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Bank Muscat board proposes 40 per cent dividend

MUSCAT, 24 January 2012 – BankMuscat, the leading financial services provider in the Sultanate, has proposed 40 per cent dividend for the year 2011, 25 per cent in the form of cash and 15 per cent in the form of bonus shares.

The meeting of the Board of Directors chaired by Khalid bin Mustahail Al Mashani, Chairman, on Tuesday, 24 January 2012, approved the 2011 financial report and dividend payout, subject to approval of the Central Bank of Oman and shareholders of the Bank.

Khalid bin Mustahail Al Mashani, Chairman, said: “Amid the challenging global economic and financial situation, the key business lines of the Bank recorded healthy performance on expected lines.

Under the proposed dividend payout, BankMuscat shareholders would receive cash dividend of RO 0.025 per ordinary share of RO 0.100 each aggregating to RO 38.71 million on the Bank's existing share capital. In addition, they would receive bonus shares in the proportion of one share for every 6.666 ordinary shares aggregating to 232,256,957 shares of RO 0.100 each amounting to RO 23.22 million. The proposed cash dividend and issuance of bonus shares are subject to formal approval of shareholders at the Annual General Meeting.

The Bank achieved a net profit of RO 117.5 million for the year ended 31 December 2011 as against a net profit of RO 101.6 million reported in 2010, an increase of 15.6 per cent. Net interest income increased by 13.3 per cent to RO 212.1 million in 2011 from RO 187.2 million reported during the year 2010. Increase in net interest income is attributable to improvement in net interest margin and asset growth. Non-interest income at RO 82.1 million was higher by 5 per cent compared to the year 2010.

Operating expenses for the year ended 31 December 2011 was at RO 120.9 million, an increase of 17.5 per cent as compared to 2010. Increase in operating expenses is attributable to higher manpower cost and operating expenses related to investment in technology and facilities.  The cost to income ratio for the year 2011 was at 41.1 per cent  as compared to 38.8 per cent  in 2010. Impairment for credit losses for the year ended 31 December 2011 was RO 56.2 million as against RO 46.6 million in 2010. Increase in impairment for credit losses was mainly due to creation of general provision in line with the loan growth. During the year 2011, the Bank was able to recover RO 25.6 million from impairment for credit losses as against RO 13.6 million recovered in 2010. Share of loss from associates was RO 3.5 million in 2011 as against RO 12.6 million in 2010. The reduction in share of loss from associate was due to lower losses from BMI Bank in 2011 as compared to 2010.

Net loans and advances increased by 20.2 per cent to RO 4,819 million as against RO 4,008 million as at 31 December 2010. Customer deposits, including CDs, increased by 31.8 per cent to RO 4,850 million as against RO 3,682 million as at 31 December 2010. During the year 2011, demand deposits increased by 29.5 per cent, savings deposits increased by 19.8 per cent and term deposits increased by 49.6 per cent.

The return on average assets marginally improved from 1.7 per cent in 2010 to 1.8 per cent in 2011.  The return on average equity improved to 15.4 per cent in 2011 as compared to 14.6 per cent in 2010. The basic earnings per share was RO 0.076 in 2011 as against RO 0.075 in 2010. The Bank's capital adequacy ratio stood at 15.9 per cent as on 31 December 2011 after appropriation for dividend for the year 2011 against the minimum required level of 12 per cent  by the Central Bank of Oman.