United Finance Company SAOG ($UFCI)

Good morning. We are pleased to welcome you today for our discussions on our year-end December 2025 audited financial reports. Before we start, some disclosure. This presentation contains statements related to United Finance business, financial conditions and results of operations from published information. Any statement or comment which has a meaning of future prospects or is forward-looking are only predictions and are not guaranteed of the future performance and does not constitute any solicitation to buy or sell any product, service, stocks, bonds or to engage in any trading strategy and should not be relied upon and considered as an advice for making any investment decisions. Due cautions 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 related to the operation and business environment of the company that may cause the actual results of the company to be materially different from any future results expressed or implied in such forward-looking statements. By accepting delivery of this presentation, the recipient agreed to accept and be bound by the statement, restrictions and of the presentation today is we give a small introduction, overall company's overview, leadership team presentation, core focus areas and the financial performance for the year 2025. So the company established in 1997 and listed in Muscat Stock Exchange since July 2022. We currently hold 9% of FMC market share. We have a head office in Muscat, and we have a workforce about 150 people with Omanization of over 90%. Our major shareholders is Oman Hotels with 34%; global 25%; Al Saud Investments, 8%; unlisted United securities, 5%; Abdullah Al Khayari, 5%; and others, 23%. So we are -- we operate in retail, corporate SMEs and we also offer deposits, corporate deposits with flexible scheme in the U.S. The head office is in -- we have 9 branches across Oman. And at the moment, we have more than 10,000 active customers. The Board of Directors comprised of 7 members, our Chairman, Abdullah Al Khayari; Hassan Ihsan Naseeb Al Nasib, our Deputy Chairman; Talal Hasan Al Nasib, Board member; Hussam Hisham Bostami, Board member; Ehab Maqbool, Board member; Mohammed Al-Raise, Board member; and Faisal Ali Jaffar, Board member, all bring to UFC solid experience, business acumen and good governance outlook in UFC. The senior management team comprised of 5, myself, Nasser Al Rashdi, I have been in UFC for now 4.5 years; Fawaz Al-Riyami, our Chief Business Officer; Mahmood Al Hadi is the AGM, HR and is also in charge of collection recovery; Mr. Nandakumar, our Chief Risk Officer; and Mr. Indika, our Chief Financial Officer. The focus continued to be around 6 segments. One, the people. So we continue to invest on performance management, talent management, engagement and training. We continue as well to focus on our process, enhance customer experience through loan origination process, revamped customer touch point, resolution management, automated process and documentation management solutions. In the system, our aim is to be a paperless company and that provide customers seamless customer experience and convenience through digital and content management solutions. On the financial side, we continue to focus on the portfolio growth, focus on new product development, enhance our fee income and focus on retail and we continue to derisk on existing corporate portfolio by selectively onboarding good quality corporate assets. We have a clear funding strategy in place, and we enjoy a great dealer relationship where we source businesses. Collection recovery is one of the pillar for the company. So the focus continue on the right operation focus. We have reorganized the team. We have daily reviews and our targets to the collection team aligned with overall company's targets. In the past few years, we focused on branch relocation, recognition and setup of marketing hub, experience-based services and superior connectivities, and that will continue to be the focus as well in the coming years. As a snapshot for our financials, income grew 20% year-on-year to OMR 13.26 million. We closed the year with the net profit just under OMR 3 million, realizing a growth of 43% year-on-year. Our margin increased by 358 basis points year-to-year to 22.38%. Return on equity increased by 170 basis points to 5.91%. Our return on capital is at 8.33%, an increase of 249 basis points year-on-year. Our net installment finance book increased by 21% to OMR 126.7 million. Total equity base remained the same around OMR 50.4 million. Our total asset base is at OMR 133.36 million, an increase of 21% on year-on-year. The cost to income reduced to 49.8% from 55.3% last year. The gearing ratio increased to 1.45% -- 1.45x from 1 in line with our asset growth. The leverage as well increased to 1.88x from 1.4 in 2024, in line with the asset growth and funding of the asset growth. And the NPL ratio reduced to 12.7% from 15.32% in 2024. And our provision coverage is up to 74% from 66.3% last year. Coming now is the performance on quarterly basis, which our Chief Financial Officer will give a presentation.

Good morning. Key quarterly statistics for 2025. So first, I'll give you finance income. You can see quarter-to-quarter, there is an increase over the quarters from quarter 1 to quarter 4. So quarter 1, 2.48%, and quarter 4 end up 3.11%. And net finance get from quarter 1 to quarter 4, there is a continuous growth from 1.62 in quarter 1 and 2.65 in quarter 4. So impairment provision also, it remains in each -- every quarter is around the same margin throughout the year. And as well as operating profit, you can see that there's an increase from OMR 0.9 million to OMR 1.37 million for quarter 4 over the every quarter. So there's a growth in each and every quarter. And net loan book, quarter 1, it was OMR 107.29 million; and quarter 2 OMR 130 million; and quarter 3 OMR 116 million; and quarter 4 OMR 126.7 million, continuous growth over the quarters. And profit after tax also quarter 1, we reported OMR 510,000; quarter 2 700,000; quarter 3 820,000; and quarter 4 904,000. So continuous growth over the quarters. There's a 7-year statistics over the period. You can see it, finance income. So in 2019, it was OMR 8.46 million and there's a dip until 2021 due to economic condition and COVID situation. And from 2022 onwards, again, it started picking up. Now it will be at OMR 11.34 million. And net income, you can see it was OMR 5.69 million in 2019. It went down and then it started again picking up from 2022 onwards. Now it is OMR 7.49 million net income. And operating profit also, you can see that from 2021 onwards, there's -- we started growing the company and it is OMR 4.72 million in the year 2025. Net profit also you can see that it was OMR 607,000 and over the years, it started growing and now it is at OMR 2.97 million. Net finance debtors, yes, 2019, it is OMR 98.4 million. So it went down to OMR 80 million in 2021 with the economic conditions and the situation of the global country. And then now we are -- it's a trepid growth over the years from 2022 onwards, it is at OMR 126.74 million. And impairment provision also in 2019 was very high, and it came down 2020 to OMR 4.71 million because of the provisions, the write-offs that we have taken. Now it's stabilized in line with the growth of the portfolio. It's at OMR 1.23 million in the year 2025. This is our management accounts. You can see that how it has grown line by line. Finance income when compared with the last year, it is 17% growth. Interest expense is an increase of 20%, mainly because of the loan book growth as well as our loan increase in line with the book growth. And other income, there is an increase of 38% and expenses overall, there's increased only 7%. And the impairment, operating profit increased 36% and impairment provision increased 19% and profit after tax is 4% increase compared to last year. Balance sheet, you can see that over the years from 2022 to 2025 asset, total assets, how it has grown from OMR 93 million to OMR 133 million, supported by the increase in growth in installment finance data. And our loan book conversion in 2024, it's almost like retail 61%. Now it is 60% raised to 25% and corporate is around 39% and this time is 40%. So we used to keep the same proportion during the years to come also we have planned. And gross portfolio, you can see that Stage 1, Stage 2 and Stage 3, how it has moved. So total performing assets means Stage 1 and Stage 2, it is OMR 77 million December 2022; and '23 OMR 9 million; '24 OMR 8 million; now OMR 120 million. So performing assets growth as well as NPA, you can see that it is OMR 21 million Stage 3, OMR 21 million. Now it has come down to OMR 7.7 million. So provision NPL ratio, 21% going down 12.7% in 2021. In December '22, it was 21%. And provision coverage, it was 50% in 2022 and has been increased to 73.92% on by the end of December 2025. So equity and liability side, you can see that the growth from capital reserve of OMR 48 million, OMR 50 million from December 2022 is OMR 48 million, now it is OMR 50 million. And as well as loan borrowings growth in line with the asset growth. And now total is OMR 13.3 million. So every year, we have to transfer 10% to legal reserve. So out of the provision, we are transferring it. And special reserves as per the articles, we have to increase based on our net debt. So we have increased the special reserve. And impairment reserve, there is a reduction when compared to last year because the gap between the CBO provision and IFRS 9 provision has narrowed. So we have got the approval from Central Bank to revert it back from the impairment reserve or written earnings. So these are the key ratios over the years. You can see that this leverage, yes, it's increasing in line with the loan book as well as gearing is in line with the loan book. So we can grow up to 5x. And you see that the ratio is coming down, now it is 9.8 and NPA gross NPL ratio is also coming down. And ECL target is also increasing over the years and return on equity as well as capital increased over the years and normalization ratio also, we have maintained 90%. Now it is at 93.42%. That's it from the financial presentation.

So with this, we -- the presentations for financial year '25 and we open for questions.

Any questions, gentlemen, ladies? So during Q4, we had a good demand for loans from retail side as well as the corporate side, SMEs specifically where we focus. So -- and that enabled us to achieve the growth that we have seen of OMR 10 million in Q3 -- Q4. And as my colleague said before, our focus continue to both the retail for the diversification of our portfolio in terms of risk and in terms of value and SMEs, small businesses, which we play a big role in the growth for financial products to the small businesses. We expect the demand to continue. As you know, the geopolitical situations in -- for the last 3 weeks, it hasn't had the sentiment. But our focus will continue to help our customers, retail and SMEs -- still we see the economy continue to grow and there will be demand for financing in the 2026 as well to continue.

When we compare to the last year, yes, there is -- compared to last first 3 months and during the first 3 months, yes, there is a growth. We experienced a growth. Now it's purely depending on how the political scenario affecting entire country, not only finance. So we are cautiously looking at it and see how -- when the loan applications come to us also, we carefully analyze how the repayment capacities of the loan applicants. So we are very cautious on that end, especially because of the situation. At the moment, when compared to the last year, there is a growth.

We hope that the geopolitical situation gets resolved and bring back positive sentiments in the market. And the Oman economy is doing well and inshallah we'll continue to focus on where we do best in the retail and SMEs. Welcome, Pankaj. Any other questions? Okay. Thank you so much for attending. The question is we're seeing the NPL ratio increasing. No, the NPL ratio actually improved. Actually, it improved from 15% to 12.7%. And you can see over a period of time from 21% in 2022 to 12.7% in 2025. As I mentioned, our core focus is collection recovery and really stopping further slippage to NPL and recovery of the existing NPL. We have done well, alhamdulillah. And we continue to be our focus. The loan growth also helped to improve the ratios. So we'll continue to focus on both enhancing our collection effectiveness and growing the book in a very prudent way. Any more questions? Okay, since there are no more questions, we will conclude our presentation for the financial year end 31st December 2025. In case you have any other clarification required, you have any questions, you are welcome to address them to myself, our Company Secretary, Mr. Hassan and our Chief Risk Officer, will provide any clarification if any information is required. Thank you. Thank you so much again, and we'll see you in the next quarter.