Oman’s Bank Sohar’s Net Profit Rises 74%

Bank Sohar said its net profit shot up 74 per cent for the first quarter of 2012 at RO5.3 million, thanks to a robust growth in non-interest income and lower provisioning. The bank’s gross loans and advances grew by 13.2 per cent to RO1.08 billion from RO952.3 million, while net loans were up by 13 per cent to RO1.06 billion. 

“On a sequential basis, credit witnessed a growth of four per cent from RO1.04 billion as on December 31, 2011,” said Al Maha Financial Services in a research note. Bank Sohar is the first Omani bank to announce financial results for the just concluded first quarter. 

The bank’s shares soared 5.26 per cent to 160 baisas, amid 8.24 million shares changing hand on the Muscat Securities Market. 

A market analyst said the high contribution from non-interest income and lower provisioning requirements must have boosted the net earnings of the bank. “It shows signs of improvement in asset quality of the bank.” 

Bank Sohar chief executive officer Mohammed Abdulaziz Kalmoor recently said that the cost of funds of his bank has been on a downward trend and he expects it to continue in that direction because of a continuous growth in savings deposit. “Further, we are now re-pricing some of the term deposits that were taken way back in 2007-2008 period, which were the early days of starting operation,” he added. 

Operating income grew by 26.4 per cent to RO12.6 million. 
“While revenue breakup has not been released, we believe that stronger revenues are likely to have been driven by improved net interest spreads and growth in fee and commission income,” EFG Hermes said in a research note.  

EFG note said the bank’s gross loans grew by 3.6 per cent quarter on quarter, while deposits only grew by 1.7 per cent quarter on quarter. “Bank Sohar’s balance sheet growth has been lagging behind sector growth rates since beginning of 2011. 

This is however not a complete surprise as the bank has focused its attention on improving profitability after gaining substantial market share over the last four years,” added EFH Hermes. The bank’s total assets grew by 30.8 per cent to RO1.56 billion, from RO1.19 billion. The results are unaudited and subject to the approval of the board, Times of Oman reported.