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MENAFN - Times of Oman - 25/03/2010

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(MENAFN - Times of Oman) Oman ORIX Leasing Company SAOG is looking at a 15-20 per cent growth in its disbursements during the current year and expand its branch network in the second half of this year, its chief executive officer, Hira Lal Bharvani said.

The company, which provides asset-backed financing to corporate and individuals, disbursed RO24.81 million in 2009 and would continue to have a "cautious" approach towards fresh lending in 2010 to control the delinquency level, he said on the sidelines of the company's annual general meeting (AGM).

The net profit of the firm declined by 18 per cent in 2009 over that of the previous year to RO2 million as tighter liquidity situation dampened vehicle as well as equipment demand and put pressure on loan recoveries.

Such situation has led to the management concentrating on quality on assets instead of mere volume-based growth, it said in a note to its shareholders. The level of impaired assets increased to 3.3 per cent in 2009 of its exposure as compared to 2.3 per cent a year earlier. "We do not expect the (delinquency) situation to deteriorate any further in 2010," Bharvani said.

Earlier in the AGM, the company's chairman, Khalid Hilal Al Maawali said the accumulated provisions against doubtful debts were RO3 million, which represented 320 per cent coverage over the requirements of Central Bank of Oman (CBO).

Oman ORIX, owned by Oman National Investment Corporation Holding SAOG (ONIC) to the extent of 35 per cent, expects the spread between its borrowing and lending rates to improve during the year from its current rate of around three per cent, he said.

This would be due to softening of interest rates in the overall banking system, which is the source for bulk of its funding apart from corporate deposits for onward lending to its clients, he said. Corporate deposits comprise about 16 per cent of its total borrowings.

In 2009, its borrowings from commercial banks were RO20.8 million and carried interest rates ranging from 5.5-8 per cent while the interest charges of corporate deposits ranged from 6.25-7.35 per cent, as per information provided in its annual report.

Based on the firm's 2009 balance sheet, a 50-basis point rise in its average funding cost is expected to result in an outgo of RO41.81 million and impact the net profit to the extent of RO209,000, it said. "We expect 2010 to be better," Bharvani said when asked about the management's outlook on the spreads or margins.

Oman ORIX currently operates from its head office in Muscat and branches in Sohar, Salalah, Nizwa, Ibra and Barka. "We believe in geographical expansion and would add one more branch in the second half of this year," Bharvani, who took charge in his current capacity in 2006 after a stint with ORIX Leasing Pakistan, said. Earlier in the AGM, the shareholders of the company, in which ORIX of Japan holds about a fifth of the total stake through direct and indirect holdings, approved a cash dividend of eight per cent and a stock dividend of 22 shares for every 100 shares held.

 






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