BankMuscat to pay 10% dividend

Mr.Abdulrazak Ali Issa Chief Executive -BankMuscat gave a presentation on the overall performance of the Bank.

BankMuscat SAOG has announced its financial results for the year 2001. The Bank achieved a net profit of RO. 7,754,841 in 2001 as against net profit of RO 16,267,264 in 2000 and has declared a cash dividend of 10% for the year 2001. The bank had an interesting year 2001. After the merger with Commercial Bank in late 2000, the bank continue its growth through acquisition policy. Talking about the bank’s initiatives during 2001, Mr. Sunder George, Deputy Chief Executive said that the bank believes that due to the negative sentiments prevailing in the markets, acquisition opportunities are available at a very good price. The bank has used this opportunities to expand.

The bank has expanded its international operations through the acquisition of ABN Amro’s Commercial banking and Offshore Banking Unit (OBU) license in Bahrain. The bank also acquired the operations of Al Ahlia Securities Company SAOC, thereby enabling the bank to offer a complete range of investment banking services to its existing customers. The bank also successfully completed its merger with Industrial Bank Of Oman during the year and acquired the merchant acquisition business of HSBC.

Talking further about the bank’s expansion plans, Mr. George said that international operations, asset management and corporate advisory are going to be the key focus areas of the bank. The bank plans to expand further into UAE and India. It is also planning a strategic investment in life insurance and to develop the concept of bancassurance. 

The bank is currently in the process of issuing rights shares to its shareholders at the rate of 2.250 per share, which will add RO 7.87 mn. to the networth of the bank. The bank’s new liability products i.e. the convertible bonds and subordinated loan notes have become the darling of investors on the MSM.

Some of the highlights of the financial performance of the bank was as under:

Net Interest Income.
Net interest income of the bank has increased from RO 47,547,932 in 2000 to RO. 49,691,554 in 2001, being an increase of 4.50%. However, if the impact of the interest expense of subordinated loans is excluded, the net interest income shows a tremendous growth of 12.20%, an increase from RO. 49,782,182 in 2000 to RO.55,855,223 in 2001.

Other operating income
The other operating income of the bank increased from RO 10,169,966 to RO 12,189,527 in 2001, an increase of 19.86%.

Total Income
The total income of the bank increased from RO. 57,717,898 in 2000 to RO. 61,881,081 in 2001, being an increase of 7.21%. However, again in the impact of the interest on subordinated loans is excluded, the total income has increased from RO. 59,952,148 in 2000 to RO. 68,044,750 in 2001, showing an excellent growth of 13.50%.

Cost to Income ratio
The bank has been successful in bringing the ‘cost to income’ ratio to 44.25% in 2001 from 49.93% in 2000. If the impact of the subordinated loan is excluded, the cost to income ratio shows a reduction to 40.24% IN 2001 FROM 48.07% IN 2000. this Reduction in operating expenses has been achieved by the bank due to the benefits of operating synergies of the merger with Commercial Bank of Oman in 2000.

Provision for loan losses
This year has been generally a bad year for the banks in Oman; especially due to the failure of one of the big corporate clients. The bank has made provisions for loan losses of RO. 26,114,082 in 2001 as against RO. 11,809,941 in 2000. By making large provisions for loan losses during the year 2001, the bank has been able to increase the provision coverage of the non-performing loans from 58.17% in 2000 to 73% in 2001.

BIS Capital Adequacy ration
The CAR of the stood at 15.80%. The shareholders funds of the bank increased from RO. 108.67 million in 2000 to RO 127.13 million in 2001. This increase was manly due to the issue of Convertible bonds of RO 27.09 million on merger to the shareholders of Industrial Bank of Oman.