Bank Sohar’s RO10m Rights Issue By Sept
Bank Sohar , the youngest Omani bank that was aggressive in expanding business and branch network, is planning to float its RO10 million rights issue next month, if everything goes as per the plan.
The rights issue will take the bank’s paid up capital to RO110 million, from RO100 million now. The shares will be offered at a price of 102 baisas, which include two baisas per share to cover expenses. The rights entitlement is on a 10:1 ratio and the proceeds of the issue will be used for raising the required minimum capital for setting up an Islamic banking window, in line with the requirements of the Central Bank of Oman (CBO).
Oman Arab Bank is the issue manager of the rights offer. An extra ordinary meeting on August 13 approved the rights issue plan and another proposal to raise its authorised capital to RO200 million from RO100 million now. The bank is looking at opening five exclusive branches -” two in capital area and three in interior regions -” for offering Islamic banking services, the bank’s chief executive officer Dr Mohammed Abdulaziz Kalmoor said few months ago.
He said the bank will then see the demand for Islamic banking products and based on that it will move forward. In fact, the bank is not intending to deploy too much capital and reach a situation where it can not use it.
Huge incipient demand
It appears that there is a huge incipient demand. However, how it gets translated into reality is yet to be seen. The banking sector is eager to see Islamic banking business in terms of the sources of funds verses uses of funds, assets and liabilities and the impact in terms of retail verses corporate segments.
Islamic banking services
Like other commercial banks, Bank Sohar has done enormous amount of work in terms of ground work for launching Islamic banking services. The bank has already identified the head of Islamic banking and a consultant is helping in starting a Sharia-based Islamic banking service.
Bank Sohar ‘s earlier said its net profit for the six months ended June 30 grew by 49.55 per cent to RO10.36 million, from net profit of RO6.93 million for the corresponding period of 2011.
Bank Sohar has performed well in all key financial parameters. Net interest income jumped 19.51 per cent to RO20.01 million in the first half of this year, from RO16.74 million for the period ended June 30.
Operating income rose by 22.69 per cent to RO25.43 million, from RO20.73 million in the first half of last year. In contrast, operating expenditure increased a modest 3.34 per cent to RO12.03 million, from RO11.64 million in the same period last year.
Net loans and advances grew 7.98 per cent to RO1,101 million, from RO1,020 million in the preceding six months ended December 31. Customer deposits ballooned to RO1,309 million from RO1,171 million as of December 31, an increase of 11.78 per cent.
Times of Oman
