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BankDhofar: Conservative regulator helps Omani banks

Tuesday, 24 November 2009 16:31

OBG interviewed Kris Babicci, the CEO of BankDhofar, about the post-crisis re-emergence of the banking sector in Oman.

To what degree have Omani banks fared better than counterparts in the rest of the region during the credit crunch?

Babicci: The strong, conservative nature of our regulator has helped Omani banks fare better than their counterparts in the region. The government and the Central Bank of Oman (CBO) have done a great job during this period. Omanis remember previous down cycles, such as the Asian financial crisis last decade and the more recent real estate collapse. This has led to more conservative policies and these policies are the reason we've fared better in Oman. The market is recovering and there are many opportunities for the Bank to capitalise on.

What strategies should the Omani banking sector employ to fuel growth in a post-economic-boom environment?

Babicci: We need to focus on the fundamentals; such as oil and gas, education, free zones and tourism. I don't believe banks are being overly conservative at this time, we are reinvesting back into Oman's economy. Concentrating on the small and medium-sized enterprises (SME) sector is also important as this segment accounts for the most jobs. The infrastructure of the country is being built up from airports, to ports, to telecoms, and banks are playing a huge role in financing these projects. Once these projects are completed, we will then see an influx of downstream industries, supporting industries and SMEs.

Do you feel the time is right for consolidations in the Omani banking sector? Are the pressures for this mounting?

Babicci: No one has a crystal ball and it is hard to predict exactly what will happen. There are many factors involved in consolidation rather than a bank or business not doing well. There has to be a buyer and seller and a compelling situation. I do not see any pressures mounting at this time, banks have to refocus on their core activities and regain customer confidence. However, I do foresee a lot of informal strategic partnerships forming; in fact, this is already taking place.

In what ways can banks participate in the government's vision to promote e-services in the country?

Babicci: Technology plays a vital role in how the bank conducts business and is supported by the government. The banks, in consultation with the CBO, have come up with many good and innovative ideas about new information & communications technology (ICT) platforms in banking. In terms of online banking, consumers are more receptive but further education is needed to inform of its benefits. More broadly speaking, as our financial markets progress, they will rely more and more on technology.

How are the demographics of Oman and the competition increase in the industry altering borrowing and lending habits?

Babicci: Banks and financial institutions act as catalysts in the borrowing and lending market. Over the past few years the Gulf Cooperation Council countries have demonstrated tremendous growth in this sector. Oman's growing economy, attributed to factors such as tourism development, expansion of ports and the growth of the manufacturing and banking sector, has created an increase in demand for larger cities and housing. We are not seeing a lot of change because we've had sufficient liquidity all the way through.

Global Arab Network

This article is published in partnership with Oxford Business Group

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Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network