Last checked at 27 Apr 2009 07:00
BankMuscat posts 82 per cent increase in 2009 first quarter net profits
MUSCAT - The board of directors of BankMusact, the leading financial institution in the Sultanate, yesterday (Sunday, 26 April 2009) approved the 2009 first quarter results, which recorded a net profit of RO 48.4 million for the three months ended 31 March 2009 as against RO 26.5 million reported during the same period in 2008, an increase of 82%.
The first quarter net profit includes RO 35.3 million of post-tax gain on sale of HDFC Bank investment. The Bank sold 81% of its 2.67% stake in HDFC Bank, India in March 2009. The Bank also accounted for RO 7.5 million of impairment losses on its Available-for-Sale investment portfolio in the first quarter.
Net interest income increased by 7% to RO 39.6 million from RO 37.0 million in the corresponding period in 2008. Non-interest income grew by RO 31.5 million to RO 49.4 million as compared to RO 17.9 million for the same period in 2008 mainly on account of gain on HDFC Bank investment. However, non-interest income, excluding the gain on HDFC Bank and realised losses on Available-for-Sale investment, is lower by 16% as compared to the same period in 2008.
The Bank has accounted for RO 7.5 million towards realised (RO 5.8 million) and unrealised losses (RO 1.7 million) on the AFS investment portfolio and believes it has substantially de-risked its investment portfolio and therefore does not expect any major write-downs on the AFS investment portfolio during the remaining course of 2009.
The Bank was able to contain the operating expenses in 2009 with various measures to reduce variable cost. Operating expenses for the first quarter 2009 at RO 21.3 million remained around the same level as pervious year.
Impairment for credit losses was RO 11.2 million as compared to RO 6.5 million during the corresponding period in 2008, an increase of RO 4.7 million. Share of loss from associates was at RO 0.3 million due to share of loss from Saudi Pak Commercial Bank.
The basic earnings per share on an annualised basis were 81 baizas for every 100 baiza share of the Bank.
The Bank's net Loans and Advances of RO 3,778 million has grown by 26.8% as compared to the position on March 31, 2008. Customer deposits, including CDs also saw a growth of 20.7% from RO 2,671 million as of March 31, 2008 to RO 3,225 million.
Commenting on the Bank's strategic initiatives, Sheikh AbdulMalik bin Abdullah Al Khalili, Chairman, said: "Despite the fundamentals of the Sultanate's economy remaining unchanged, the banking outlook in 2009 has been influenced by the fall in oil prices and the general slowdown in global economic activity. Against this backdrop, BankMuscat is focused on raising low-cost deposits, attracting customers with schemes that offer high value proposition."
Notably, the ongoing certificate of deposit (CD) auction accepted a total amount of RO 86.20 million of bids against the subscription of RO 192.10 million till the sixth CD issuance. The Bank targets a total of RO 250 million from the CD programme within one-year timeframe. The objective of the CD programme is to develop a long-term yield curve for Riyal Omani.
The Bank, which has always been at the forefront of financial innovation in Oman, launched a subordinated bond issue carrying 8 per cent annual yield. The 7-year bond issue targets to raise RO 60 million. The Bond is an extension of the CD initiative, aimed at creating greater visibility on the long end of the Riyal Omani yield curve. The subordinated bonds are considered as tier 2 capital and therefore strengthen the capital adequacy of the Bank.
The Bank's popular al Mazyona savings scheme was relaunched, offering high-value daily cash prizes of RO 10,000 and RO 1,000 throughout the year. The all-new al Mazyona operates on the basic principle of rewarding customers daily up to 10 times their balance in their savings amount.
In step with eOman launched and led by Information Technology Authority (ITA), the Bank has been mandated to launch an e-Purse project as part of the ambitious e-Governance initiative. In another project implemented during the first quarter, Muscat Municipality teamed up with BankMuscat to introduce electronic card payment facility for all fee-based municipal services.
The Bank has also been mandated as one of the two fund managers of the RO 150 million Investment Stabilisation Fund instituted by the government to shore up investor confidence on Muscat Securities Market (MSM).
Committed to serving the community and making a difference to the nation, BankMuscat remains focused on its mission of attracting one million satisfied customers by 2010.