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National Bank of Oman (NBO) recently held its 38th Annual General Meeting (AGM) at the Muscat InterContinental Hotel, where the shareholders approved the report of the Board of Directors and the financial statements of the bank for the year ended December 31, 2011. The shareholders also approved the Board of Directors’ recommendation for a cash dividend payout of 17.5 per cent and a stock dividend of 2.5 per cent to shareholders of the paid up capital.
In addition, a limit of up to RO 200,000 was approved to allow the Board of Directors to contribute towards Corporate Social Responsibility initiatives and donations for the financial year ending December 31, 2012.
While addressing the shareholders, NBO’s Deputy Chairman Mohammed Mahfoodh al Ardhi said: “The bank approaches 2012 with optimism as continued government spending is expected to maintain the growth momentum. The Wholesale and Investment Banking franchise will continue to support domestic project financing and related activity, whilst mortgages, cards business and low cost deposit activities will remain the key focus for Retail Banking. Participation in major domestic transactions and cross border activity in conjunction with NBO’s strategic alliance partner — Commercial Bank of Qatar, continues to be key to driving efficiencies by sharing best practices”.
Al Ardhi also mentioned that NBO will launch an Islamic Banking window this year and will provide Sharia compliant products and services to both retail and corporate customers, after obtaining regulatory approvals.
The bank’s net profit after tax increased by 26 per cent to RO 34.2 million for the twelve months ended 31 December 2011 compared with RO 27.2 million in 2010. Additionally, in 2011 net interest income grew to RO 58.2 million, an increase of 5 per cent compared to 2010 with the cost of funds improving to 2.13 per cent for the year ended 31 December 2011 compared with 2.64 per cent in 2010.
Net spreads were 3.18 per cent in 2011. Other income was a strong driver of revenue growth in 2011, with significant improvement in the ratio of non-interest income to total income, at 37 per cent, up from 29 per cent in 2010. Operating expenses increased by 9 per cent to RO 43 million for the year ended 31 December 2011 as the bank continued to invest in its employees, systems and delivery channel network. The cost to income ratio improved from 51 per cent to 47 per cent on a year on year basis due to higher levels of income.
Net provisions for credit losses and investments for the year were higher than the previous year by RO 2.1 million predominantly due to an increase in impairment of investments classified under the available for sale category. Recoveries and release from provisions on credit losses and loans written off increased by RO 3.6 million during the year, a 43 per cent improvement over the previous year. The bank continues to reduce non-performing loans, with the non-performing loan ratio standing at 2.9 per cent at the end of December 2011 as compared to 3.5 per cent in 2010.
During the twelve months ended December 31, 2011, customer lending increased by 23 per cent to RO 1.7 billion. Customer deposits grew by 21 per cent over the previous year to RO 1.6 billion.
In the last quarter of 2011, the bank raised subordinated debt of RO 24.1 million through a private placement to further strengthen its tier II capital. The Bank’s regulatory capital now stands at RO 322 million. The Capital Adequacy Ratio was 15.3 per cent, as at December 31, 2011, well above the Central Bank’s minimum requirement of 12 per cent.
The bank will continue to invest in its people, processes and brands which will support the bank’s progress towards achieving sustainable value for its Shareholders and all other Stakeholders.
The Deputy Chairman expressed appreciation and gratitude to the Central Bank of Oman and Capital Market Authority, for their prudent supervision and guidance. He also took the opportunity to thank all the bank’s customers, correspondent banks and shareholders for their continued confidence in the bank.