Bank Muscat has recorded a 36.8 per cent year-on-year growth in net profit for the six-month period ended June 30.
Net profit for the first half of this year stood at RO86.35mn, compared with RO63.1mn in the same period of 2013, according to the bank's preliminary results posted on the Muscat Securities Market website on Thursday.
Bank Muscat's net interest income from conventional banking and Islamic finance stood at RO120.41mn for the six months of 2014, against RO114mn a year ago, for an increase of 5.6 per cent. Non-interest income at RO72.89mn was higher by 40.9 per cent from RO51.75mn in the corresponding period of 2013.
Further to its earlier disclosure on merger of its Bahraini subsidiary BMI Bank with Al Salam Bank in Bahrain, Bank Muscat said it has finalised the accounting treatment for the transaction in the bank's book in this quarter. “As per the International Financial Reporting Standards, we have accounted the investment in Al Salam Bank as an associate at the adjusted fair value and accordingly recorded an investment gain of RO9.48mn. This gain is included in the second quarter results as part of non-interest income.”
The bank’s net loans and advances increased by 9.8 per cent to RO6.11bn from RO5.56bn. Customer deposits, including CDs, increased by 10.6 per cent to RO6.32bn from RO5.72bn.
Islamic financing receivables amounted to RO352mn as of June 30, 2014 compared with RO214mn in the same period of 2013. Islamic banking customer deposits amounted to RO179mn as of June 30, 2014, against RO133mn on June 30, 2013
Operating expenses for the six-month period ended June 30, 2014 was lower at RO78.81mn as compared with RO 87.40 for the same period in 2013. “Last year, operating expenses included a RO14.98mn prepaid travel card operating loss provision. Excluding that, operating expenses increased by 8.8 per cent,” the bank added.
The bank's impairment for credit losses for the six-month period in 2014 rose to RO27.36mn as against RO17.48mn for the same period in 2013.
EFG-Hermes, in a research note, said that strong growth in non-interest income, loan book growth and one-off gains of RO9.5mn on merger of Bahraini subsidiary, are positives, while higher provisioning costs remain negative.
“Revenues were stronger than expected, with non-interest income ex-capital gains rising 11 per cent in the second quarter on a quarter-on-quarter basis, while net interest spreads appear to have remained stable. Provisioning costs doubled in the second quarter on a sequential basis, rising from a low base in the previous quarter. Though recoveries continued to remain strong, gross provisioning charge rose, partially driven by collective impairments on incremental lending,” EFG-Hermes said.
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