We started the year in line with our approved business strategy until the COVID-19 pandemic disrupted the economy. As the COVID-19 pandemic spread across the world there has been a huge impact on the economy and several sectors have seen substantial slowdown. In this period of uncertainty, we responded dynamically to the situation to protect our people and customers. The health and safety of our employees and customers was our priority. We ramped up our communication to ensure we keep our people informed both internally and externally with the latest updates on critical information across all touchpoints. We also supported our customers who were impacted by COVID-19 with options to defer repayments or reschedule their finance deals.

The FY 2021 Oman budget represents the first year of the Tenth Five-Year Development Plan (2021-2025) and is the first step towards the Oman Vision 2040 development objectives. It has been prepared to address challenges faced by the country due to the COVID-19 pandemic and its associated implications.

The Budget 2021 has forecast a growth of 2.3% for the economy aiming to increase revenues, reduce public spending and work towards achieving financial sustainability. The budget 2021 reflects the Government’s confidence in its economic diversification programs, as revenue budgeted from non-oil sources consists of about 37% of its overall estimated revenue for FY21as against actual revenue of 28% in year 2020. The continued focus on the need to enhance the contribution of non-oil revenue and the Government acknowledgement that revenues from non-oil sectors depend significantly on private sector investment augurs well for growth in capital investment.

Our Company has a well-diversified geographical presence across Oman (21 locations), coupled with a broad product profile and we are well positioned to meet the financing requirements of both the Retail and SME segments. We anticipate slower credit offtake in the medium term with a need to balance credit risk with market growth. We aim to continue to strengthen our market leadership position in Oman while offering our customers an optimal experience.

Our Company continues to adopt a conservative approach to credit approvals keeping in view the overall macroeconomic scenario and perceived increase in credit risk. Within this policy, our approach has been to target customers who satisfy our credit risk appetite. We anticipate a cautious outlook to our credit off take in the medium term and overall, our reading is that the economic climate will continue to remain challenging.

Our Total regulatory capital of RO 109 million is the highest among FLCs and gives us a strong base on which to build our business. Our company remains the largest finance and leasing Company in the Sultanate in terms of asset size, branch network, revenues and profit.

During the year 2020, the company adopted conservative underwriting measures with focus on writing good quality business with improved margins. Our operating profit (profit before provision and tax) was at RO 15.3 million (RO 17.7 million in 2019) while total earning assets was at RO 402.3 million (RO 426.7 million in 2019). Profit after tax was RO 8.0 million as compared to RO 10.0 million in 2019. The decline from 2019 Profit of RO 10.0 million was primarily due to higher borrowing costs, lower business originations and continued pragmatic provisioning.

The company is in full compliance with the provisioning norms prescribed by the Central Bank of Oman and the International Financial Reporting Standards and holds an additional overlay over the IFRS9 requirement as a buffer given incremental risk in the portfolio due to COVID-19. The digital platform continues to play a pivotal role in our core business, we are constantly aiming to meet our customer’s growing demand and expectations. As a result, we have launched our e-Channels which enhance our customer’s experience. We will continue to strive to improve our technological platform to be aligned with the digital transformation happening across the world and provide solutions that deliver best in class customer experience

The projected lower levels of credit offtake combined with increased interest costs will make it challenging to sustain current profitability levels. However, our Company is well positioned to deal with the challenging business environment as a result of its strong financial position, well established processes, well trained personnel and long experience in this business. We will continue to focus on strengthening our efficiencies, customer experience, product offerings and quality of service delivery.

The Company’s dividend distribution aims at providing shareholders a reasonable return and to build reserves to achieve a strong capital base. Based on this, the Board recommends distribution of 6% dividend in cash. This dividend will be paid on the shares outstanding on the record date.

Our Company has been complying with all the requirements of the code of corporate governance, as specified by the Capital Market Authority (CMA). A detailed report on corporate governance is set out along with a certificate from the Statutory Auditors in compliance with CMA regulations.

National Finance has been supporting numerous CSR initiatives to reinforce and maximize its contribution to society. During the year 2020, the company has contributed RO 175,000 to the Endowment Fund to support the health services towards the fight of COVID-19 in Oman as a part of the CSR initiatives.

The company remains committed to Omanisation and as of December 31, 2020, the number of Omani employees was 271 out of the total workforce of 312. The Omanisation percentage works out to 86.86%, which is higher than the given target of 80%. Your Company continues to remain committed to providing career growth and development of Omani nationals through ongoing training in line with their job requirement. We will continue to maintain momentum on employee engagement initiatives, development of future skills, managerial and leadership capabilities for professional development.

We also extend our sincere gratitude to the Central Bank of Oman, Capital Market Authority, Muscat Securities Market, our bankers, depositors, vehicle and equipment dealers, customers and shareholders for the support extended for the growth of the Company. On behalf of the Board of Directors, we also thank the management and staff for their dedication and hard work.