rate as it reached 2.8% as of June 2026 year-on-year. This was impacted, of course, by the current geopolitical situation. The revised oil price in the first half of the year was $74 and the repo rate, we continue to see that it's constant at 4.25% with no changes as compared to December 2025. On the fiscal side, the forecasted debt to GDP ratio is 33% at the end of 2026, which is a further improvement from the 36% that we have seen at the end of 2025. On the banking sector, both credit and deposits continue to show strong momentum in the first 6 months of 2026, total credit increased by 8.2% to OMR 2.9 billion, which is higher than the full year increase we have seen in 2025 at OMR 2.8 million year. 87% of this increase was in conventional banking, which grew by 9%, through our Islamic financing grew by around 5%. On deposits, they went up by OMR 3.3 billion or 9.7%, with the private sector contributing OMR 1.8 billion and government and public sector contributing OMR 1.5 billion. Conventional deposits were the main driver of the increase as 95% of the increase went to conventional deposits or OMR 3.5 billion. Now I will move to Oman Arab Bank and as well aware, we are backed by two major shareholders, Arab Bank holding of 49% and OMINVEST holding 31% our Board has my members with extensive experience across business and financial fields. We were also the second oldest bank to be incorporated in Oman. And today, we provide our services through 69 branches, of which 51 branches offering conventional orders and 18 branches, offering Islamic banking services and products through our fully owned subsidiary, Alizz Islamic Bank. Turning to our financial performance. The major highlights of the first half operating profit saw healthy growth of 7% and reached OMR 33 million in the first half of 2026. While net profit reached OMR 18 million, 21% increase year-on-year, driven by the growth in operating profit, as I mentioned, and also lower cost of risk. Loans and deposits were up 6% and 5% year-on-year, respectively. And if we go to see further information in our P&L you can see that our operating expenses increased marginally by 2% year-on-year. Our cost-to-income ratio improved slightly from 55% to 54% while our return on equity saw a slight increase from 7.7% to 7.8%. Specifically on loans, our gross loans increased by 6% year-on-year or OMR 230 million of which conventional loans were up by OMR 109 million and the Islamic financing up by OMR 122 million. Against December 2025, loans were up 3%, OMR 110 million with 40% of that growth in conventional and 59% in Islamic finances. In deposits, they were higher 5% to OMR 178 million year-on-year. CASA represented by around 59% of the total deposits. We also continue to enjoy a strong liquidity position with LCR at 155% and NSFR at 111%. On capital. Total capital adequacy ratio increased to 18.8% while our CET1 ratio stood at 11.5%. So it's worth highlighting here that we have completed our issuance of the [indiscernible] additional [ CET1 ] securities amounting USD [ OMR 400 million ] in the first half of 2026 which have further strengthen our total capital position. With that, I will conclude our performance overview for the first half of 2026, and we will open the session for Q&A. Please feel free to raise your hand and submit your question, whenever you have. [Foreign Language].

We are open for questions, please, please go ahead.

Yes, Sandesh?

Am I audible?

Yes.