Salaam Said Al Shaksy, CEO of Alizz Islamic Bank shares the strategic initiatives that enabled the bank to record its best-ever financial performance since inception
How was Alizz Islamic Bank’s financial performance in FY2018?
The bank performed very well in 2018. We are extremely proud that the bank achieved its maiden full year profit in 2018 since it commenced operations in September 2013. The bank witnessed solid growth in all core business areas, which resulted in an increase in financing receivables by 20.2 per cent to reach RO553.3mn in 2018 from RO460.2mn. Furthermore, deposits increased by 23.6 per cent to reach RO586.4mn. The bank’s revenue from financing and investing activities increased by 45.8 per cent to RO30.8mn in 2018 and the bank reported a net profit of RO2.0mn in 2018 versus a net loss of RO2.9mn in 2017, which resulted in an impressive 166.9 per cent year-on-year growth. Overall, we had an excellent year.
Where are this growth and profit coming from?
Wholesale banking contributed significantly to the growth of the balance sheet in 2018, both in terms of financing growth as well as deposits. Asset yields were generally ahead of the industry with the cost of funds carefully managed through stringent liquidity management processes. Disciplined risk management has also contributed to asset quality and ultimately resulted in lower than industry non-performing assets. During 2018, the bank was also able to increase the retail customer base by 41.4 per cent reaching more than 42,439 retail customers. Retail liability & assets have shown substantial year on year growth above 75 per cent & 40 per cent respectively on the overall portfolio as compared to 2017.
What were the major milestones during the year? Can you talk about the measures to enhance retailing, ATM and CDM networks of the bank?
We tried to have a focused approach in the market segments that we target. This has helped us in turn to develop products and services that are suitable for those segments. We believe in the importance of recruiting the right people to cater to these segments and have developed delivery and distribution channels that meet the needs of these market segments, whether they are retail or wholesale.
In the wholesale banking space, we improved our delivery in terms of e-banking. We are shifting from traditional branches to technology-led channels like mobile apps and Internet banking. Alizz Islamic Bank launched phase II of the mobile banking application in 2018 and this helped with the channel migration from physical channels to digital. This enhances the customer experience as they can enjoy the convenience of banking 24/7. Phase II of the app further cemented the bank’s image as a leader in innovative technology with customer convenience at the core of our business strategy.
Building on our success as the joint lead manager for the Sultanate of Oman’s debut global 7-year $2bn Sukuk issue in 2017, Alizz Islamic Bank was appointed as the dealer for the second global sovereign Sukuk issuance by Oman, worth $1.5bn. Leveraging from this experience we have recently won a prestigious mandate for financial advisory services in the tourism sector. The investment banking team also led our Ijarah based funding Sukuk programme, which is expected to generate the required liquidity to help the bank sustain our own growth plans.
Our flagship product, the Bushra Prize Savings account, continued to be extremely popular amongst our retail customer base and has contributed significantly to the growth of the bank’s low-cost deposit base. This is the first Shari’a compliant prize savings account and has been very well received.
Additionally, the bank progressed with its growth and expansion strategy during the year, further augmenting the bank’s distribution channels and reach by adding multiple customer touch-points and through the strengthening of our wealth management team & direct sales teams which covered multiple locations across the Sultanate. The bank also expanded its distribution network by opening a new branch in Ma’abela, thus bringing the network to 10 branches.
What about the measures taken to support SMEs?
In 2018, our SME banking team focused on customer-centric initiatives and enhanced our offering with concerted efforts towards building a complete Shari’a compliant value proposition. Large strides were made on identifying and onboarding customers, ranging from micro to medium enterprises which enabled our clients to achieve their business objectives. The bank also focused on supporting sectorial supply chain. Additionally, the SME banking undertook a number of product enhancements, and successfully launched the Mudaraba based Business Saver account, a call account solution for our SME customers.
Furthermore, we executed some strategic tie-ups, most notably with the Al Raffd Fund, a first in the market for an Islamic bank, in addition to a tie-up with Prime Business Solutions for their cloud-based SPUR ERP system targeted at small & medium enterprises. We also set in motion some longer-term initiatives, from which our customers will reap a range of benefits. As a bank, we strive to continually enhance the SME banking experience and offerings.
What were the major HR initiatives taken by the bank?
In 2018, the bank appointed a reputable HR consultant to review the bank strategic and operational HR abilities, focusing on talent management and staff compensation and benefits. This gave us a clearer picture of the differentiating capabilities for the bank going forward, providing criteria for success and focus for development investment. We also established a methodology to ensure all current employees as well as new hires are aware of all current staff rewards & benefits. The bank has a significant focus on investing in human resources. In light of this belief, one of our top priorities is to build a team of members with high caliber who can focus on achieving the sought-after goals and bringing value to stakeholders.
The bank invests part of its funds in human resources development to enhance skills and employ state-of-the-art technologies to deliver fast and exceptional customer services and in 2018, as a part of our Omanisation priorities, the bank has contributed through Internship programmes for fresh graduate students from different colleges and universities to enable them to explore banking careers. The programme has provided students an opportunity to get a feel of practical work compared to theoretical aspects of their education. The bank also launched a designated employee engagement division. Employee engagement is a very important component in HR Development and is linked to business success, which is why we identified it as a critical factor to the success of the organisation.
What are the future plans to enhance operational efficiency and technological deployment?
Alizz Islamic Bank takes great pride in being one of Oman’s most innovative banks and an early adopter of new technology. We continue our journey towards providing superior customer service through our digitalisation initiatives, which includes our ‘Bridge’ project, which is a process reengineering initiative that will significantly reduce account opening and other processes that directly impact our customers’ experience. The bank has also streamlined the credit underwriting process for retail banking to allow for a faster turnaround while maintaining adequate oversight over the whole process.
What are the bank’s priority areas and the outlook for 2019?
In 2019, we will continue to focus on continuous growth, while enhancing our risk management framework and systems to avoid any major unpleasant surprises. We will also continue to strengthen our product efficiency, customer experience and delivery channels.
