Bank Muscat: Top of the league

Abdul Razak Ali Issa, CEO, Bank Muscat

After a hiatus of two years, Bank Muscat has reclaimed the No 1 ranking in the BusinessToday-EY Best Banks and NBFCs ranking. 

The nation's largest bank scored 326 points in this year's survey, though it is 25 less than the previous year's score. The company topped the charts in parameters like return on capital (ROC) and earnings per share (EPS) and are second in return on equity (ROE), efficiency and return on assets (ROA).

Bank Muscat's EPS is 670bz and ROC is 73.75 per cent this year. Its ROE is 12 per cent and ROA is 1.79 per cent in the current survey. The bank's net profits grew 0.6 per cent to RO176.56mn in 2016. Gross loans were up by 8.43 per cent and deposits were up by 2.30 per cent. The bank's stock price closed at 472bz as of December 31, 2017, which is the same as the figure in the year before.

According to the bank's annual report, net interest income from conventional banking and income from Islamic financing stood at RO274.15mn for the year 2016 compared to RO260.51mn for the same period in 2015, an increase of 5.2 per cent. Non-interest income at RO142.03mn was lower by 3.5 per cent compared to RO 147.23mn for the year ended December 31, 2015. Operating expenses for the year ended December 31, 2016 at RO174.08mn was marginally higher by 1.8 per cent as compared to RO171.06mn for the same period in 2015.

The report also added that net loans and advances from conventional operation increased by 6.1 per cent to RO7.1bn as against RO6.7bn as at December 31, 2015. Customer deposits from the conventional operations decreased by 0.6 per cent to RO6.69bn as against RO6.74bn at December 31, 2015. Islamic financing receivables amounted to RO855mn of  December 31, 2016 compared to RO635mn in the same period of 2015. Islamic banking customer deposits amounted to RO763mn as of 31st December 2016 compared to RO625mn reported on December 31, 2015.

Low oil prices had a severe impact on the economy in 2016. How did it affect your bank and how did you counter it?

Against the backdrop of prevailing economic situation, the sultanate’s 2016 budget reflected bold policy decisions. The realistic budget focused on growth as infrastructure projects continued to give a fillip to the economy.

In 2016, Bank Muscat embarked on a new organisation structure to realign the strategic objectives with a focus on customer-centricity. The bank made a difference in banking excellence through product innovation and improved level of service for both personal and wholesale banking customers.

Bank Muscat maintained its leadership with a 38 per cent market share of assets and posted a net profit of RO176.56mn in 2016. The basic earnings per share was sustained at RO 0.067 in 2016. The bank’s capital adequacy ratio stood at 16.90 per cent after appropriation for dividend against the minimum required level of 12.625 per cent as per Basel III regulations issued by the Central Bank of Oman. 

What are the new innovations and developments introduced by the bank?

Bank Muscat is a leader in using technology to make financial services more efficient. Financial technology (Fintech) is changing the future of banking and Bank Muscat has seamlessly progressed from traditional to innovative digital banking to enhance customer experience, reengineer business / operations and achieve growth. The alternate banking channels reiterate the focus and commitment of Bank Muscat in adding value and engaging customers through their preferred electronic banking channels.

In project & structured finance, the bank’s expertise in key sectors along with innovative structuring capabilities helped to maintain the leadership position in facilitating finance for key infrastructure projects.

Within just four years of operations, Meethaq attained leadership position in the Islamic banking industry in Oman with financing receivables rising to RO855mn as of December 31, 2016. The banking sector in Oman is witnessing the consolidation of Islamic banking as Meethaq recorded many achievements in 2016 contributing to the growth and development of the economy. 

What factors will drive growth this year? What are the challenges?

The sultanate’s 9th Five Year Plan (2016-2020) focusing on economic diversification provides room for the private sector to participate in major infrastructure projects. In the coming period, the bank’s focus will continue on maintaining performance momentum while simultaneously evaluating growth opportunities in key regional markets. The dynamic ‘Let’s Do More’ vision roadmap reflects the readiness to face future challenges and sums up the bank’s confidence and determination to stretch the boundaries in banking excellence.

Bank Muscat: Top of the league
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