BankMuscat suffers 22% fall in net profit for first half of 2010

Muscat: BankMuscat has suffered a 22.2 per cent fall in net profit for the first half of 2010 compared to the same period in 2009.

The leading financial services provider in Oman had a net profit of 47 million Omani riyals (Dh446.4 million) for the six months ended June 30 compared to 60.4 million riyals reported during the same period in 2009.

The net profit for the first half of 2009 included 53.2 million riyals of post-tax gains on sale of HDFC Bank investment, a 9.4 million riyal loss on available-for-sale investment portfolio and 25.4 million riyals of credit losses on Saudi branch exposures.

Scorecard

Excluding these one-off items, the adjusted net profit for the first half of 2009 was 41.2 million riyals. Thus, on a like to like comparison, the net profit for the first half of 2010 showed an increase of 14 per cent over the first half of 2009.

The bank's net interest income increased by 6 per cent to 88.1 million riyals during the six month period ended June 30 from 83.3 million riyals reported during the corresponding period in 2009.

Non-interest income was higher by 8 per cent compared to first half 2009, excluding the gain on HDFC Bank investment and realised losses on available-for-sale investment. Operating expenses for first half 2010 at 49.4 million riyals increased by 16.5 per cent over the same period in 2009.

The increase in operating expense is attributable to the long-term vision and strategy to develop the banking infrastructure to provide better service and maintain the leadership position. Impairment for credit losses for the six-month period in 2010 was 20.7 million riyals against 51.5 million riyals in the first half of 2009.

Approval

The results require the approval of the board of directors. The bank will release the final results along with a complete set of financial statements for the six-month period ended June 30 after approval by the board in the last week of this month.

Earnings at two other Omani banks rose significantly, depicting a recovery in the sector hurt by rising provisions.

Performance