OIB's net profit hit by additional provisions

• Text size
•  
•  

MUSCAT: The net profit of Oman International BankOman International Bank (OIBOIB) fell 22.06 per cent to RO9.22 million for the first half of 2010, from RO11.83 million posted by the bank for the same period last year.

The net profit announced by the bank is well below analysts' average forecast. "The net profit after tax (for the second quarter alone) declined to about RO3.57 million, which is well below our estimates," Gulf Baader Capital Markets said in a research note.

A fall in net interest income and higher provision for loan impairment are seen as major reasons for dwindling net earnings.

The net interest income for the first half was RO14.65 million, below RO16.04 million achieved for the same period last year. Net interest income for the second quarter declined on a quarter to quarter basis to about RO7.16 million from RO7.81 million.

While major banks have announced only a marginal growth in loans and advances, small banks have posted a robust growth in their loan book for the first half. The provision for loan impairment stood higher at RO2.25 million from RO620,000 during the period under review.

"The impact of recoveries amounted to RO2.61 million as compared to RO1.93 million for the comparative period last year and the bank continues to pursue further recoveries," OIBOIB chairperson Reem Omar Zawawi stated.

Net loans and advances declined by 5.6 per cent to RO599.70 million from RO635.39 million during the period, while total deposited rose by three per cent to RO734.54 million from RO713.11 million.

OIBOIB said that its net asset per share stood at 175 baisas by end-June 2010, compared to 176 baisas for the same period of 2009, while the capital adequacy ratio was higher at 15.23 per cent, compared to 14.70 per cent.

As far as overseas operations are concerned, Indian operations have reported a profit, whereas the Pakistan operations are being closely monitored to improve results.

By A.E James

© Times of Oman 2010