MUSCAT -- National Bank of Oman (NBO) recorded a 20 per cent increase in its net profit for the quarter ended March 31, 2014. Net earnings climbed to RO 10.3 million this year, up from RO 8.6 million for the same period last year. This increase is primarily a result of stronger revenue growth at 7 per cent and lower net provisions charge of 37 per cent compared to the same period last year, said Chairman Mohammed Mahfoodh al Ardhi in the Board of Directors' report for the quarter.
Net interest income from conventional banking and revenues from Islamic financing activities increased by 10 per cent to RO 19.1 million for the period, as a result of growth in loans and advances, as well as a better deposit mix. Low cost deposits continue to show improvement and this has resulted in a reduction in the cost of funds, the report said.
Total non-interest income for the quarter increased by 3 per cent to RO 7.2 million. Operating expenses are 9 per cent above the same period last year.
"New infrastructure has been created to support our Islamic and UAE businesses which are at fledgling stages. We hope to achieve improvements to our cost to income ratio as these new businesses grow to their potential," Al Ardhi said.
Impairment on loans and advances at RO 1.92 million was significantly lower compared to the same period last year. Lower provisions on our corporate book and a reduced requirement for general provisions account for this positive variance. The Bank's asset quality is satisfactory with NPLs at 2.25 per cent and coverage of 145 per cent, the Chairman said.
During the quarter, loans and advances grew by 1.1 per cent to RO 2092 million. The Bank's UAE business recorded a strong growth partially offsetting the large repayments that have occurred in the Bank's Oman business. In Oman, the Bank has experienced a strong growth in deposits and as a result the Bank's deposits grew by 30 per cent to RO 2830 million. "Consequently, the balance sheet at the end of the quarter is very liquid. The Bank will, in due course, deploy this surplus liquidity in quality assets," the report said.
Shareholders' funds stand at RO 322.5 million, showing a reduction of RO 5.6 million from December 2013 levels, as a result of dividend payments partially offset by interim profits. The Bank's capital adequacy ratio continues to be strong at 14.5 per cent as at March 31, 2014 against the statutory requirement of 12.625 per cent. The capital position will be managed and maintained at a level above Central Bank of Oman's minimum requirement, he added. (OEPPA Business Development Dept)
© Oman Daily Observer 2014
