Oman’s non-banking finance companies (NBFCs) faced a tough year in 2019 as all the five companies in the sector reported double digit declines in net profits, mainly due to softening of demand for vehicle financing, which accounts for bulk of their business.
For the full-year 2019, the combined net profits reported by all NBFCs stood at RO18.36mn, more than 28 per cent lower compared to RO25.72mn reported in the previous year.
Most NBFCs witnessed a slowdown in credit offtake due to dearth of new projects which impacted vehicle sales, which is a major source of business for them. These finance companies are also facing growing competition from banks along with rise in cost of borrowing.
The biggest decline in net profit was reported by Muscat Finance, whose net profit for 2019 dropped 89 per cent to RO436,000 compared to RO4.05mn in the corresponding period an year ago.
Out of the total RO18.36mn net profit recorded by all NBFCs, National Finance alone accounted for more than half of it. Following its merger with Oman Orix Leasing, National Finance Company emerged as the largest NBFC in Oman and reported a 16.63 per cent decline in 2019 net profit at RO10.02mn compared to RO12.02mn net profit in 2018.
United Finance reported a decline of 11 per cent in its profit at RO673,000 as against RO755,000 in the previous year. Similarly, Al Omaniya Financial Services reported a net profit of RO3.43mn in the year ended December 31, 2019, a 14.83 per cent decline compared to RO4.03mn it reported in the previous year.
Taageer Finance’s net profit for 2019 also declined 21.86 per cent to RO3.8mn as against RO4.87mn in the previous year.
Despite the sharp declines in net profits, some NBFCs were able to increase their overall revenues, which acted as a silver lining amid dark clouds.
National Finance reported an increase of 5.4 per cent in their total revenue at RO44.63mn. Taageer Finance reported over 20 per cent rise in overall revenue at RO19.85mn for 2019