Bank Dhofar registers H1 net profit of RO 20.5 MN
Published: Jul 13, 2014
Source: Muscat Daily


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Bank Dhofar registers H1 net profit of RO 20.5 MN

BankDhofar posted a consolidated net profit of RO20.5mn for the six-month period ended June 30, 2014, compared with a net profit of RO40.8mn for the corresponding period of last year, a decline of 49.7 per cent.

The bank's net profit in the first half of 2013 had benefited from a legal write-back of RO26.1mn. Excluding the legal case recovery, net profit for the first half of 2013 stood at RO17.8mn. Excluding the on-off gain, Bank Dhofar's first half 2014 net profit rose 15.1 per cent.

Coming as a positive surprise to analysts, the bank's net loans and advances to customers jumped by 20.7 per cent to RO2.18bn, from RO1.8bn a year ago. Customer deposits surged by 26 per cent to reach RO2.19bn as of June 30, 2013, against RO1.74bn a year ago.

Bank Dhofar's operating income increased by 8.7 per cent to RO48.5mn, from RO44.5mn in the first half of 2013.

The bank's Maisarah Islamic Banking Services was able to reduce its losses to RO258,000 in the first half of this year, compared with RO889,000 in the same period last year.

In a note, EFG-Hermes said the bank's earnings came in at RO10.3mn for the second quarter of 2014, which was three per cent ahead of its estimates. “It is a decent set of results. While revenue growth picked up on strong loan growth, the impact on the bottom-line was curtailed by higher provisioning costs.”

EFG-Hermes said that the strong loan growth was the biggest positive surprise in the results. “We estimate that loan growth was driven by strong expansion in the corporate loan book likely aimed at becoming complaint with the Central Bank of Oman's revised guidance on retail loans-to-total loans ratio,” EFG-Hereme added.

BankDhofar shares closed 1.03 per cent up on Sunday.

Kanaga Sundar, head of research at Gulf Baader Capital Markets (GBCM), said, “Positive surprise came in the form of higher credit offtake seen in the second quarter. Year-to-date, the loan book growth is at 14.5 per cent. We believe that the drawdowns from big-ticket project lending, along with higher demand from the retail sector could have led to strong credit growth.”

He said that the bank's year-to-date deposits growth was at 7.9 per cent and deposits growth was relatively lower during the second quarter this year, amid efforts taken by the bank to reduce high cost deposits.

“Overall, we see the BankDhofar numbers as a good start to the banking sector results,” added Sundar.

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