Feb 07 2013 |
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Bank Muscat eyes 15% credit growth as wages set to climb
By A. E. James Muscat: Bank Muscat , the Sultanate's biggest bank, is anticipating a credit growth in the region of 14-15 per cent this year, thanks to high government spending, a substantial growth in number of Omanis entering the workforce and an increase in minimum salary of Omani workers.Apart from huge spending for infrastructure development, the government has offered employment opportunities for 56,000 Omanis this year and the minimum salary will be raised from OMR200 to OMR325 from July onwards.
"These two factors will generate a positive result as far as (demand for) retail credit is concerned," said Ahmed Al Abri, chief operating officer of Bank Muscat , while addressing an investors' meet here yesterday.
Referring to the credit growth in Islamic line of business, he said; "We need to see the contribution from Islamic banking as far as Bank Muscat is concerned."
He also said that the bank already has an Islamic banking portfolio of OMR150 million since it started it almost four years ago. "We have a good start, unlike our competitors."
Even if the bank achieves 5 per cent contribution from Islamic line of business, it is a good achievement since the bank's total loan portfolio is around OMR5.4 billion, he pointed out.
Al Abri said although the bank's board has approved OMR150 million capital for Islamic banking, the bank has allocated only OMR20 million for this line of business now. "This allocation will be increased depending on the market demand," Al Abri noted.
He said that the bank has attached special attention to fund small and medium enterprises, with its dedicated department and by providing credit guarantee along with Oman Arab Bank.
"Amid the slow global economic recovery, the key business lines of the bank recorded healthy performance on expected lines in 2012. The opportunities identified by the bank include major infrastructure development projects and government focus on economic diversification and tourism development.
Every year, over 50,0000 Omanis are entering the workforce and the bank envisages substantial opportunities and sizeable unbanked market as 49 per cent of the population is below 25 years," said AbdulRazak Ali Issa, chief executive of Bank Muscat .
"The outlook for Oman's economy in 2013 is positive as the government has announced a 29 per cent increase in spending. Infrastructure projects will continue to give a fillip to the economy in 2013 as part of the Eighth Five-Year Plan, which has received a 35 per cent increase in expenditure outlay pegged at OMR58 billion," added Ali Issa.
"The banking sector will benefit from the government's policy aimed at balancing the economic and social development. The launch of Islamic banking operations on the directive of His Majesty Sultan Qaboos will also contribute to the socio-economic development of Oman. The banking sector is expected to post positive results in 2013 in line with the overall economic activity in the country," added Ali Issa.
Bank Muscat has achieved a net profit of OMR139.2 million for 2012 compared to OMR117.5 million reported for the previous year, an increase of 18.5 per cent.
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