Last checked at 28 Jul 2009 11:44
BankMuscat H1 net profit at RO 60.4 million up by 4.5 per cent
MUSCAT, 28 July 2009 - BankMuscat, leading financial services provider in the Sultanate, achieved a net profit of RO 60.4 million for the six months ended June 30, 2009 compared to RO 57.8 million reported during the same period in 2008, an increase of 4.5%. The Board of Directors approved the H1 results on Monday (28 July 2009)
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"In an unusually challenging environment for financial institutions around the world, the Bank recorded a resilient performance during the period in question," AbdulMalik bin Abdullah Al-Khalili, Chairman, said.
The net profit for the first half 2009 includes RO 53.2 million of post-tax gain on sale of HDFC Bank investment. The Bank had sold its remaining stake in HDFC Bank, India in June 2009 and as a result, the total post-tax gain of RO 53.2 million is reflected in the 2009 H1 Income Statement.
During the second quarter of 2009, the Bank has made provision for credit losses amounting to RO 40.2 million. This includes provisions on the Bank's exposures to two large business groups in Saudi Arabia - Al Gosaibi and Saad Group.
Net interest income increased by 12% to RO 83.4 million during the 6-month period ended June 30, 2009 from RO 74.7 million reported during the corresponding period in 2008.
Non-interest income has grown by RO 42.0 million to RO 84.7 million in the first half 2009 as compared to RO 42.7 million for the same period in 2008 mainly on account of the gain on HDFC Bank investment. However, non-interest income, excluding the gain on HDFC Bank investment and realised losses on Available-for-Sale investment, was lower by 9% compared to the same period in 2008.
In Q1 '09, the Bank accounted for RO 7.5 million in respect of realised and unrealised losses on the AFS investment portfolio. In Q2 '09, an additional RO 1.9 million of realised and unrealised losses on the AFS investment portfolio was accounted.
The Bank successfully contained the operating expenses in 2009. Operating expenses for the first half 2009 at RO 42.4 million was lower by RO 1.1 million compared to the same period in 2008. Impairment for credit losses for the first half 2009 was RO 51.5 million as against RO 13.1 million, an increase of RO 38.4 million. Share of loss from associates was at RO 4.7 million for the six months ended June 30, 2009 mainly due to share of loss from BMI Bank, Bahrain and Silkbank, Pakistan. BMI Bank posted a loss during the second quarter as it has made provisions for exposures to the Saudi groups.
The Bank's net Loans and Advances of RO 3,811 million as of June 30, 2009 has grown by 20% as compared to the position on June 30, 2008. Customer deposits, including CDs have seen a growth of 14% from RO 2,816 million as of June 30, 2008 to RO 3,214 million as of June 30, 2009.
Strategic initiatives
During the second quarter, the strategic initiatives by the Bank included the RO 60 million 8% subordinated bond, which closed with encouraging response, leading to exercising the Green shoe option of RO 15 million, thereby increasing the issue size and allotment to RO 75 million.
Meanwhile, the ongoing CD issuance programme by the Bank accepted a total amount of RO 94.10 million of bids till the 7th auction. The Bank targets a total of RO 250 million from the CD issuance programme within a one-year timeframe.
BankMuscat, through its subsidiary Muscat Securities House Company (MSH), recently received approval from the Capital Market Authority to commence business in the Kingdom of Saudi Arabia. The company is a "Greenfield" operation and the Bank does not expect immediate profits from it.