Friday 20 / June / 2025
Muscat: R. Narasimhan the General Manager - Wholesale Banking of Bank Nizwa speaks about the bank's significant role in developing and growing the banking industry and its wholesale banking division.
How was the year 2020 for the wholesale banking division? What key things stood out in terms of business opportunities?
Bank Nizwa has always strived to be the financial partner of choice for the people and enterprises of Oman. Our values of being driven, principled, innovative and helpful are the pillars of our approach in providing a diverse set of products and services. Performing this consistently is a proud achievement and thanks to our customers and stakeholders, our impressive financial results rightfully manifest our leading and most trusted position within Oman’s Islamic banking sector. Ever since inception, we have been committed to providing Sharia-compliant innovative financial solutions, to offer customers a unique banking experience in line with their evolving needs.
Despite a multitude of challenges, including those posed by the COVID-19 pandemic in 2020, Wholesale Banking recorded a remarkable double-digit growth during the year in volume weather assets, deposits and trade finance as well as contributed significantly to the income and bottom line of the bank.
Key attribution to this was the tireless efforts put in by our staff in upholding our clients’ trust, delivering the right Sharia-compliant products and services. We structured our business segments early to align with key markets and adopted a universal banking approach with close coordination and interactions with many sections of the bank. Diversification into various industries with a focus on important economic sectors and moving away from sensitive sectors such as real estate, stock market and commodities was also a key part of the growth achievement.
The growing, multi-industry portfolio is a testament to the trust clients place in our Sharia-compliant products and services. Noteworthy involvements in the economy were made including closing several landmark deals with key clients. Going forward, harnessing the strength and resources of all stakeholders, internally and externally, towards a unified focus in enhancing market share, client experience and service quality shall be the main drivers. The Wholesale Banking Group endeavours to continue redefining the way we do business by enhancing capabilities and focus to meet diverse business needs towards national Vision 2040 aspirations.
What were the key projects signed in 2020?
In the face of economic headwinds, Bank Nizwa has remained steadfast and continued to play a meaningful role in the Sultanate’s economic growth and social development, while aiming to be the financial partner of choice for corporate and institutions. To that effect, Bank Nizwa’s Wholesale Banking team have strongly and dedicatedly supported the government’s diversification plan and continues to take part in playing a crucial role in Oman’s 2040 vision.
Several landmark deals were signed in 2020 including a strategic Musharaka financing deal, with Nakheel Oman Development Company, for the date processing plant in the Sultanate. The financing deal supports the state-of-the-art processing plant to be built in the wilayat Nizwa. Notably, also a financing agreement worth OMR20 million was signed with Oman National Engineering & Investment Company SAOG (ONEIC) to establish Sahalnoot sanitation network for Salalah Sanitary Drainage Services Co SAOC (SSDC). The sanitation network project, valued at OMR45 million, is one of the identified key projects that will support overall development in the Dhofar region and follows the national direction of encouraging more Public-Private Partnership in the country’s infrastructure development. recently, a new campus project under the Arab Gulf Programme for Development with Arab Open University was signed to support education enrichment in the Sultanate, to mention a few. Our bank also participated in unique Shari'a-compliant large financing structures with nationally important state-owned enterprises like Oman Air, OQ and Oman Food Investment Holding Company.
What has been your contribution to promoting the SME sector?
Bank Nizwa is a keen supporter and offers tailor-made solutions to SMEs in the Sultanate. The trust placed in our Sharia-compliant products and services is evident through a notable increase in our SME customer-base and business volume. The SME business continues to expand coverage in key interior cities other than Muscat. As we concentrate on industrial areas such as Madayn, more tie-ups with promotion associated with major corporations and oil majors are undertaken. Additionally, the affiliations with larger corporate enterprise vendors as supply chain solution towards supporting SMEs remains our mainstay contribution. A dedicated SME brochure was made to highlight Shari’a compliant products and services available to SMEs. Additionally, a revamp SME policy was carried out and approved to provide quicker turnaround time and response.
Despite numerous challenges, SME business recorded satisfactory growth along with increasing products adopted. The bank shall continue growing the SME business by increasing focus, utilising various available channels and provide further support with Sharia-compliant products and services to SME business expansion.
Additionally, Bank Nizwa provided relief to the customers including SME by allowing deferment of instalments as permitted by the Central Bank of Oman pandemic relief measures. The deferrals were given to customers whose businesses were directly impacted by current economic challenges. Further, several transactional fees were waived to further relief the customers from a monetary burden. We believe that these initiatives will aid the customers from the impact of the pandemic and place them in a good position to recover after the pandemic is over.
What were the main challenges faced in the WBG in 2020?
The effect of COVID-19 and the consequent lockdowns to contain the pandemic, and other economic challenges, including depressed oil prices, have acutely impacted economic activities around the world. According to the IMF recent World Economic Outlook, it is estimated that the global economy shrunk by 3.5 per cent in 2020 and has described the decline as the worst since the Great Depression of the 1930s.
Nevertheless, banks globally have shown resilience with high capital and liquidity position pre-pandemic in addition to unprecedented policy support from central banks. However, the banking industry’s profitability was severely hit and remains a challenge coupled with concerns of rising non-performing financing.
The Omani economy is not spared from challenges due to COVID -19 pandemic and low oil price environment. Similarly seen in the global banking industry, Omani banks profitability was also affected, clearly reflected in the recent disclosures of 2020 overall results. Even so, Omani banks remained resilient and robust.
Across the GCC, governments and central banks have announced various economic support measures. The Central Bank of Oman has taken swift action to address concerns, and implement relief measures including an extension of its stimulus package until the end of March 2021, which is highly commendable.
The Omani banking sector has a firm foundation and remains sound with strong capital buffers, ample liquidity coverage ratio and sound asset quality. Furthermore, the Central Bank of Oman is swift in providing regulatory support to the banking system whenever required as seen in recent OMR 8 billion extra liquidity through regulatory policy measures and announcing economic stimulus financial incentives. Despite recent multifaceted shocks impacting all economic sectors, the Omani banking sector showed resilience and continued to support the economy with uninterrupted service. The commitments of Oman banks remain robust. During FY 2020, our bank not only met its commitments but also, disbursed several big value financing to ‘blue-chip’ companies highlighting the strong liquidity management abilities in turbulent times.
What has been set forth for 2021? What expectations do you have from the market this year?
As we begin the new financial year 2021, the outlook remains uncertain, and risks abound. Nevertheless, there are signs of a rebound with COVID -19 vaccinations being carried out all around the world and oil prices seen stabilising at around $60 per barrel recently.
Despite the challenges, Oman is set to embark upon a development programme to shift to a diversified economy by developing small and medium-sized enterprises, public-private partnerships (PPPs) and improving the investment climate. The government is establishing programmes that will grant numerous opportunities to broaden the country's economic base, both vertical expansion of the sectors dependent on oil and the development of non-oil sectors such as manufacturing, fisheries, transportation & logistics, tourism and mining. The economic and structural reforms will improve multiple fronts, including financial and social objectives.
Amidst all this, the growth of Islamic Banking in the Sultanate is most encouraging and has become significant in a short space of time through various support and policy measures adopted by the Central Bank of Oman. As we progress, standardised liquidity management frameworks and instruments, diversified financing portfolios and innovative Islamic finance products will play a crucial role in developing this sector. With the introduction of new products, especially for corporate customers and SMEs, and Sharia-compliant liquidity management tools, Islamic Banking will continue to grow steadily and achieve all potential opportunities.
As the largest and fastest-growing full-fledged Islamic bank in the Sultanate, Bank Nizwa has been playing a significant role in developing and growing the industry. The bank is leading the sector’s growth on multiple fronts including in corporate banking, international banking, trade finance and treasury among others. Through strategic partnerships, Bank Nizwa is well-positioned to spearhead the growth of Islamic finance and solidify its leadership in the sector. The bank will continue to expand its client franchise organically by deepening client relationships, train and retain talents, and invest in the right products and services. We continue to strive to be the financial partner of choice for the people and enterprises of Oman.
We will continue to invest in projects that not only promise great returns but also positively impact the communities we operate in. We believe that our contribution through the business of both intermediation and participation will lead to the economic, social and ethical wellbeing of society. Bank Nizwa will continue to play a significant role in supporting the government’s diversification plan as well as towards Oman Vision 2040. Looking at the future, we are confident of setting new industry benchmarks and place Oman higher on the Islamic banking landscape globally.
