| Overview During Q1 2010 the local economy witnessed signs of revival from the affects of the global meltdown against the backdrop of improvement in the global economy. With oil prices remaining stable over USD 70, the economy is back on track, albeit, at a moderate pace. The governments continued spending on infrastructure development projects has provided the required impetus for economic growth. Despite these initiatives, the market sentiment remained subdued with limited demand for equipment and vehicles. We believe that the commencement of projects announced by the government would trigger the pace of economic activity, provide avenues for growth and improve liquidity during the Q2 2010 and beyond. | Performance highlights The Company recorded a net profit of RO 420,365 for Q1 2010 as against as loss of RO 223,945 for the corresponding period last year. The improvement in profitability is on account of reduction in non-performing loans and resultant provision requirements. In view of the subdued market conditions the company adopted a judicious approach and curtailed disbursements during Q1 resulting in the loan portfolio reducing from RO 104.26 million as at Dec 2009 to RO 91.30 million. The market witnessed a contraction in size and provided limited scope for expansion of credit. The prevalent lending rates were also very competitive. Provisioning positionThe company maintained provisions as per regulatory guidelines and directions of the regulators and RO 10.31 million as principal provision. Of this RO 9.70 million is required as per standard regulatory norms applicable to the industry. In addition the company maintains a special reserve of RO 1.5 million to guard against any delinquencies from unforeseen circumstances. The company has initiated concerted efforts on the recovery front and these are likely to yield better results by way of improved collections and wrire back of provisions during the current year. Funding The company has initiated discussions with existing banks to mobilise additional credit lines from banks to fund business requirements. Banks have indicated that they are open to considering additional credit lines. Management is confident of raising the required funds to meet the budgeted business levels for the current year. Future Outlook While the market sentiment is presently subdued, the quantum of infrastructure projects initiated by the government is expected to trigger economic activity and provide opportunities to propel growth. With liquidity easing and indications of redcution of interest rates the outlook is positive.
Acknowledgement We thank His Majesty Sultan Qaboos bin Said, His Government , Central Bank of Oman, Capital Market Authority and other regulatory authorities for their support and guidance during the quarter. We also thank our bankers for their continued trust and confidence .
Shaikh Suliman Ahmed Al Hoqani Chairman of Board of Directors |
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