SME Credit & Marketing @ Bank Muscatsme.ebi.gov.eg/networkingactivities/Conferences Documents/MENA...

SME Credit & Marketing @ Bank Muscat “Innovations & Segment Strategies in SME Banking”

Presented by:

Ilham M. Al Hamaid

Head – SME Credit & Marketing Department

Bank Muscat SAOG

At

MENA SME 2012 Conference in Beirut

On 24th January 2012

www.bankmuscat.com 1

• Purpose of the Presentation

• Background on Sultanate of Oman

• Brief on Bank Muscat SAOG

• SME Definition at Bank Muscat

• SME Credit & Marketing at Bank Muscat

• SME Products

• Horizontal Innovations

• Vertical Innovations

• Strategies / Plans for 2012

www.bankmuscat.com

Overview


• SMEs in Sultanate of Oman & Bank Muscat SAOG

• Global best practices

• Innovative solutions

• Ideas and strategies to serve SMEs

• Building relationships

www.bankmuscat.com

Purpose


Sultanate of Oman

• Total Size: approx. 309,000 sq. kilometers • Population: 2.8 million • Political system: Monarchy (Sultanate) advised by council of ministers • Constitution: Basic law of the state issued in 1996 • Oman is a member of GCC, UN, IMF, IBRD, Islamic Development Bank and WTO • Free Trade Agreement signed with USA in 2006 • Well regulated banking and capital markets through Central Bank of Oman and

Capital Markets Authority • An open economy, oil plays a major role in public finances • Focus on other sources of revenues for the country i.e. Tourism and Industry • Significant infrastructure development expected to contribute to banking sector

growth • Substantial product cross sell opportunities • Sizeable “unbanked market”, very young population

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http://www.lonelyplanet.com/worldguide/destinationRedirect.do?nodeid=491

• The number of commercial establishments in Oman is estimated to be

150,000/-.

• Only 110,000 seem to be active. Minimum of 90 % of the active

companies are SMEs.

• Major government focus on SMEs as a source of creating jobs

• Royal Decree to establish the Directorate General for Development of

SMEs in March 2007 as part of the Ministry of Commerce and Industry

• Many organizations that support SMEs such as:

– Ministry of Labour’s Sanad Program (Microfinance)

www.bankmuscat.com

The SME Market

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– Ministry of Social Development (Producing Families Projects)

– The Youth Fund (Equity Funding)

– Oman Development Bank

– Shell Initiatives

Training: Intillaqah

Financing: Growfin Oman

– Knowledge Oasis Muscat (IT based SME companies incubator)

– Commercial Banks

– SME college programs

www.bankmuscat.com

The SME Market Cont.

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Bank Muscat – Oman’s #1 Bank • Market capitalisation US$ 2.8 billion

• Retail customers 1,227, 502 (Sept 11)

• Market share by assets 39.1% (Aug 11)

• Branches / ATMs /CDMs /POS 132 / 388 / 132 / 5,378

• Employees 2,835

• Total customer deposits US$ 11.3 billion (Customer & certificate of deposits)

• Total assets USD 16.3 billion

• Net loans and advances US$ 11 billion

• Major shareholders Royal Court Affairs (Omani Government) : 24.84%

Dubai Financial Group : 15.00%

• Strategic investments 49% in BMI Bank BSC, Bahrain

43% in Mangal Keshav Holdings Limited, India

• Other international locations Dubai RO (UAE), Riyadh Branch (Saudi Arabia), Kuwait

Branch & Muscat Capital (subsidiary in Saudi Arabia)

• Long-term credit ratings A1 (Moody’s – July 211), A- (S&P – Dec 11), A- (Fitch

Ratings – October 11), A (Capital Intelligence – Aug 11)

www.bankmuscat.com

Bank Muscat – Oman’s #1 Bank

• Return on Average Equity of 14.65% as on Dec. 2010 • Net profit CAGR 2006-2010 of 13.87% • Investment grade credit ratings • Members of existing senior management team in place for over 12

years • Proven track record of successful organic and inorganic growth

• Listed on the Muscat Securities Market, Bahrain Stock Exchange and GDR’s listed on London Stock Exchange.

• Free float of over 40%

• Approximately 7,500 shareholders and GDR holders


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Growing International Presence

PAKISTAN

Silk Bank (8%)

INDIA

Mangal Keshav Group

(43%)

BankMuscat SAOG,

Oman

Representative Office,

Dubai BMI Bank BSC(c) 49%,

Bahrain

BankMuscat, Muscat

Capital, Saudi Arabia BankMuscat SAOG

Kuwait

Respresentative Office

SINGAPORE

www.bankmuscat.com

BankMuscat

• Commercial Banking Group:

o Corporate Banking

o Consumer Banking

• Wholesaling Banking Group

o Treasury & Capital Markets

o Financial Institutions Group

o Asset Management & Private Banking

o Investment Banking

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www.bankmuscat.com

Bank Muscat SAOG

• Any organized entity , registered as a business concern

whatever is its form of constitution and with an annual turnover of less than RO 1 Million and lending within RO 400K, is considered a small / medium business establishment.

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SME Definition @ Bank Muscat


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• SME Credit & Marketing was set up as independent

department in end of 2005.

• Larger team and resources were allocated within the

department by:

Centralizing the entire SME process of decision making,

disbursements and monitoring

Backing up majority of the lending with collateral

www.bankmuscat.com

SME Credit & Marketing at Bank Muscat

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In June 2006, Bank Muscat has engaged IFC for discussion on tier 2 capital finance, mortgage and SME finance.

Technical assistant from IFC has been requested by Bank Muscat. The market project conducted by IFC, which included six models:

1. Market Research 2. Refine Segmentation 3. Formalizing a Strategy (Vision) 4. Adapting the Products 5. Improve Sales and Delivery Channels 6. Structure the Promotion Strategy

New SME business model was implemented, which positively impacted Bank Muscat:

Profitable SME finance operation SME portfolio grew by 61% in number & by 200% in volume Sales capabilities have been strengthened Useful training sessions conducted by IFC for Bank Muscat Staff SME training by IFC business edge

www.bankmuscat.com


Head 3 Unit Heads 12 ARMs Credit Analysts.

Recovery Cell.

Credit Facilities up to RO 400K.

Decentralized approach with Account Relationship Managers in all the different regions of the country.

Objective evaluation of credit risk using risk rating models by the Risk Management Department.

www.bankmuscat.com



SME Finance: Funded Non-Funded SME Programme Lending Six Products: • تمويل المعدات Equipment Finance • تمويل المستحقاتReceivables Finance • تمويل مستحقات نقاط البيعPOS Receivable Finance • تمويل رأس المال العاملWorking Capital Finance • تمويل العقودContract Finance • تمويل الوارداتImport Finance

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SME Products


• Market & Economy Downturn: NPAs

Slow in business / growth

Sustainability of SMEs in the market

High liquidity compared to new projects

• Boost growth

• Target new segments

• Amend credit policies

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www.bankmuscat.com

Why Going toward Innovative Solutions?

Horizontal Innovations

SME Banking instead of SME Lending

Cross Selling

Full Service Package

Centralized Approach

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Horizontal Innovations

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Vertical Innovations

1. Collection Management System within the Department

2. Government Guarantee Program

3. Focus on Woman Entrepreneurs

4. Non Financial Services

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Vertical Innovations

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Bank Muscat As SME Friendly Bank

Three SME Workshops in 2011

1. Successful Entrepreneurship – A Global Prospective

2. Financing SMEs: Challenges & Solutions 3. The Latest in Operational Management Strategies

& Enterprise Expansion

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Non Financial Services

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University of Nizwa “Financial Management for Small and

Medium Enterprises”


• IFC funding on Social & Environmental Management System (SEMS)

• Specific products / services for Women Entrepreneur segment

• Focus on medium size sector

• Islamic banking

• Scorecard as Risk Assessment tool

• Staff development / training

• Non-financial services for SMEs

• Continue to increase staff morale

www.bankmuscat.com

Strategies / Plans for 2012

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Staff Entertainments


Thank You!

Any Questions?

“To touch every SME in Oman”

Bank Muscat's SME Vision

www.bankmuscat.com

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SME Credit & Marketing @ Bank Muscatsme.ebi.gov.eg/networkingactivities/Conferences Documents/MENA...

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