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GFH 0.46 3,578,848
BKSB 0.14 275,822
DSI 0.39 45,711,538
ALINMA 16.41 24,441,807
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Bank Muscat

Source: Taib Bank

Quarterly Result Update

• Bank Muscat (BKMB) reported an 8.8% decline in total operating income to OMR 265.49 million during 2010 from OMR 291.04 million in 2009, despite achieving a 7.3% increase in net interest income following the inclusion of a one-time profit of OMR 53.33 million on sale of investments during 2009.
• Net profit was up 37.8% YoY to OMR 101.59 million, driven by lower impairment for credit losses and improved recoveries.
• We have revised our FY2011E operating income upwards by 5.6%. Factoring in lower provisions for credit losses, our net profit estimate now stands 4.3% higher, partially offset by higher operating expenses.
• We are now reiterating our earlier OVERWEIGHT recommendation with a revised target price of OMR 1.100, implying an upside of 36.3%.

Net Profit
Despite lower total operating income, net profit was up 37.8%, resulting from lower provisioning for credit losses and improved recoveries. Overall, annualised EPS increased to OMR 0.076 from OMR 0.055.

We had updated BKMB on November 11, 2011 with an OVERWEIGHT recommendation (target price of OMR 1.069 with a 17.6% upside). Currently, the company’s stock is trading at a P/E multiple of 8.82x and 8.01x on 2011E and 2012E earnings, and at a P/BV multiple of 1.24x and 1.13x on 2011E and 2012E BVPS, respectively. The stock has fallen 11.2% since our last update report compared to the 4.3% fall registered in the MSM (Muscat Securities Market) 30 Index. Based on the above factors and our analysis, we have arrived at a target price of OMR 1.100, representing an upside of 36.3% over the current price of OMR 0.807 (as of March 10, 2011). Accordingly, we are reiterating our earlier OVERWEIGHT rating on Bank Muscat.

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