Q2 2026 Taageer Finance Co SAOG Earnings Call
Speaker #1: بسم الله الرحمن الرحيم. السلام عليكم ورحمة الله وبركاته. نرحّب بالأخوة والأخوات الأفاضل في اجتماع المساهمين لعرض القوائم المالية الغير مدقّقة للنصف السنوي 2026. Good morning, everyone.
Speaker #1: Welcome to the meeting to the investors' meeting. Presents the unaudited financials and financial performance of the company for the half-year 2026. In terms of introductions, we have our CEO, Sheikh Khalil Al-Harthi, our Deputy CEO, Mr. Kashif, and myself, Head of Finance, Musa Al-Lawati, and we also have Mr. Akhtar, our Finance Manager.
Speaker #1: I will hand it over to our CEO to start with the introductory part of this presentation. And we will continue with the financial performance, and then we will move to the Q&A section.
Speaker #2: Thank you, Musa. Good morning. سلام عليكم. Everybody, welcome to the first half session of MSX presentation. Thank you for your interest. Thank you for your attendance toward the session.
Speaker #2: We'll move to the first slide. Probably some of these slides will be familiar somewhat to you, but we'll try to look at updating them.
Speaker #2: The gross loan book grew to almost 360 million riyals, we're having 23.2 market share as on the second quarter and first half of the year of the FLC market.
Speaker #2: Our branch network has been under expansion. For this year, we're looking for 4 new branches, and the reallocation of our Najwa branch this becomes part of our strategic presence into the SME and the retail market so that we become available.
Speaker #2: We invite you to visit our new branches. There is a fresh look and feel into them. It makes all our clients feel most welcome.
Speaker #2: And then we have a dedicated also some of the counters to be recipient for our SME clients, where they can showcase their work. So a lot of initiatives are undergoing there.
Speaker #2: During this year, we became more of an SME-focused. We have reviewed entirely our portfolio. We're trying to ensure that we are having sustainable returns for the shareholders and income.
Speaker #2: So this is one of the focus areas we're trying to do. As you may know, the country is trying to focus on supporting SME sector in the country, from the top level to the central bank, and it's a joint effort.
Speaker #2: And this is participation from Tajir in order to support this initiative. Then we have a new leadership, which is focused towards digital. Digital, of course, is more of a tool.
Speaker #2: It's not an objective. But like we mentioned before, the board of directors have approved a 5-year strategy for the coming 5 years. Management and board are collaborating very closely in order to make sure that there is a robust execution dynamic outflow of the entire strategy forward-looking.
Speaker #2: And digital, of course, becomes the mean for that. I don't think it's elective anymore to go for that. So we are looking at becoming digital-first.
Speaker #2: We are trying to apply the AI tools whenever applicable within the guidelines of central bank and good practice. And of course, trying to see that the strategy is aligning towards the goal.
Speaker #2: As you may know, this is probably just a recap that 86% of the company shareholding belongs to is very strong sovereign and institutional investment houses within Oman and outside Oman.
Speaker #2: Oman Investment Authority makes about one-third of the shareholding, which gives us, you know, a good strong backing of shareholders. You will have the entire list available at MSX.
Speaker #2: The key hirings were revolving around the enforcement, the strategy to make sure that we are moving forward in the right way. We have also enforced the compliance, the credit.
Speaker #2: We have new hirees. We're going to highlight that on the subsequent slides. HR and have also revamped and strengthened our control functions to ensure that we are aligned with the central bank mandate and objective.
Speaker #2: We are walking the path, and the right solid ways in line with the best practices inside and within the external ecosystem. So we have highlighted these areas probably as we move on.
Speaker #2: We will try to zoom in into what are we looking at. Of course, bearing in mind internal elements to be preserved for the company.
Speaker #2: So we are the first objective is to have sustainable growth. So we are focusing on the profitable sectors within the SME segment. We are undergoing an ongoing analysis for where are the profitable sectors.
Speaker #2: As you know, SME sector is underserved within the economy. Yet it carries a good amount of high-risk. So where the higher risk comes, the higher return.
Speaker #2: But we are trying to balance the wheel where we can focus into meaningful sectors in alignment with the 2040 key sectors, which are into the place.
Speaker #2: We are trying to be very practical in terms of our approach. We are trying to ask what are the purposes of funds. We are trying to match loan dispensation to a more robust criteria and then, you know, become more agile in terms of offering that kind of financing.
Speaker #2: So therefore, based on that objective, we have dispensed 15% more this year towards an SME sector compared to what we did last year. There's a portfolio diversification across the new branches.
Speaker #2: We are trying to see where are the hubs of businesses which are happening as you may know. We have Muscat Government, naturally. We have Bafar, we have Batna Sohar.
Speaker #2: So we are trying to reinforce those and focus in into getting the right service levels for those sectors. Digital channels and alternative sales platforms.
Speaker #2: We have been quite proactive in terms of trying to deploy adequate channels more robust turnaround times internally. We are trying to shape up our risk assessments and the deployment from application to disbursement in the as effective way.
Speaker #2: It's an ongoing journey, but I think we are on the right path for that matter. On the credit risk management, I think we all agree that the core function of a lender is to have a robust credit management.
Speaker #2: So in there, we have looked at restructuring the underwriting credit department to enhance it. And that comes from either from functionality from people, from process point of view.
Speaker #2: And this is an undergoing. We have, like we mentioned before, we have a new hirees. We are looking at enhanced capacity and then upskilling our people on ongoing basis to make sure there is alignment across different levels.
Speaker #2: So within the department, we are trying to also look at our portfolio, trying to recalibrate the risk concentration. So as you may know, systematically and the Omani market, the lenders have certain concentrations and some sectors.
Speaker #2: So we are ongoing basis reviewing what is the concentration level on certain sectors. And we are trying to rebalance based on profitability and based on risk framework, what is our risk appetite and how do we see the past historical performance of a sector, what is the ongoing, and then what is the outlook for that.
Speaker #2: And based on that, we are trying to re-score so the re-score the sectors and the pricing for that matter. We are definitely trying to use technology as an enabler for us to help us expedite and rationalize our risk assessment and then arrive at the early warning sign system and then try to make the risk, the credit risk, as agile as it could be to cope up with the market.
Speaker #2: In terms of governance, we are strengthened, like we mentioned before, our internal audit, our compliance and risk function have been boosted up in terms of capacity, in terms of people, in terms of process.
Speaker #2: They have become a centerpiece for most of our decisions, either from second layer or third layer of defense. There are engaged at large with many of the processes, many of the policies, many of the discussions of the company.
Speaker #2: Internally, so we are we would like to think down. We are moving towards creating a culture of strong GRC within. We have also reviewed our management committees.
Speaker #2: There are several which are led by the regulator, and then in line with those, we try to make them efficient, we try to reshape those terms of references, we try to.
Speaker #2: Quantify deliverables, and we try to make those management committees effective into delivering the key objectives in line with the company strategy. And in alignment to central bank, which we thank for their constant support.
Speaker #2: And we are in constant dialogue and I think we are seeing very good support from central bank towards the sector as a whole. And to ensure there have been very understanding and then I can say from 10 years side, from board level, from shareholder level, and definitely company management, we have been forthcoming with them.
Speaker #2: We have been as transparent and open with them. And I think this dialogue is quite healthy and looking forward. From people angle, they were like we mentioned before, they were key hirings in terms of strategy, credit, HR, compliance, and product development.
Speaker #2: This is to ensure that we are in line with the strategic initiatives we are trying to get. And it definitely people are the key assets for any enterprise where we have the right people at the right place what matters the most.
Speaker #2: We are building institutional capacities by creating a competency framework, a competency is vital so that we make sure that people are being deployed and developed.
Speaker #2: And there are shaping up to the next level of company aspiration. We have also started by developing enterprise level KPIs and that has been on the road.
Speaker #2: This year we're cascading further into departmental and to individual. I think it's a very important element that people are having clear objectives from enterprise cascaded to the individual level.
Speaker #2: And then also we have it in alignment with our overall strategy. In terms of processes, like we mentioned before, any transformation looks at people, process, and systems.
Speaker #2: Processes are under constant and comprehensive review across all major functions, whether it's the core from the sales, from the credit, or from the recovery part of it.
Speaker #2: And then also from the support functions, whether it's an HR, IT, or finance, and all the support functions. We are going in a cohesive way where we have created the list of key projects which we are trying to execute towards the execution.
Speaker #2: And amongst them, the process enhancement and the objective here is that we are trying to be agile and we are trying to be innovative forward.
Speaker #2: And the best way to do this is to cross-pollinate and bring all the heads together. And to constructive way to make it move forward.
Speaker #2: Improving customer experience is definitely a centerpiece because this everything revolves around the customer experience, especially nowadays where customer expectations are. We are all customers at one way or another.
Speaker #2: And BAR has been raising and then we are trying to definitely see how can we improve in that element. Digitization is definitely a tool which people are seeking convenience out of.
Speaker #2: It helps efficiency, it helps productivity, y, turnaround time, reading of MI, and agility to turnaround. NPA management has been a centerpiece. I think it's not only for that year per se, we all know that post-COVID, they have been ramifications for especially the SME sector where a lot of companies within the SME sector have been given a breather over a period of time.
Speaker #2: Tajir has been also very collaborative with many of the SME customers which we have. And the spirit of collaboration and therefore we have been extending the with the guidance of central bank certain break areas for them in terms of restructuring and moratorium.
Speaker #2: Tajir also has been trying to collaborate with some of the clients where they're finding it difficult to repay post-COVID. And some additional facilities we're giving to them in terms of moratorium and restructure.
Speaker #2: I think several of those have reached those last miles within 20. We would have seen that we have captured part of them. You would have seen in the financials of last year, we have absorbed a couple of provisions in terms of NPA.
Speaker #2: We see that during this year, we will try to consolidate all of these accounts which are falling under NPA. So we expect that within this year, inshallah, the capture of the entire NPA restructuring and post-COVID prudentially will be captured within this year to start normalizing these accounts.
Speaker #2: So like we mentioned, they are legacy portfolios which we have been to place. We have been trying to be supportive to the SME segment at large.
Speaker #2: Now prudentially, we think it's only right to start to build up our provisions. Now the management and being supervised also by the board and then equal support by the board of directors.
Speaker #2: We have been proactively looking at those portfolios trying to recoup from them whatever we can while provisioning the fact that we are provisioning is not necessarily a gun money, but is the industry norm to start providing additional provisions for this which Tajir is proactively doing.
Speaker #2: We are being revamping and aggressively pursuing our recovery models trying to fast pace and expedite the NPA reduction. Multi-layers. Whether it's from retail level, whether it's an SME level, and corporate level.
Speaker #2: But as you may know, the retail probably is largely mechanical at nature. And it has its own pace. It has its own mechanics. When it comes to SME, to untangle their issues, it requires a bit of hand holding from our side.
Speaker #2: And the corporate elements also clients, they require different type of handling. Nonetheless, we are working as a financial advisor to those clients, trying to see how can we progressively and then where needed aggressively trying to support them into getting outside the woods and we are saying very good tractions being very engaged with them.
Speaker #2: So we see a very good higher level of recoverability either from the remedial route, the typical way, or from legal execution. Of course, amicable settlement remains to be the preference for everybody.
Speaker #2: We are also trying to proactively ring fence the legacy portfolios, what we have observed that from 2025 dispensations of portfolio, we have seen positive outcomes in terms of NPAs we are seeing very better portfolio handling outcomes.
Speaker #2: So it is clear to us that these are predominantly legacy portfolios like we mentioned earlier, the indicators of the fresh portfolios which were onboarded hereafter has been quite positive alhamdulillah.
Speaker #2: And we see the efforts of shaping up our credit has been yielding well. But as you know, it is a cycle where year on year the buildup of NPA has to be offset by a better portfolio underwriting as we go.
Speaker #2: So in a simple nutshell, NPA is a pragmatic being pragmatically approached by the management. It's not a symptom of Tajir alone. Different financial institutions do face such challenges at different point of time, especially during economic or geopolitical cycles.
Speaker #2: But we are becoming more and more aware of that how we handle what have we learned and how we improve our practices policies and processes and how do we shape up our people towards better handling of the NPA management.
Speaker #2: For the performance highlight, we probably will hand it to my colleague Musa head of finance to go take you through the numbers.
Speaker #1: To start off with some of the key indicators from the balance sheet perspective, the company's portfolio continues to grow and a growing rate of 3.5% is registered for the current period.
Speaker #1: As compared to the prior period, the fluctuation that you see in the bank borrowings and corporate deposits are mainly due to the company's effort to optimize the cost of funding.
Speaker #1: The other point that I'd like to highlight here is that the bond maturity or retention that is planned in November of the current year, the company has enough liquidity planned for that perspective.
Speaker #2: In the company maintains a diversified borrowing mix in an effort to optimize cost of funding. The debt to equity ratio is in line with the prior period.
Speaker #2: The gross loan book consistently with prior years continues to grow. Again, not to repeat what our CEO has mentioned, the company has undertaken great efforts and measures to build the provision over the coming period.
Speaker #2: From finance, from income perspective, as the funding cost continues to decline our lending rates as well have reduced. Which is evident and this is why our finance income has been in line with the prior period.
Speaker #2: The company has taken good measures and maintaining our operating expenses cost to income ratio of 36%, which is greater than the industry average. Indicated here.
Speaker #2: The company has very prudential provisioning policy resulting in increase in our ECL as compared to the prior period and resulting in the dip in profitability that is currently in the screen.
Speaker #2: The ROE ROA and EPS as well are in line with the profitability decline. Again, the cost to income ratio 36.5% which is greater than the industry average our net interest margin is due to the decline in both cost of funds and lending rates.
Speaker #2: We have reached to the end of this presentation and we are happy to take up any questions from the boards.
Speaker #1: Is there any questions feel free to ask whoever have attended.
Speaker #2: No more questions. We would like to thank everybody who has attended to the call. We remain committed from Tajir board to management to entire staff to make this work.
Speaker #2: We are trying to consolidate within this year inshallah with the support of shareholders with the support with our partners investors confidence on the company and then support of central bank inshallah we are quite confident that we will be able to consolidate within this year and inshallah we're looking for several strategic initiatives which will uplift to bring back Tajir to where it belongs inshallah soon.
Speaker #2: So with that if there are no more questions we would like to thank everybody for their kind participation and looking forward to see the best of all ahead.
Speaker #2: Thank you.
