BankDhofar posted a net profit of RO10.2mn for the first quarter ended March 31, 2014, compared with a net profit of RO32.4mn for the same quarter last year, a decline of 68.5 per cent.
The bank's net profit in the first quarter of 2013 benefitted from a legal write-back of RO26.1mn. Net profit in the first quarter of last year, excluding the recovery, stood at RO9.44mn. Excluding the one-off gain, BankDhofar's first quarter 2014 net profit increased by 8.18 per cent, beating analysts' estimates.
Net loans and advances rose 17.35 per cent in the first quarter this year to slightly over RO2bn, compared with RO1.71bn at the end of the same quarter of the previous year, while deposits from customers jumped 21.75 per cent to RO2.18bn, from RO1.79bn a year ago.
Gulf Baader Capital Markets (GBCM), in its note, termed the BankDhofar results "a good set of numbers" and said the bank's operating income and net profit came in above its estimates.
It said, "The first quarter net profit of the bank stood at RO10.2mn, as against our estimates of RO9.1mn. The net loan book growth is above our estimates, the bank continued to grow at a stronger pace than the sector growth, which is positive. In absolute terms, the loan book has increased by RO106mn, as compared with the meagre addition of RO16mn during the fourth quarter of 2013."
GBCM said that the bank's total operating income for the first quarter of 2014 stood at RO23.7mn, an increase of 6.8 per cent year-on-year and
five per cent on a sequential basis, which has been achieved amid a continuing growth strategy and also growth in low-cost deposits.
"This is above our estimates of RO22.4mn. Though the loan book growth is coming in at lower margins, we are positively surprised on the stable net-interest margins reported by the bank during the quarter," said the GBCM note.
"We believe that the overall credit growth will improve during the coming quarters, while the margins may still be under pressure. We remain neutral on the bank," GBCM added.
EFG-Hermes, in its note, said that BankDhofar's first-quarter earnings were 13 per cent above its estimates. It said that though revenue growth was slow, earnings were supported by a drop in operating costs.
"It is a solid start to the year's balance sheet growth, with both loans and deposits growing at a strong pace. With relatively higher exposure to the retail segment, we believe that the bank is focusing on growing its corporate loan book to meet the central bank's revised guideline on retail lending exposure," EFG-Hermes said.
"Provisioning costs, however, rose 21 per cent, likely on higher general provisioning driven by loan book expansion. We believe that recoveries on previously classified NPLs also slowed down," EFG-Hermes added.
© Muscat Daily 2014
