Half Year 2026 Oman Arab Bank SAOG Earnings Call
Speaker #1: Good afternoon, ladies and gentlemen. Can you hear us? Good afternoon, ladies and gentlemen. We hope you're able to hear us. Yeah. Maybe we'll wait for another two more minutes.
Speaker #1: Before we start—yes, thanks. Good afternoon, ladies and gentlemen. I hope you're able to hear us. We will start shortly; we're just waiting for 2 or 3 minutes.
CB Ganesh: Good afternoon, ladies and gentlemen. I hope you are able to hear us and we will start. We were just waiting for two, three minutes. I think now we can start to the further delay. I'm CB Ganesh, I'm Deputy CEO for Oman Arab Bank, presently here. As well as I have my colleague, our CFO, Mr. Ahmed El Damaty, is also present. Mr. El Damaty will take us through the presentation and thereafter, we'll be happy to take your questions.
CB Ganesh: Good afternoon, ladies and gentlemen. I hope you are able to hear us and we will start. We were just waiting for 2, 3 minutes. I think now we can start to the further delay. I'm CB Ganesh, I'm Deputy CEO for Oman Arab Bank, presently here. As well as I have my colleague, our CFO, Mr. Ahmed El Damaty, is also present. Mr. El Damaty will take us through the presentation and thereafter, we'll be happy to take your questions. With your permission, I request El Damaty to take us through the presentation.
Speaker #1: I think now we can start without further delay. So, I'm C.P. Ganesh, Deputy CEO of Oman Arab Bank, presently here. As well, I have my colleague, our CFO, Mr. Ahmad Damar—he's also present.
Speaker #1: So, Mr. Damar will take us through the presentation. Thereafter, we'll be happy to take your questions. With your permission, I request Mr. Damar to take us through the presentation.
CB Ganesh: With your permission, I request El Damaty to take us through the presentation.
Speaker #2: Thank you, C. P. Ganesh. Assalamu alaikum warahmatullahi wabarakatuh. Good afternoon, everyone, and thank you for joining our half-yearly investors call. Before we start, I would like to remind you that today's session is being recorded.
Ahmed El Damaty: Thank you, CB. [Foreign language] Good afternoon, everyone, and thank you for joining our H2 investor support. Before we start, I would like to remind you that today's session is recorded. The recording and a copy of the presentation on the screen will be made available on our website. Today's session is split in two parts. In the first part, we will take you through our financial performance for the H1 2026. As CB mentioned, the second part will be dedicated for Q&A. As always, before we start our presentation, we start with some housekeeping. I would like to draw your attention to the disclaimer on the screen. This presentation and the following discussion are to discuss the performance of Oman Arab Bank. It's not an invitation to buy or sell any of the bank's securities or services.
Ahmed El Damaty: Thank you, CB. Good afternoon, everyone, and thank you for joining our H2 investor support. Before we start, I would like to remind you that today's session is recorded. The recording and a copy of the presentation on the screen will be made available on our website. Today's session is split in 2 parts. In the first part, we will take you through our financial performance for the H1 2026. As CB mentioned, the second part will be dedicated for Q&A. As always, before we start our presentation, we start with some housekeeping. I would like to draw your attention to the disclaimer on the screen. This presentation and the following discussion are to discuss the performance of Oman Arab Bank. It's not an invitation to buy or sell any of the bank's securities or services.
Speaker #2: The recording and a copy of the presentation shown on the screen will be made available on our website. Today's session is split into parts. In the first part, we'll take you through our financial performance for the first half of 2026.
Speaker #2: And as C.P. mentioned, the second part will be dedicated to the Q&A. As always, before we start our presentation, we'll begin with some housekeeping.
Speaker #2: I would like to draw your attention to the disclaimer on the screen. This presentation and the following discussion are to discuss the performance of Oman Arab Bank.
Speaker #2: This is not an invitation to buy or sell any of the bank's securities or products. The discussion will also contain forward-looking statements, which are based on the currently available information.
Ahmed El Damaty: The discussion also will contain forward-looking statements, and these are based on the current available information. We're going to start our presentation with the month review. Maybe one of the highlights of this period is the uptick that we have seen in the inflation rate as it reaches 2.8% as of June 2026 year-on-year. This was impacted, of course, by the current geopolitical situation. The rise oil price for the H1 was $74, and the repo rate, we continue to see that it's constant at 4.25%, with no changes as compared to December 2025. On the fiscal side, the forecasted debt-to-GDP ratio is 33% at the end of 2026, which is a further improvement from the 36% that we have seen at the end of 2025.
Ahmed El Damaty: The discussion also will contain forward-looking statements, and these are based on the current available information. We're going to start our presentation with the month review. Maybe one of the highlights of this period is the uptick that we have seen in the inflation rate as it reaches 2.8% as of June 2026 year-on-year. This was impacted, of course, by the current geopolitical situation. The rise oil price for the H1 was $74, and the repo rate, we continue to see that it's constant at 4.25%, with no changes as compared to December 2025. On the fiscal side, the forecasted debt-to-GDP ratio is 33% at the end of 2026, which is a further improvement from the 36% that we have seen at the end of 2025.
Speaker #2: We're going to start our presentation with the monthly view. Maybe one of the highlights of this period is the uptick that we have seen in the inflation rate, as it reaches 2.8% as of the year.
Speaker #2: This was impacted, of course, by the current geopolitical situation. The realized oil price for the first half of the year was $74, and the repo rate—we continue to see that it's constant at 4.25%, with no changes as compared to December 2025.
Speaker #2: On the fiscal side, the forecasted debt-to-GDP ratio is 33% at the end of 2026, which is a further improvement from the 36% that we have seen at the end of 2025.
Speaker #2: On the banking sector, both credit and deposits continue to show strong momentum. In the first 6 months of 2026, total credit increased by 8.2%, with OMR 2.9 billion.
Ahmed El Damaty: In the banking sector, both credit and deposits continued to show strong momentum. In the first 6 months of 2026, total credit increased by 8.2% of the OMR 2.9 billion, which is higher than the full year increase we have seen in 2025 at OMR 2.83. 87% of this increase was in conventional banking, which grew by 9%, while Islamic financing grew by around 5%. On deposits, they went up by OMR 3.2 billion or 9.7%. With the private sector contributing OMR 1.8 billion and government and public sectors contributing OMR 1.5 billion. Conventional deposits were the main driver of the increase, as 95% of the increase was conventional deposits, or OMR 3.1 billion. Now I will move to Oman Arab Bank.
Ahmed El Damaty: In the banking sector, both credit and deposits continued to show strong momentum. In the first 6 months of 2026, total credit increased by 8.2% of the OMR 2.9 billion, which is higher than the full year increase we have seen in 2025 at OMR 2.83. 87% of this increase was in conventional banking, which grew by 9%, while Islamic financing grew by around 5%. On deposits, they went up by OMR 3.2 billion or 9.7%. With the private sector contributing OMR 1.8 billion and government and public sectors contributing OMR 1.5 billion. Conventional deposits were the main driver of the increase, as 95% of the increase was conventional deposits, or OMR 3.1 billion. Now I will move to Oman Arab Bank.
Speaker #2: This is higher than the full-year increase we saw in 2025, at 2.8% in real terms. Eighty-seven percent of this increase was in conventional banking, which grew by 9%, while Islamic financing grew by around 5%.
Speaker #2: On deposits, they went up by R$3.3 billion, or 9.7%, with the private sector contributing R$1.8 billion and the government and public sectors contributing R$1.5 billion.
Speaker #2: Conventional deposits were the main driver of the increase, as 95% of the increase went to conventional deposits of 3.1 billion Rial. Now, I'll move to Oman Arab Bank.
Speaker #2: As you're aware, we are backed by two major shareholders: Arab Bank Holdings with 49%, and Omnivest Holdings with 31%. Our board has nine members with extensive experience across business and financial fields.
Ahmed El Damaty: As you are aware, we are backed by two major shareholders, Arab Bank holding 49% and OMINVEST holding 31%. Our board has nine members with extensive experience across business and financial fields. We are also the second oldest bank to be incorporated in Oman, and today we provide our services through 69 branches, of which 51 branches offering conventional products and 18 branches offering Islamic banking services and products through our fully owned subsidiary, Al Yusr Islamic Banking. Turning to our financial performance. The major highlights of the H1 operating profit saw healthy growth of 7% and reached OMR 33 million in H1 2026. While net profit reached OMR 18 million, a 21% increase year-on-year, driven by the growth in operating profit I mentioned and also lower cost of risk. Loans and deposits were up 6% and 5% year-on-year respectively.
Ahmed El Damaty: As you are aware, we are backed by two major shareholders, Arab Bank holding 49% and OMINVEST holding 31%. Our board has nine members with extensive experience across business and financial fields. We are also the second oldest bank to be incorporated in Oman, and today we provide our services through 69 branches, of which 51 branches offering conventional products and 18 branches offering Islamic banking services and products through our fully owned subsidiary, Al Yusr Islamic Banking. Turning to our financial performance. The major highlights of the H1 operating profit saw healthy growth of 7% and reached OMR 33 million in H1 2026. While net profit reached OMR 18 million, a 21% increase year-on-year, driven by the growth in operating profit I mentioned and also lower cost of risk. Loans and deposits were up 6% and 5% year-on-year respectively.
Speaker #2: We were also the second oldest bank to be incorporated in Oman, and today we provide our services through 69 branches, of which 51 branches offer conventional products.
Speaker #2: And 18 branches offering Islamic banking services and products through our 31 subsidiary allies, Islamic Bank. Turning to our financial performance, the major highlights of the first half of 2025 show healthy growth of 7%, reaching 33 million in the first half of 2026, while net profit reached 18 million rials, a 21% increase year-on-year.
Speaker #2: Driven by the growth in operating profit as I mentioned, and also lower cost of risk. Loans and deposits were up 6% and 5% year on year respectively, and if we go to see further, information in our P&L, you can see that our operating expenses increased marginally by 2% year on year, our cost to income ratio improved, slightly from 55% to 54%, while our return on equity saw, slight increase from 7.7% to 7.8%.
Ahmed El Damaty: If we go to see further information in our P&L, we can see that our trading expenses increased marginally by 2% year-on-year. Our cost-to-income ratio improved slightly from 55% to 54%, while our return on equity saw a slight increase from 7.7% to 7.8%. Specifically on loans, our gross loans increased by 6% year-on-year or OMR 250 million, of which conventional loans were up by OMR 109 million and Islamic financing up by OMR 122 million. Against December 2025, loans were up 3%, OMR 110 million, with 40% of that gross in conventional and 59% in Islamic financing. In deposits, they were higher, 5% to OMR 178 million year-on-year. Qirad represented around 59% of the total deposits. We also continued to enjoy a strong liquidity position with LCR at 155% and NSFR at 111%.
Ahmed El Damaty: If we go to see further information in our P&L, we can see that our trading expenses increased marginally by 2% year-on-year. Our cost-to-income ratio improved slightly from 55% to 54%, while our return on equity saw a slight increase from 7.7% to 7.8%. Specifically on loans, our gross loans increased by 6% year-on-year or OMR 250 million, of which conventional loans were up by OMR 109 million and Islamic financing up by OMR 122 million. Against December 2025, loans were up 3%, OMR 110 million, with 40% of that gross in conventional and 59% in Islamic financing. In deposits, they were higher, 5% to OMR 178 million year-on-year. Qirad represented around 59% of the total deposits. We also continued to enjoy a strong liquidity position with LCR at 155% and NSFR at 111%.
Speaker #2: Specifically on loans, our gross loans increased by 6% year on year, to 230 million rial, of which conventional loans were up by 109 million rial and Islamic financing up by 122 million rial.
Speaker #2: Again, in December 2025, loans were up 3%, at 110 million Rial, with 40% of that growth in conventional and 59% in Islamic financing. Deposits were higher by 5%, at 178 million year on year. CASA represented around 59% of the total deposits.
Speaker #2: We also continue to enjoy a strong liquidity position, with an LCR of 155% and an SFR of 111%. On capital, the total capital adequacy ratio increased to 18.8%, while our CET1 ratio stood at 11.5%.
Ahmed El Damaty: On capital, total capital adequacy ratio increased to 18.8%, while our CET1 ratio stood at 11.5%. It is worth highlighting here that we have completed our issuance of the USD additional Tier 1 securities amounting to USD 400 million in H1 2026, which has further strengthened our total capital position.
Ahmed El Damaty: On capital, total capital adequacy ratio increased to 18.8%, while our CET1 ratio stood at 11.5%. It is worth highlighting here that we have completed our issuance of the USD additional Tier 1 securities amounting to USD 400 million in H1 2026, which has further strengthened our total capital position.
Speaker #2: Sole source highlighting here that we have completed our issuance of the USD additional 81 securities amounting to $400 million real in the first half of 2026, which has further strengthened our total capital position.
Speaker #2: With that, I will conclude our performance overview for the first half of 2026, and we'll open the session for Q&A. Please feel free to raise your hand and submit your question whenever you have one.
Ahmed El Damaty: With that, I will conclude our performance overview for H1 2026, and we will open the session for Q&A. Please feel free to raise your hand and submit your question whenever you have anything to ask about. We are open for questions. Please, go ahead. Yes, Sandesh. Please go ahead.
Ahmed El Damaty: With that, I will conclude our performance overview for H1 2026, and we will open the session for Q&A. Please feel free to raise your hand and submit your question whenever you have anything to ask about.
CB Ganesh: We are open for questions. Please, go ahead. Yes, Sandesh. Please go ahead.
Speaker #1: Yeah, open for questions, please. Please, go ahead if you have any questions. Got it.
Speaker #3: Yeah, hi. Am I audible?
[Analyst]: Yeah, hi. Am I audible?
[Analyst]: Yeah, hi. Am I audible?
Speaker #2: Yes, you are.
Ahmed El Damaty: Yes, you are. Go ahead, Sandesh.
CB Ganesh: Yes, you are. Go ahead, Sandesh.
Speaker #1: Perfect, Andish.
Speaker #3: Yeah, hi. Thank you for the presentation. My first question is on the Al Islamic Bank transaction. Is there any update on that, on what's happening from that front?
[Analyst]: Yeah, hi. Thank you for the presentation. My first question is on the Al Yusr Islamic Banking transaction. Any update on that, on what is happening from that front?
[Analyst]: Yeah, hi. Thank you for the presentation. My first question is on the Al Yusr Islamic Banking transaction. Any update on that, on what is happening from that front?
Ahmed El Damaty: Okay. You must be remembering we made a disclosure on 23 July regarding this transaction, wherein we mentioned that we received a non-binding offer to buy Al Yusr Islamic Banking from Bank Dhofar, which was accepted by our board of directors. As we mentioned in that disclosure, this is subject to completion of due diligence and execution of transaction documentations and all necessary regulatory approvals. We will definitely be making announcements for market as and when there are further material developments on that matter.
CB Ganesh: Okay. You must be remembering we made a disclosure on 23 July regarding this transaction, wherein we mentioned that we received a non-binding offer to buy Al Yusr Islamic Banking from Bank Dhofar, which was accepted by our board of directors. As we mentioned in that disclosure, this is subject to completion of due diligence and execution of transaction documentations and all necessary regulatory approvals. We will definitely be making announcements for market as and when there are further material developments on that matter.
Speaker #2: Oh, okay. So, you know, you must remember we made a disclosure on 23 July regarding this transaction, wherein we mentioned that we received a non-binding offer to buy Al Islamic Bank from Banglishwa, which was accepted by our board of directors.
Speaker #2: And as you mentioned in that disclosure, this is subject to, you know, completion of due diligence, execution of transaction documentation, and all necessary regulatory approvals.
Speaker #2: So, we will definitely be making announcements to the market as and when they arise, regarding further material developments on the matter.
Speaker #3: Okay, okay. Thank you for that. And also, the second thing would be on your cost-to-income ratio. It has improved from la— last, last particular year.
[Analyst]: Okay. Thank you for that. Also, the second thing would be on your cost-to-income ratio. It has improved from last particular year. What would be your long-term plan with respect to this? What are you targeting this to?
[Analyst]: Okay. Thank you for that. Also, the second thing would be on your cost-to-income ratio. It has improved from last particular year. What would be your long-term plan with respect to this? What are you targeting this to?
Speaker #3: So, what would be your, like, long-term plan with respect to this? Like, how are you going to track, like, what's your target? Like, what are you targeting this to? Like, while there was an improvement, it's a slight improvement in our view on the actual, also the market view.
Ahmed El Damaty: Yeah, you are right. While the improvement is a slight improvement in our view, and I am sure also from market's view. But if you look at our cost-to-income ratio for the past five years, it has been going down almost every single year. Four years, around 63%. Today, we are at 54%. And it has been achieved through two angles. One of them is our cost base, which has been maintained almost flat for the past, let's say, five years. The only years that we have seen an increase was last year, when it grew by 3%. But if you compare the total cost base to
Ahmed El Damaty: Yeah, you are right. While the improvement is a slight improvement in our view, and I am sure also from market's view. But if you look at our cost-to-income ratio for the past five years, it has been going down almost every single year. Four years, around 63%. Today, we are at 54%. And it has been achieved through two angles. One of them is our cost base, which has been maintained almost flat for the past, let's say, five years. The only years that we have seen an increase was last year, when it grew by 3%. But if you compare the total cost base to
Speaker #3: But if you look at our cost-to-income ratio for the past five years, it has been going down almost every single year—four years.
Speaker #3: 6.60%. Today we are at 4.54%. This has been achieved through two angles. One of them is our cost base, which has been maintained almost flat for the past, let's say, five years.
Speaker #3: The only year that we saw an increase was last year, when it grew by 3%. But if you compare the total cost base to 2022 and 2021, roughly, they are the same.
Ahmed El Damaty: 2022 and 2021, roughly they are the same. There have been also good improvement in our total revenue. Our target for the strategy period that we are discussing more with the board, that within the coming two to three years will come within the market average, which is around 45%, but it will meet at some time.
CB Ganesh: 2022 and 2021, roughly they are the same. There have been also good improvement in our total revenue. Our target for the strategy period that we are discussing more with the board, that within the coming two to three years will come within the market average, which is around 45%, but it will meet at some time.
Speaker #3: There has also been good improvement in our total revenue. Our target for the strategy period, which we are discussing regularly with the board, is that within the coming two to three years, we will reach the market average, which is around 45%.
Speaker #3: But it will need some time. Okay, okay. Thank you. Thank you, team, for the answers. Thank you. That's it from my end.
[Analyst]: Okay. Thank you. Thank you, team, for the answers. Thank you. That is it from my end.
[Analyst]: Okay. Thank you. Thank you, team, for the answers. Thank you. That is it from my end.
Speaker #2: Thank you, Andish.
CB Ganesh: Thank you, Sandesh.
CB Ganesh: Thank you, Sandesh.
Speaker #3: Okay.
[Analyst]: Okay.
[Analyst]: Okay.
CB Ganesh: Please raise your hand if you have any questions. I couldn't see any other hands raising. Well, we are happy to wait, or if you don't have any questions, we can close the session. Please, even later, if you have questions, feel free to write to us. We'll be happy to answer any particular questions. Thank you. Thank you, ladies and gentlemen, for attending this session and feel free to write to us if you have any questions. Now, since there are no further questions, we couldn't see any hands raising, so with your permission, we are concluding this session, and thank you very much.
CB Ganesh: Please raise your hand if you have any questions. I couldn't see any other hands raising. Well, we are happy to wait, or if you don't have any questions, we can close the session. Please, even later, if you have questions, feel free to write to us. We'll be happy to answer any particular questions. Thank you. Thank you, ladies and gentlemen, for attending this session and feel free to write to us if you have any questions. Now, since there are no further questions, we couldn't see any hands raising, so with your permission, we are concluding this session, and thank you very much.
Speaker #1: Please raise your hand if you have any questions. Please. So, let's see. Any other hands raised? I mean, we are happy to wait for a few.
Speaker #1: Don't have any questions? We can close the session. Please, even later, if you have questions, feel free to write to us. We'll be happy to answer any particular questions.
Speaker #1: So, thank you. Thank you, ladies and gentlemen, for attending this session. And feel free to write to us if you have any questions.
Speaker #1: So now, since there are no further questions and we couldn't see any hands raised, with your permission, we will conclude this session.
Speaker #1: And thank you very much.
Speaker #2: Thank you. Thank you, everyone.
Ahmed El Damaty: Thank you. Thank you, everyone.
Ahmed El Damaty: Thank you. Thank you, everyone.
Speaker #4: The recording has stopped.
CB Ganesh: The recording has stopped. Yeah.
