The Bank’s Capital Structure Optimization

Date: 27 July 2022

Subject: The Bank's Capital Structure Optimization

In view of the Bank's strategic goals, objectives and strong financial performance over the past years, Bank Muscat would like to inform the market that its Board of Directors have approved a proposal to optimize the Bank's current capital structure, by proposing a one-off dividend ("Proposed Dividend") comprising issuance of bonus shares and perpetual bonds to its shareholders. The Proposed Dividend is designed to improve the efficiency of the Bank's capital and in turn improve returns to shareholders; without impacting the Bank's capital position, liquidity or profitability.

Key features of the Proposed Dividend are set out below:

1. One Ordinary Share of RO 0.100 for each Ordinary Share aggregating to 3,753,198,531 shares equivalent to RO 375.320 million; and

2. One Perpetual Bond of RO 1 for every 10 Ordinary Shares aggregating to 375,319,853 bonds equivalent to RO 375.320 million.

The proposed perpetual bonds being issued as part of the Proposed Dividend will be listed on the Muscat Stock Exchange (MSX), will carry a coupon of 4.25% per annum and would form part of the Bank's Tier 1 Capital. The bonds will not have a fixed maturity date, however may be callable at Par at the option of the Bank after 5 years from the date of issuance.

Overall, the Proposed Dividend will not have an effect on the Bank's total Capital Adequacy Ratio and total Tier 1 Capital Ratio. Following the proposed dividend payout, all capital adequacy ratios will remain comfortably above the regulatory requirements and the Bank will continue to be well capitalized to support its growth aspirations.

The Proposed Dividend is subject to the approval of the shareholders of the Bank, the Central Bank of Oman (CBO) and Capital Market Authority (CMA). The Market will be notified of the record date of the event after obtaining all the necessary approvals.

Waleed K. Al Hashar

Chief Executive Officer