Investor. Subject: Presentation. Department: June 2016

Transcription

1 Investor Subject: Presentation Department: June 2016

2 Agenda I. bank muscat introduction 4 II. Operating Environment 7 III. bank muscat Business Overview 12 IV. Financial Performance 20 V. Annexure 25 Note: The financial information is updated as of 30 June 2016, unless stated otherwise.

3 I. bank muscat introduction

4 bank muscat at a Glance Overview Ownership #1 Bank in Oman with a significant active customer base in excess of 1.68 million clients and a workforce of 3,707 employees as of 30th June 2016 Established in 1982, headquartered in Muscat with 154 branches across Oman, 2 branches overseas, and 2 representative offices Fully diversified commercial bank offering corporateand retailbanking services Primarily domestic dominated operations with over 95% of operating income generatedinoman Meethaq pioneer of Islamic Banking services in Oman, officially launched in January 2013 with full fledged product and services offering Long term Bank Rating: Moody s Baa1(stable), S&P BBB (stable) Listed on the Muscat Securities Market (with a market cap of USD 2,437 million as of 30 th June 2016), London Stock Exchange & Bahrain Stock Exchange bank muscat Growth Key Financials Footsteps of a Leader Throughout Decades Merger between Bank of Muscat & Bank Al Ahli Al Omani Listed on the MSM in 1993 Establishment of Bank of Muscat Dubai Rep Office Acquisition of the Bahraini operations of ABN AMRO Merger with Commercial Bank of Oman Acquisition of 49% stake in BMI Bank Muscat Capital LLC launched 1 st Branch in Saudi Arabia 1 st Branch in Kuwait Meethaq launched Singapore Rep Office Merger of BMI Bank with Al Salam Bank, Bahrain IFC becomes a 5% shareholder In US$ M illions, unless otherwise stated Jun Total Assets 33,896 32,581 25,268 22,043 Gross Loans 19, ,810 18, ,52 1 Deposits 19,847 17,502 16,481 14,545 Opera ting Income 547 1, Net Income Tier % % % % Total CAR 16.45% 16.10% 15.90% 16.40% Loans to Deposit Ratio 99.44% 99.40% 96.90% % NPL Ratio 3.22% 2.80% 2.80% 2.70% Cost/Income 40.83% 41.90% 41.20% 42.20% ROA 1.71% 1.60% 1.80% 1.90% ROE % % % % 4 Source: bank muscat audited financial statements and interim financials

5 bank muscat Key Highlights Dominant Franchise in Oman Strong Financial Metrics Most profitable bank in Oman Strong and sustainable profitability metrics: Operating profit CAGR of 8.5% Net profit CAGR of 10.5% Largest Bank in Oman by total assets of 41.46%, as of 31st May 2016, 3 times larger than the 2 nd largest Omani Bank Market Capitalisation of USD 2,437 million as at 30 th June 2016 Largest branch network with 154 domestic branches The only bank in Oman to be designated a D SIB Highest Government Ownership Highest Government Ownership among Omani Banks Royal Court Affairs: 23.6% Direct and indirect Government ownership of around 37% through various entities Solid Capital Position Strong capitalization levels offering room for substantial growth CAR of 16.45% as of 30th June 2016 Stable Operating Environment Solid macroeconomic conditions Stable banking sector Prudential regulatory environment Stable Asset Quality Conservative lending approach Strong risk architecture and policies Adequate asset quality metrics Management Stable and experienced management with proven track record of successful organic and inorganic growth Good corporate governance 5 Source: bank muscat audited financial statements and interim financials

6 II. Operating Environment

7 Sultanate of Oman Overview Overview 2 nd Largest country in the GCC with an area covering approx thousand km 2, strategically located, sharing borders with Saudi Arabia and UAE Stable Political System, excellent diplomatic relations in the region Oman explicitly aims to create a neo liberal free market economy, where the private sector is the driver of the economy as opposed to the state Population of 4.19mn predominantly represented by Omani Nationals who account for 56% of the total population The economy will continue to grow at high rates driven by several factors, such as: The increase in hydrocarbon production TheGovernment s balancedsupport for theeconomy with disciplined fiscal policy measures Strengthening and growing local demand; increasing services and activities contribution to GDP Vision 2020 focuses on diversification, industrialization and privatization, with the objective of reducing economic reliance on oil revenues and the hydrocarbon sector contribution to GDP GDP Growth (1) Source: Central Bank of Oman website, Rating Reports: Moody s and S&P as of May 2016 GDP Composition Saudi Arabia Kuwait Bahrain Qatar UAE Oman Key Indicators (1) Sovereign Ratings Moody's\S&P A1/A Baa1/BBB Budget Surplus\Deficit 4.6 Bn 1.6 Bn(Q1) Current account Surplus\Deficit 15.4% 20%E Net Public Debt (% GDP) 9.2% 26%E US$ Million 100,000 80,000 60,000 40,000 20, % 8.9% 2.9% 3.8% 45,410 48,470 49, % 38,634 37, % 23, Non Oil GDP in Current Prices (US$Mn) Oil GDP in Current Prices (US$Mn) % Change 10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Other activities 32% Public Admin & Defence 13% Industry Activities 20% Petroleum activities 34% Agriculture & Fishing 1% % Change as at December 31st 2015 (Provisional) 7 Source: National Center for Statistics and Information, 2015 figure as of Q4 2015

8 Oman Banking Sector Overview Overview Loans and Deposit Growth The Omani banking sector comprises of 7 local banks, 2 specialized banks, 9 foreign commercial banks and two full fledged Islamic Banks The top 3 banks contribute around 35.27% of total sector assets. bank muscat represents 41.46% of total banking sector assets Conservative and Prudent Regulator A number of regulations and caps in place to support the growth, stability and sustainability of the Omani banking sector Adequate asset quality with relatively low impaired assets and sound capitalization Implementing Basel 3 regulation with effect from Jan 2014 US$ billion Gross Loan: +12.6% Deposits: +11.5% Oman in the GCC banking sector context (1) Asset Quality (2) 200% 150% 100% 50% 177% 84% 142% 159% 99% 152% 0% UAE Saudi Qatar Kuwait Oman Bahrain Assets as % of GDP Source(1) GDP data is for FY 2015 forecasted.; UAE, Saudi, Kuwait, Oman as at Dec 2015; Qatar as at Nov 2015; Bahrain as at Jun 2015 Source: UAE Central Bank; National Central Banks and forecasts 2) Central Banks, EIU and Bloomberg data as of June Notes: (1) Central Bank websites based on the latest available figures for the GCC banking sectors. US$/ AED: 3.67, US$/ SAR: 3.753, US$/ QAR: 3.64, KD/ US$: 0.303, and OMR/ US$: 0.385

9 bank muscat Unrivalled Leading Market Position in Oman Total Assets Gross Loans Deposits Net Profit 9 Source: Banks financial Statements. Based on June 2016 Notes: OMR/ US$: 0.385

10 bank muscat Dominant Domestic Franchise in the Region Market Share Assets Market Share Deposits Assets as % of Total Sector Assets Deposits as % of Total Sector Deposits Asset Quality Adequate Capitalization 281.2% 276.1% 300.0% 15.1% 21.1% 16.4% 17.1% 16.10% 14.5% 15.3% 15.7% 250.0% QNB ENBD NBAD NCB BM NBK CBQ BBK NPL/GL LLR/NPL Tier 1 Tier 2 Total Capital Adequacy Ratio Key: Qatar National Bank QNB, bank muscat BM, National Bank of Kuwait NBK, National Commercial Bank NCB, Emirates NBD ENBD, National Bank of Abu Dhabi NBAD, Bank of Bahrain and Kuwait BBK % 4.0% 128.8% 165.9% 1.6% 1.4% 2.6% 109.7% 3.5% 1.6% 117.7% 4.6% CBQ QNB NCB BM NBAD NBK BBK ENBD Source: GCC Central Banks. Banks financial Statements. (1) Information for all banks as of Dec USD/BHD = % 10.0% 150.0% 103.9% 100.0% 50.0% 0.0% 0.0% 15.1% 3.1% 18.0% 1.4% 0.9% 2.64% 1.2% 2.2% 3.1% 15.0% 16.2% 13.46% 13.3% 13.1% 12.6%

11 III. bank muscat Business Overview

12 bank muscat Strategy Key Pillars Consolidate Leading Position in Oman Financial strength Leverage on technology and infrastructure investments Regional Expansion Focus on Islamic Banking Developments in Oman Capitalize on growth opportunities in Oman Infrastructure development projects and Government focus on economic diversification and developing tourism Omanis entering the workforce; over 45% of the population is less than 19 years old Leverage large network of branches and other delivery channels Platform to focus on the growth potential Cross sell opportunities among business lines and customer segments Continue to focus on customer acquisitions and retention Focus on fee based income Scale up fee driven businesses both in the wholesale banking (transaction banking, investment banking, treasury) and personal banking (credit card, bancassurance, private banking) Further enhance financial strength Strong capitalization and stable returns Further enhance the diversified funding mix and large CASA deposit base. Efficient management of operating costs Pioneering investments in technology supporting growth plans Multiple digital banking channels for sales and services Technology driven banking to enhance customer experience and improve internal efficiency Customer Convenience and Service Quality Innovative products and services offering Customer centric approach through We Can Do More philosophy Strengthen regional presence through focused and controlled expansion in GCC Leverage existing regional presence to scale up business growth Focus on opportunities for controlled expansion in GCC and the region Meethaq Islamic banking platform Be the market leader in Islamic Banking Business Endeavor to offer full fledged products and services Expansion of branch and channel network 12

13 bank muscat Business Lines Key Highlights Asset Contribution Profit Contribution Deposits Wholesale Banking (1) Corporate Banking Leading Corporate Bank Franchise offering the full array of corporate banking services c. 3,550 corporate customers in Oman Strong expertise in project finance US$ 10.00bn 29% of total assets US$95.41mn 40% of total profit Individual & Others 43% Ministries & Other Gov Orginisations 35% Global Institutions, Investment Banking & Treasury Comprise of treasury, corporate finance, and asset management Financial Institutions US$ 13.10bn 38% of total assets US$ 88.27mn 17% of total profit Financial Institutions 1% Private Commercial 21% Personal Banking Leading Retail Bank platform in Oman Over 1.80 million retail customers in Oman Largest distribution network US$ 7.20bn 21% of total assets US$88.65mn 38% of total profit Loans & Advances Meethaq Islamic Banking International Operations OMR 50mn (c.us$130mn) capital assigned to this business Officially launched in January Currently operating through 16 full fledged Islamic branches with a plan to expand the network to 25 branches by the end of 2016 and expand thereafter Presence in GCC and Singapore through overseas branches, rep offices and subsidiary US$ 2.36bn 7% of total assets US$ 1.82bn 5% of total assets US$ 11.09mn 4% of total profit US$ 0.94mn 1% of total profit (Before allocations) Personal 29% Construction 4% Housing 10% Others 2% Services 9% Mining & quarrying 5% Utilities & Transport 18% Manufacture 6% Real estate 3% Wholesale & Retail trade 3% Import & Export Trade 4% FIs 5% (1) Definition of Wholesale Banking has changed since 1 st January Source: bank muscat unaudited financial statements as of June 2016

14 Wholesale Banking Overview Opportunities Strategy Leading Corporate Banking Franchise Extensive and expanding range of products and services Strong project finance capabilities Large corporate client portfolio with c.6,200 customers and lead bank for top tier Omani corporate entities High level of sophistication differentiated through technology led investments Commitment to maintain strong control over asset quality Corporate Banking Large number of infrastructure/ Industrial projects in the pipeline Privatisation and diversification drive by Government Increasing business flows between Oman and regional countries Leverage on leading position and expertise Reinforce presence in Oman across all segments in the value chain Benefit from large infrastructure and industrial projects in Oman Focus fee income generating business Transaction banking business to enhance fee income Explore cross sell opportunities among business lines Utilize presence in regional markets Grow GCC trade flows share Corporate Loans Peer Comparison Asset Growth Operating Income US$ billion BankMuscat Bank Dhofar NBO Bank Sohar HSBC Oman Ahli Bank Oman Arab Bank 14 Source: bank muscat audited financial statements and interim financials

15 Wholesale Banking Global Institutions, Investment Banking & Treasury Overview Opportunities Strategy Treasury: funding, asset and liability management requirements, offer structured solutions to corporate clients Corporate Finance: Leader in corporate advisory: series of successful transactions and track record outside Oman Financial Institutions: trade, DCM and correspondent banking services Asset Management: Largest Omani mutual fund manager with potential for growth and expanding outside Oman. Investment solutions for high net worth individuals Significant cross sell opportunities to other wholesale banking clients Leverage transaction experience in attracting new corporate finance mandates Leverage regional expansion to introduce new products Strong growth potential in the high net worth market segment Strengthen Bank Muscat s leading position in specialised areas Utilize the presence in regional markets to expand business Leverage specialised product expertise in other markets Leverage on expertise built to further grow the market share and increase the market potential Securities portfolio (1) Asset Growth Operating Income Others (2), 1.6% Aaa to Aa3, 45.67% A1 to A3, 52.75% (1)Securities portfolio represents Bonds & T Bills. (2) Others include Baa1 to Baa3 securities and unrated Banks. Data as of Dec Source: bank muscat audited financial statements and interim financials

16 Personal Banking Overview Opportunities Strategy Leading Personal Banking Franchise in Oman Over 1.80 million customers Front runner across retail banking segments including cards, bancassurance and remittances Largest delivery channel network in Oman (154 branches, 464 ATMs, 192 CDMs and the best online platform in Oman) Substantial low cost retail deposit base Merchant acquiring market share of over 80% by volume in 2015 and leading ecommerce business in Oman Government spending resulting in job creation Increase in salaries through various government initiatives Favorable demographics Over 45% of the population less than 19 years old Housing finance Leveraging on leading presence in the retail segment Increase penetration and cross sell Explore new business and product lines Technology led product development and service offerings Enhance process efficiency and customer convenience Focus on development and utilization of e delivery channels Personal Loans Peer Comparison Asset Growth Operating Income 7.00 US$ billion BankMuscat Bank Dhofar NBO Ahli Bank Oman Arab Bank Bank Sohar HSBC Oman 16 Source: bank muscat audited financial statements and interim financials

17 Meethaq Islamic Banking Overview Opportunities Strategy One of the most successful Islamic banking operation in Oman since dedicated branches become operative throughout the Sultanate Innovation in product offering and services to create niche Established Sharia Board comprising of experienced and reputable Sharia scholars Growth momentum continued in the second year of launch indicating potential in the market Shari a governance structure ensures transparent banking Large network at disposal to leverage business Awareness drives on Shari a compliant banking to increase customer base To be the market leader by far Full fledged product and service offerings Increase Meethaq exclusive branch network to an optimum level Customer Centric approach and transparency Technology driven customer service delivery within the Shari a compliance ambit Financing Portfolio Meethaq Product and Portfolio Development 2015 Consumer Corporate Investment & Treasury Asset Management Child saving accounts, employee saving funds, Ijara products Government checking accounts with profit distribution Sukuk issue and advisory, FX hedging products Real estate and Equity Funds 17 Source: bank muscat audited financial statements and interim financials

18 International Operations Overview Opportunities Strategy Presence in GCC and Singapore Branches in Saudi Arabia and Kuwait Rep offices in UAE and Singapore 99.99% stake in Muscat Capital LLC Saudi based, CMA licensed entity 14.7% stake in Al Salam Bank Bahrain Large banking markets in Saudi Arabia and Kuwait Pan GCC network offering opportunities for business and trade synergies Increasing trade/business opportunities between GCC and Asia Efficiency: rationalization of back office costs sharing of operational costs Received all regulatory approvals to proceed with representative office (non transactional) in Iran Focus on existing GCC operations Solidify position and increase profitability Drive synergies within the group Scale up business volumes to attain desired return Capture trade / business flows between GCC and Asia Assets Operating Income (1) Includes US$25 million being gain on acquisition of BMI bank by Al Salaam Bank, Bahrain 18 Source: bank muscat audited financial statements and interim financials

19 IV. Financial Performance

20 Operating Performance and Profitability Overview Resilient operating performance through the financial turmoil Solid top line income growth 5 year CAGR of 8.5% Stable cost to income ratio in spite of business and infrastructure expansion Solid profitability Stable Return on assets Strong core revenue generation with net interest income and commission and fees contributing to over 80% of total operating income Increasing focus on top line commission and fee income generation Operating Income & Cost to Income CAGR: + 8.5% 41.6% 42.2% 41.2% 41.9% 40.2% 40.8% Cost to Income Operating Income Composition Profitability (1) Other income: FX Income, Profit on sale of non trading investments, Dividend income and other income 20 Source: bank muscat audited financial statements and interim financials

21 Asset Quality Overview Loan Growth Stable loan book growth Conservative lending approach Focus on high quality assets with access to top tier borrowers Strong project finance capabilities Diversified loan portfolio across sectors Adequate provisioning of impaired asset Conservative approach provisioning in line with the higher of either IFRS or CBO requirements Non specific loan loss provisions of 2% on retail portfolio and 1% on corporate portfolio Gross Loans Sector Breakup Impaired Assets and Provisioning Construction 4% Housing 10% Others 2% Services 9% Mining & quarrying 5% Manufacture 6% Personal 29% Real estate 4% Wholesale & Retail trade 3% Import & Export Trade 4% FIs 5% Utilities & Transport18% 21 Source: bank muscat audited financial statements and interim financials

22 Funding and Liquidity Overview Funding Mix Stable funding structure with a diversified funding base Largest deposit base in Oman with significant granularity Retail deposits comprise 37.5% of total deposits Top 10 depositors represent 22% of total deposits and comprise of top tier Omani institutions Strong capitalization levels Highest CAR among Omani peers and one of strongest among GCC peers Adequately capitalised, with total capital ratio at 16.10% and Tier 1 at 13.46%, above the % and 9% ratio required by the CBO 20,555 20,045 25,268 31, ,506 32,899 Total Assets Liquid Assets Capital Adequacy Ratio 16.32% 16.40% 15.92% 16.10% 16.13% 16.45% 19.72% 22.31% 34.84% 34.18% 34.74% Liquid Assets / Total Assets Total Capital Adequacy Ratio 22 Source: bank muscat audited financial statements and interim financials

23 شكرا لكم Subject: Thank You Department:

24 VII. Annexure

25 Balance Sheet Amounts in USD 30 Jun Dec Dec Dec 13 Cash and bal. with Central Bank 7,861 6,265 2,589 1,512 Due from banks 2,750 2,577 2,283 2,252 Loans and Advances 17,788 17,391 16,586 15,230 Islamic financing receivables 1,946 1,649 1, Non trading investments 2,731 3,943 1,924 1,460 Tangible fixed assets Other assets (incl. invt in associates) Total assets 33,898 32,581 25,268 22,043 Bank deposits/frns /Bonds 8,666 7,926 2,802 2,303 Customer deposits (incl. CDs) 17,943 17,502 16,481 14,545 Islamic Customer's Deposit 1,903 1, Other liabilities 999 1,030 1,056 1,042 Subordinated debt Convertible bonds Total liabilities 30,108 28,954 21,860 18,894 Share capital and premium 1,911 1,802 1,775 1,733 Total reserves 1,054 1,057 1, Retained profits Shareholders' equity 3,790 3,627 3,408 3,149 Total liabilities + shareholders' equity 33,898 32,581 25,268 22,043 Key ratios Loans and advances/customer deposits 99.14% 99.36% 95.13% % Shareholders' equity/total assets 11.18% 11.13% 13.16% 13.35% Subordinated debt/(debt + equity) 10.18% 14.69% 15.81% 19.74% BIS total capital ratio 16.14% 16.10% 15.53% 15.10% 25 Source: bank muscat audited financial statements and interim financials

26 Profit and Loss 30 Jun Dec Dec Dec 13 Net interest income Net income from Islamic financing Other operating income Operating income , Operating costs (223.5) (444) (410) (373) Recoveries from impairments Credit loss impairments (85) (187) (168) (131) Other impairments (11) (13) (4) (12) Gain/(loss) from associates Profit before Tax Taxation (35) (57) (60) (59) Net Profit Key ratios Cost/income ratio 40.83% 41.95% 41.21% 42.24% Return on average assets 1.71% 1.72% 1.79% 1.86% Return on average equity 12.93% 13.68% 13.89% 14.49% Basic EPS (US$) Share price (US$) Source: bank muscat audited financial statements and interim financials

27 Organisation structure Board Secretariat, GDGM Yousuf Abbakar Sharia Supervisory Board Board of Directors Internal Audit, GM, AGM Thomas Totton & Aliya AL Balushi Chairman Office, DGM Ahmed Al Barami Chief Executive AbdulRazak Ali Issa Risk Management, GM Leen Kumar Compliance, DGM Damian O Ridian Deputy Chief Executive Officer Meethaq Sulaiman Al Harthy Deputy Chief Executive Officer Waleed Al Hashar Chief Operating Officer Ahmed Al Abri Deputy Chief Operating Officer K. Gopakumar Enterprise Services, GM Marco Walters Strategy & Development GM Sheikha Al Farsi CFO GM Ganesh T. Wholesale Banking GM Abdulla Al Hinai Personal Banking, GM Inkawan Jusi ISB, AGM Muhammed Nadeem Credit, GMs Salim Al Kaabi Abdul Kader Al Bulushi Human Resources, DGM Ahmed Faqir Capital Markets BO, DGM Ali Said Ali Trans. & Public Sec. Banking DGM Tariq Atiq International Banking, DGM Mana Das Premier Bkg, DGM Abdulnasir Al Raisi Service Excellence Centre, GDGM Naresh C Technology, GDGM Shamsa Al Seefi Treasury, DGM Mallikarjuna KSA Branch, DGM Abdulwahid Al Murshidi Inst. Sales & PD, DGM Abdulla Al Mashani Central Ops, AGM Talal Al Zadjali Business Solutions & Applications, SAGM Ahmed Al Ojaily Large Corporates DGM Ilham Al Humaid Investment, FI & AM, DGM Nilesh Gavankar Cards & ebanking AGM Amjad Al Lawati PMO & Infrast., GDGM Said Al Aufi Project Finance, AGM Osamah Abdul Latif Corp Banking GDGM Rajshekar Singh Branches GDGM Said Al Badi Support Services, DGM Yaseen Abdul Latif SME, AGM Fatima Al Maskiry Interior Regions, AGM Saleh Al Maini Capital Regions, AGM Taya Bait Sabeea 27