MUSCAT - National Bank of Oman (NBO) reported a 20 per cent growth in net profit to RO10.3mn for the first quarter ended March 31, 2013, compared with RO8.6mn in the same quarter last year, according to the bank's filing of its unaudited numbers with the MSM on Sunday.
The bank achieved a six per cent growth in its loan book, as net loans, advances and financing activities for customers increased to RO2.09bn as of the end of the first quarter of 2014, compared with RO1.97bn at the end of the corresponding period in 2013.
The bank reported a robust growth of 37 per cent in customer deposits and unrestricted investment accounts to RO2.83bn at the end of March 2014, against RO2.07bn a year ago.
Arafat al Assad, vice president of asset management at National Securities, said that the huge growth in the bank's deposits will have a positive impact in the coming quarters as the bank will be able to expand lending.
He said, "The net interest income came in below our estimates, but there has been a reasonable growth on a year-on-year basis. However, the loan book growth in the first quarter is not much, given the huge increase in deposits. We were expecting a better growth in loans and advances."
"The NBO stock is trading below its fair value and the valuation is much less than the banking sector average in Oman. We are positive on the stock," added Assad.
Gulf Baader Capital Markets (GBCM), in a note, said the bank's operating income and net profit are in line with its estimates. "In absolute terms, the loans increased by RO24mn during the first quarter, which is lower than our estimates and also [lower than] the sector growth."
GBCM said that the growth in total deposits is well above its estimates. "In absolute terms, deposits increased by RO651mn during the quarter. On the back of strong deposit addition, the credit-to-deposit ratio of the bank went as low as 74 per cent. This also shows the ability of the bank to poise itself for stronger growth through participating in the upcoming project financing requirements."
It said that the net interest income (including income from Islamic financing) for the first quarter is at RO19.1mn, an increase of 9.7 per cent year-on-year and declining by 2.3 per cent on a sequential basis. "This is marginally below our estimates. The sequential decline could be on the back of higher deposit addition seen during the quarter, which we believe needs to be deployed," GBCM said.
NBO's operating income increased by eight per cent to RO26.3mn in the first quarter of 2014, compared with RO24.4mn in the same period a year ago.
"As per our crude estimates, net interest margins have further dropped to 2.8 per cent with the declining trend continuing during this quarter also," GBCM added.
© Muscat Daily 2014
