BankMuscat successfully concludes EGM and AGM

Key points discussed during the EGM included proposed changes to the Articles of Association of the Bank to conform to recent amendments made to the Commercial Companies Law No (4/1974) (subject to approval by the Central Bank of Oman and the Capital Markets Authority and entry upon the commercial register) and approval to issue (through public subscription) up to RO 100 million of negotiable bonds denominated in Rial Omani with a nominal value to be determined pursuant to the regulations applicable. The bonds are to carry a maximum maturity of 10 years and will be listed on the Muscat Securities Market. The negotiable bond issues would be of different amounts on different dates and varying terms of subscription. Shareholders were also requested to authorize the Board of Directors of the Bank to determine the amount, date and terms of subscription of each issue, provided that the total negotiable bonds offered through public subscription are issued and subscribed in full in five years from the date of the approval of EGM of the shareholders. Each negotiable bond issue would be available for public subscription on the approval of the regulatory authorities.

The AGM, which followed immediately after the EGM, sought due shareholder consideration and approval on the Report of the Board of Directors, Report on Corporate Governance, Auditor's Report; Management Discussion & Analysis Report, Balance Sheet and Profit & Loss Account for the Bank for the financial year ended 31 December 2005. The shareholders were also asked to consider and approve the Board of Directors' recommendation to distribute cash dividends at the rate of 35% of the issued share capital of the Bank and stock dividend at the rate of 10% per share of the issued capital of the Bank (being 1 bonus share for each 10 shares held) for the financial year ended 31 December 2005.

The sitting fees for the Board of Directors and its committees for the year ended 31 December 2005 and recommendations with regard to the sitting fees for 2006 were also discussed and reviewed by the shareholders of the Bank. As were the Related Party transactions for financial year 2005. The shareholders were also requested to deliberate on the appointment of auditors for the financial year 2006 and assign their fees, subject to the approval of the regulatory authorities.

All the proposals of the Board of Directors met with the approval of the shareholders of the bank.

BankMuscat, it may be recalled, achieved a net profit of RO 45.4 million for the year ended 31 December 2005, as against a net profit of RO 34.1 million for the year ended 31 December 2004, an increase of 33.1%.

Net interest income for the year increased by 3.8% (from RO 75.2 million in 2004 to RO 78.1 million in 2005). However, Net interest income has increased by 9.1% when compared with Oman Operations of 2004. Non-interest income grew from RO 22.8 million in 2004 to RO 23.3 million in 2005, an increase of 2.2%. On a like-to-like basis, Non-interest income increased by 17.6% in 2005. Operating profit of RO 57.3 million in 2005 is 3.6% higher than the RO 55.3 million achieved in 2004. Operating expenses of RO 44.3 million in 2005 are higher by 3% than RO 42.7 million incurred in 2004. The Cost to Income ratio for the year was at 43.5% as compared to 43.6% in 2004.

The return on average assets improved from 1.95% in 2004 to 2.33% in 2005. The return on average equity improved from 20.0% in 2004 to 20.2% in 2005. The basic earnings per share increased from RO 0.493 in 2004 to RO 0.642 in 2005.

The Bank's net loans and advances portfolio grew by RO 43 million to RO 1,372 million as at 31 December 2005 compared to RO 1,329 million as at 31 December 2004. However, net loans and advances portfolio of Oman operations grew by RO. 157 million, an increase of 12.9%. Customer deposits grew by RO 171 million to RO 1,333 million as at 31 December 2005 compared to RO 1,162 million as at 31 December 2004. Savings deposits increased by 17.7% from RO 287 million as at 31 December 2004 to RO 338 million as at 31 December 2005.

The Bank made loan loss provisions of RO 24.4 million during the year compared to RO 20.4 million made during the year ended 31 December 2004. Loan loss provision charge of RO. 24.4 million for the year 2005 includes RO. 13.2 million towards general loan loss provision as per the requirement of Central Bank of Oman. As of 31 December 2005, the Bank has fully met the general loan loss provision requirement of Central Bank of Oman though banks are allowed to comply by 2006. The Bank holds a general loan loss provision of RO 22.2 million as at 31 December 2005. During the year 2005, the Bank has recovered RO 15.9 million from provision for possible credit losses compared to RO 6.3 million in 2004. In addition, the Bank made a recovery of RO. 1.9 million from provision for placements in 2005.

It may be recalled that on 1 January 2005, the Bank's Bahrain branch was disposed off to a newly formed bank by the name of Bank Muscat International (BMI), in which the Bank acquired 49% stake. Investment in BMI is accounted as investment in associate using the equity method. Accordingly, the results of Bahrain operation are not consolidated line-by-line in the Bank's results of 2005 whereas the comparative figures of 2004 include the results of Bahrain branch.

The Bank made a net profit of RO. 2.8 million in 2005 representing the excess of sale consideration over net assets of Bahrain branch, on disposal of the branch. The Bank's associates contributed RO. 3.7 million as share of profits during the year 2005 as against a net loss RO. 1.4 million of 2004.