Omani banks show robust performance amid crisis

Financial turbulences in global markets failed to create any adverse impact on Omani banks, which recorded a robust performance in the third quarter, said a recent study. The non-fee income of the banks declined marginally but they maintained a strong performance due to growth in core income. The combined profits of the listed banks rose by 37.6 per cent during the nine months period of 2008, from RO125.5 million to RO172.7m, in comparison to the corresponding period of the previous year. The banking sector is poised for a positive growth in the medium term. According to the study by Kuwait-based investment bank, Global Investment House, an above five per cent of real GDP growth and the economy’s attempts at diversification supports its positive view on the economy of the Sultanate. The Muscat Securities Market has been affected due to the recent declines in the GCC stock markets because of its strong positive correlation to the regional indices. But regulations by the Central Bank of Oman (CBO) and Capital Market Authority (CMA) have helped protect the market from global financial crisis as most of the investments by banks and insurance companies are inside the Sultanate, the study said. Stock markets would get a positive support from confidence building measures undertaken by the CBO and the CMA, it added. « We believe that the above five per cent of real GDP growth and diversification efforts of the Omani economy displayed by the increasing share of non-oil sector supports our positive view on the economy of Oman. The confidence building measures by the CBO and CMA should go a long way in supporting the stock market. Also, the strong performance of the Omani banks, backed by core income growth reflect our positive outlook on the sector in medium term, » said the study, sent to Emirates Business. According to the Global, most of the listed Omani banks recorded a double-digit growth in their profits. Ahli Bank Oman showed 84.6 per cent year-on-year growth in net profits from RO2.8m for nine months of 2007 to RO5.1m during nine months of 2008, followed by Bank Dhofar with a 49.9 per cent growth whereas Bank Muscat showed a 43.9 per cent growth in its profits for nine months of 2008. « Albeit none of the Omani banks reported a decline in profits, National Bank of Oman (NBO) and Oman International Bank were the two laggards in terms of profit growth. It is commendable that when some of the major regional banks in the GCC registered decline in profits, even the laggards of the Omani banking sector registered double-digit profit growth, » said Global. Ahli Bank Oman’s superior performance was attributed to its conversion to a commercial bank from erstwhile mortgage bank and in case of Bank Muscat, a 70.7 per cent growth in non-interest income during the nine months of 2008 was cited as the growth driver. Banks and public companies too displayed excellent economic situation, the study said. By Shveta Pathak business24-7.ae