Bank Muscat board proposes 40 per cent dividend

Bank Muscat board proposes 40 per cent dividend

MUSCAT, 29 January 2014 - Bank Muscat, the leading financial services provider in the Sultanate, has proposed 40 per cent dividend for the year 2013, 25 per cent in cash and 15 per cent in the form of mandatory convertible bonds.

The meeting of the Board of Directors chaired by Khalid bin Mustahail Al Mashani, Chairman, on Tuesday, 28 January 2014, approved the 2013 financial results and dividend payout, subject to approval of the Central Bank of Oman and shareholders of the Bank.

Khalid bin Mustahail Al Mashani, Chairman, said: "The Bank continued to demonstrate healthy performance and strong growth in spite of increasing competition and challenging market dynamics".

The Board of Directors has proposed a dividend of 40%, 25% in the form of cash and 15% in the form of mandatory-convertible bonds. Thus shareholders would receive cash dividend of RO 0.025 per ordinary share of RO 0.100 each aggregating to RO 53.81 million on Bank's existing share capital. In addition, they would receive mandatory-convertible bonds in lieu of dividend of RO 0.015 per ordinary share of RO 0.100 each aggregating to RO 32.28 million. The mandatory-convertible bonds will carry a coupon rate of 4.5% per annum. On maturity, the bonds will be converted to ordinary shares of the Bank by using a "conversion price" which will be calculated by applying 20% discount to 3 month average share price of the Bank on the Muscat Securities Market prior to the conversion. These bonds will mature after a period of 3 years from the date of issuance. The bonds will be listed on the Muscat Securities Market. The proposed cash dividend and issuance of mandatory-convertible bonds are subject to formal approval of the Annual General Meeting of the shareholders and regulatory authorities.

The Bank achieved a net profit of RO 152.2 million for the year ended 31 December 2013 compared to RO 139.2 million reported for the year 2012 (growth of 9.3%). Net interest income from conventional banking activities and Net Income from Islamic Financing stood at RO 235.3 million for the year 2013 compared to RO 230.4 million for the same period of 2012. Reducing net interest margin resulted in marginal increase in Net interest income. Other operating income at RO 104.8 million was higher by 12.4 per cent compared to RO 93.2 million for the year ended 31 December 2012.

Operating expenses for the year ended 31 December 2013 at RO 143.7 million as compared to RO 134.6 for the same period in 2012, increase of 6.7 per cent. The Bank exercised cost control measures to limit the increase in expenses. In relation to the exceptional operating loss provision that was considered in Q1 2013 for the Prepaid Travel Card fraud incident, the Bank's insurers have agreed to indemnify the bank's loss in the sum of RO 14.9 million. The bank has reversed the loss provision created in Q1 2013 towards this specific loss through its Q4, 2013 results.

Impairment for credit losses for 2013 was RO 50.5 million as against RO 57.9 million for the same period in 2012. Recoveries from impairment for credit loss for the year 2013 was RO 32.5 million compared to RO 33.5 million for the same period last year. Share of profit from associates for the period ended 31 December 2013 was RO 1.3 million against loss of RO 3.4 million for the same period in 2012. Subsequent to the market disclosure on 10th November 2013, on the bank's exit from its associate investment in Mangal Keshav Securities Ltd, the Indian Securities firm through a share buyback by the company, the bank has considered during the year, an impairment of RO 2.7 million on the carrying value of Mangal Keshav Securities Ltd .

Net Loans and Islamic Financing increased by 9.7 per cent to RO 6,143 million as against RO 5,601 million as at 31 December 2012. Customer deposits including CDs, increased by 5.9 per cent to RO 5,693 million as against RO 5,378 million as at 31 December 2012. During the year saving deposits increased by 18.8 per cent, demand deposits increased by 2 per cent and term deposits increased by 1.5 per cent. The return on average assets marginally improved to 1.86 per cent in 2013 from 1.84 per cent in 2012. The return on average equity reduced to 14.49 per cent in 2013 from 15.42 per cent in 2012.

The basic earnings per share were RO 0.072 in 2013 against RO 0.073 in 2012. The banks' capital adequacy ratio stood at 16.5 per cent as on 31 December 2013 after appropriation for dividend for the year 2013 against the minimum required level of 12 per cent by the Central Bank of Oman.