26 Jan 2010 07:00
BankMuscat proposes 45 per cent dividend as net profit touches RO 73.7 million
* Operating profit at RO 208.9 million up by 36.9%.
* Net interest income up by 7.6% at RO 174.4 million
MUSCAT, 25 January 2010 - BankMuscat, the leading financial services provider in the Sultanate, on Monday (25 January 2010) proposed a payout of 45 per cent dividend. Subject to approval of the Annual General Meeting and regulatory authorities, the Board of Directors recommended 20 per cent cash and 25 per cent bonus stock for shareholders. The cash dividend works out to RO 0.020 per ordinary share of RO 0.100 each aggregating to RO 21.54 million on the Bank's existing share capital and stock dividend in the proportion of one share for every four ordinary shares.
The Bank achieved a net profit of RO 73.7 million in 2009 as against RO 93.7 million reported in 2008. The operating profit stood at RO 208.9 million for the year ended 31 December 2009 as against RO 152.6 million for the year ended 31 December 2008, an increase of 36.9%. During 2009, the Bank disposed off its investment in HDFC Bank, India and recognised a pre-tax profit of RO 60.5 million. Operating profit excluding the gain on HDFC Bank investment was marginally lower by 2.7% in 2009. This demonstrates that the Bank's core business income during 2009 was strong and stable in spite of the global financial crisis.
Net interest income increased by 7.6% from RO 162.1 million in 2008 to RO 174.4 million in 2009 supported by a combination of asset growth and improvement in net interest margin. Non-interest income grew from RO 74.7 million in 2008 to RO 116.7 million in 2009 mainly on account of the gain on sale of HDFC Bank investment during 2009. However, non-interest income excluding the gain on HDFC Bank investment was lower by RO 18.5 million due to realised losses on Available-for-Sale investment and lower non-funded business in 2009. Operating expenses at RO 82.1 million in 2009 were lower by 2.5% than RO 84.2 million incurred in 2008 due to cost containment measures carried out by the Bank. The Cost to Income ratio excluding the gain on HDFC Bank investment for the year was at 35.6%, comparable to the ratio in 2008.
Impairment for credit losses on loans portfolio was RO 98.2 million during the year compared to RO 24.6 million for the year ended 31 December 2008. The impairment charge of RO 98.2 million for the year 2009 was substantially higher as the Bank decided to consider full provision for certain large exposures in its overseas branch. During 2009, the Bank recovered RO 10.6 million from impairment for credit losses compared to RO 12.6 million in 2008. The Bank holds a non-specific loan loss provision of RO 53.6 million as on 31 December 2009 as per the requirements of Central Bank of Oman.
Share of loss from associates amounted to RO 10.4 million in 2009 as against RO 3.2 million in 2008. The higher share of loss in 2009 was attributable to loss from BMI Bank in Bahrain due to higher impairment for credit losses, which included certain overseas credit exposures.
During the last quarter of 2009, the Bank advised non-participation in the rights issue of Silkbank, where it holds an approximate 35% stake. As a result of non-participation in the rights issue, the Bank's stake in Silkbank is expected to be diluted to around 8.5% based on the proposed rights issue terms. As it is certain that the Bank is not participating in the rights issue and thereby substantially diluting its stake from an associate status to non-strategic available-for-sale investment, the Silkbank investment was marked-to-market in the Bank's book as on 31 December 2009. This resulted in impairment losses of RO 20.3 million, including the loss on depreciation of the Pakistan Rupee amounting to RO 9.6 million which was earlier adjusted in equity.
The Bank's gross loans and advances portfolio grew by RO 199 million or 5.2% to RO 4,052 million as on 31 December 2009 compared to RO 3,853 million as on 31 December 2008. Customer deposits as on 31 December 2009 was RO 3,068 million as compared to RO 3,173 million as on 31 December 2008, reduced by RO 105 million due to decrease in term deposits as the Bank was mobilising deposits through its Certificate of Deposits programme. The Bank's deposits such as savings and demand deposits increased by 9.6% to reach RO 1,796 million as on 31 December 2009. Savings deposits had a growth of 6.1% from RO 768 million as on 31 December 2008 to RO 815 million as on 31 December 2009.
The return on average assets was 1.2% in 2009 as compared to 1.8% in 2008. The return on average equity was 10.8% in 2009 as compared to 14.8% in 2008. The basic earnings per share was RO 0.068 in 2009 as against RO 0.087 in 2008. The Bank's capital adequacy ratio stood at 15.2 per cent as on 31 December 2009 against the minimum required level of 10 per cent.
Bankmuscat Regs (BKM)