The Metamorphosis

Nothing has changed inside the portals of Ahli Bank on Wattaya district – erstwhile known under a different name: Alliance Housing Bank. The same smiling faces. The same quality service that one has been used to over the past few years. Yet, a lot has changed. Including the name. In the past few months, the sand dunes have reshaped its contours thus catapulting into the big league. The desire to become big has materialized. From a mortgage bank, Alliance Housing Bank has turned into Ahli Bank, thanks to the Central Bank of Oman granting a license. Yes, that’s the new name under which it will provide a slew of commercial banking services. The banking segment has yet another member. Welcome, Ahli Bank!

How did this transformation come about? This coincided with the culmination of a strategic alliance with the Ahli United Bank B.S.C. and the International Finance Corporation. Last December, Alliance Housing Bank issued, by way of capital increase through private placement of 81,076,923 new shares to Ahli United Bank B.S.C. (AUB) and 32,000,000 new shares to International Finance Corporation (IFC) at a price of RO 0.450 per share, including a premium of RO 0.350 per share, and raised a total of RO 50,884,615.350 in new shareholders’ equity. This increase in the Bank’s capital has enabled Ahli Bank to meet the minimum capital requirements of the Central Bank of Oman and also provide for further organic growth in line with the Bank’s new strategy. December 27 last year was a historic day for Ahli Bank because that was the day it got the Commercial Banking License from the banking regulator. “It is a misconception to say that it was a merger,” clarifies AbdulAziz M Al Balushi, Chief Executive Officer of Ahli Bank and hastens to add, “it is a partnership to take us forward». Al Balushi is a seasoned banker with more than 22 years of solid banking practice in Oman and abroad. A son of the soil with top credentials.

Seated in his spacious and uncluttered office - nestled among the giant car dealers of the Sultanate, the May 1962 born banker is lucid. No ifs and buts. Shooting from the hip straight. Not running away from challenges. Learnt perhaps on the Muscat football fields where he played Centre Back with Oman Club. With Oman being a small country in terms of population (2.6 million) and more than a dozen banks – both domestic and foreign – in existence competing a slice of business, the Ahli Bank bossman is game. Ready and raring to go. “Our business model is very simple. We want to be a premier bank in Oman with a decent market share offering different products that can add value to various segments. We will try our best to differentiate our products and services from competition,” explains he.

Ahli Bank has no illusions about becoming a niche player. Why? “Because money market in Oman is very small,” shoots back the bespectacled banker. “We want to focus on certain areas of business and clients. At this moment, we focus on all segments. For instance, if our focus is on oil and gas sector, then we have tailor made products to suit their needs. Another example: if there are people who want their salaries to be credited and don’t want to come to our bank, then we don’t need a branch in that area. In such cases, we will look at distribution channels to service their needs,” says Al Balushi without batting an eyelid. It is a tough call and a clever move. Successful leaders in the annals of history have one trait in common: turning disadvantage into advantage. Considering that Ahli Bank is a new player – just 3 months old at the time of going to print – with no large branch network, it just has to chisel out a working model to survive and take competition head on. The strategic alliance is turning out to be beneficial. “The Bank is benefiting from AUB’s management, technical expertise and know-how with a view to effectively manage conversion from a mortgage bank into a fully-fledged commercial bank offering retail, corporate, treasury and wealth management products and services to its customers and meet the growing competition,” says Chairman H.E. Sayyid Khalid Hamad Hamood Al Busaidi.

Ahli United Bank has banks in Kuwait, Qatar, Bahrain, Oman, Egypt, London and Iraq. Such a wide network crossing countries in the region helps immensely in servicing clients through a single window. “If you bank with us in Oman, you can by default consider you have access to our branches in the region,” claims the Bank. You can get it done at Ahli Bank. You transact through the existing account in whichever country it has a footprint. With economies in the region booming, business flow is growing warranting a huge demand for banking.
All this will have a positive impact on Ahli Bank’s bottomline, hopes Ahli Bank CEO. “Corporate clients in the GCC region will start dealing with us immediately. Big investors in the region will come to us. So also cash rich Omanis wanting to invest abroad will come to us. Here’s a bank that will help them transact their business and protect them in all ways” adds he. Tranforming a mortgage bank into a fully-fledged commercial bank is no easy job. In a short span of time, it has to implement systems, policies and procedures. Gear itself for the big leap forward. “We did it in three months flat,” announces a proud Al Balushi. He is categorical that it would have been impossible but for the association.

Biggest challenge? There is a lot of risk involved in a mortgage bank transforming into a commercial bank. Changing the mindset of people was the toughest call. However, everything went through smoothly. Staff were sent to Bahrain for training and senior management literally sat in classrooms to understand the nuances of the new business before sharing with colleagues down below. The staff did not let Al Balushi down. Never. How bold will be Ahli Bank in the days to come? Pat comes the response: “By nature, we are a conservative bank. Banking is all about balancing risk. You cannot avoid risk. Money cannot be parceled out to everyone. At the same time, we cannot sit atop money and say we will not disburse. The business of banking that way is tricky. It does not work. We want a steady growth and we need to be prudent.”

Al Balushi is least unperturbed over the marketplace. “Can I wish away competition? No.. We are capable of managing (the competition). All banks have mortgage business. However, we were not allowed to do commercial banking until now.” What actually the Ahli Bank chief hinting at is that the competition should be worried because the market place has a new player in the form of Ahli Bank! Not him. Bravo.

Yet, it is not all brave talk and no plan in place. “To face competition, you want to have a clear objective and a strategy to implement. What you want to do? You don’t have to follow competition. You really have to focus on what your business is. However, you have to watch what they are doing without getting distracted from what you have achieved,” elaborates the science major and financial guru. Staff at Ahli Bank is charged up. Why not when the leader at the helm eulogises meritocracy? “If you are dynamic, want to work hard and sacrifice certain things in life today so that you can have a better future tomorrow, you have a great future in Ahli Bank. On the other hand, if you want someone give you something on a platter and all you have to do is to eat, then you have no future,” says Al Balushi matter of factly. Sounds like a management don. Before one recovers from this inspiration speech, here comes the next one. Listen: “The colour of your passport is not a guarantee of success. We certainly respect Omanisation and we will work hard to have a strong young and dynamic Omani force based on quality and not quantity. You being an Omani does not mean that you get everything. All will be treated equality. Performance is the only yardstick we will use to evaluate the diverse nationalities working with us. We are ready to share our success.”

What’s Ahli Bank striving for under his stewardship? “We don’t believe in numbers game. We want decent market share and respect from our customers, stakeholders, competition and the Regulator (CBO),” says he. What’s new? one feels like asking, but hold back. The sincerity in Balushi’s eyes shine through and one senses his genuineness. He’s dreaming big. Working hard to convert that dream into reality with a team in tow. Two decades of playing soccer with Oman Club had taught him a few key lessons – how to be a team player; not to be selfish and the determination to win. Balushi has never scored a solitary goal. But … Hang on … he has helped his club to win medals at regular combination. A veritable combination or success recipe. Why not give him a chance? Let’s wait and watch

AHLI BANK – Financial Highlights In spite of the increased competition and the transition to a Commercial Bank, the total assets at the end of December 2007 reached RO 305.9 million as compared to RO 175.1 million at the end of December 2006, representing a growth of 75%. The Loans and Advances continued to show a healthy growth and has increased by RO 88.7 million or 59% to RO 239.4 million in December 2007 from RO 150.7 million at the end of December 2006. The new business which has been largely acquired towards the end of the year is at a yield higher than the average yield on the portfolio as at December 2006. The loan book continues to be of a very high quality and this is reflected in the reduction of the specific provision requirements by more than 20% to RO 0.303 million year over year. Customer Deposits grew by 99% to RO 152.1 million at the end of December 2007. This growth is in line with the strategy to build a stable low cost funding base. Operating Income for the year ended December 2007 amounting to RO 15.2 million increased by 12.7% compared to the year ended December 2006. The cost of transition to a commercial bank with investments in human resources and information technology coupled with higher cost of funds during 2007 has resulted in a decline in net profit of the bank by 43% compared with last year. This investment was essential and will have a positive contribution to the performance of the Bank in future.