Dubai: Oman’s largest lender Bank Muscat posted a slight increase in second-quarter net profit on Wednesday, helped by a rise in net interest income and increased recovery of bad debts, sending its shares up and lifting banking sector stocks.
The bank made a profit of 46.7 million rials ($121.3 million, Dh445 million) in the three-month period ending June 30, up from 46.5 million rials a year earlier, and just ahead of the average estimates of four analysts polled by Reuters, who forecast a quarterly profit of 43.3 million rials.
Bank Muscat did not disclose a quarterly breakdown of its earnings so Reuters calculated the figures based on previous financial statements.
With smaller government reserves than many of its neighbours, Oman has been more vulnerable to the two-year slump in oil prices. Omani banks have suffered in the form of rising cost of funding as the government has been less able to provide liquidity due to reduced oil profits.
During the second quarter, Bank Muscat’s expenses rose by 1.2 per cent against the same period of last year. However, net interest income, profits from lending, rose by 6.6 per cent to 62.3 million rials.
This helped alleviate a 12.1 per cent drop over the same period in non-interest income, including income from fees and commission, to 34.6 million rials, Reuters calculations showed.
In another reflection of the challenging economic environment, the bank’s provisions edged up by 6.8 per cent from the same period last year, although its recoveries of bad debts edged up 10.6 per cent to curtail the impact.
Bank Muscat’s encouraging results sent its shares up as much as 2 per cent although they ended on Wednesday trade 1.1 per cent higher. Shares in other Omani banks performed strongly with Bank Dhofar and National Bank of Oman, number two and three by assets, rising 3.9 per cent and 1.6 per cent respectively.
