MSM 30 Index firms revenue at RO 2.7bn in nine months

25/12/2012 10:03 AST

Led by banking sector players, the total revenue of MSM 30 Index companies including investment holding companies stood at RO 2,735 million for the first nine months period in 2012. At the same time aggregate top-line of banking and investment holding sector grew by 10.7 per cent year on year and 15.8 per cent respectively for the nine months. Services sector revenue for the period grew by 6.7 per cent amid disappointment from the sector majors Renaissance and Nawras. The revenue of the industry sector registered a 2.1 growth.

“With the continuing higher oil prices and the incremental contribution from non-oil income, we estimate the domestic economy to continue its stable pace. The thrust on government project spending is anticipated to benefit the local companies especially in cement, engineering, construction and other commodity players, which would reflect in the earnings moving ahead”, say the analysts at Gulf Baader Capital Markets.

During the nine months, the banking sector continued its stable performance on the back of steady credit growth, stabilising operating expenses and also improvement in asset quality. Overall credit addition for the sector during the period is estimated at RO 1,439.7 million, reporting a year to date growth of 11.5 per cent levels.

During the third quarter alone, the sector credit addition (in absolute terms) increased by RO 280.2 million amid continuing growth in the retail as well as the corporate lending. This is lower as compared to an addition of RO 533 million during the second quarter of 2012. During the quarter, the retail lending has increased by RO 119.150 million, while the corporate book in Oman increased by RO 161.073 million revealing the pickup in private sector lending.

Despite the estimated lower growth in retail lending (post incorporation of new regulations), overall credit growth drivers for the sector continue to remain steady amid expectations of Government Projects spending and the stable private sector credit demand. The total deposits of the sector increased by RO 1,228.3 million, reporting an increase of 9.8 per cent for the year owing to higher growth in private and Government deposits.

During third quarter, the sector deposit addition (in absolute terms) increased by RO 256.7 million as against an addition of RO 491.8 million in the second half. During the period, the banks continued its efforts in mobilising low cost deposits utilising the presence of ample liquidity in the banking system.

“The aggressive strategy from the existing commercial banks and the starting up of two new Islamic banks operations are expected to intensify competition within the sector going forward. Despite the estimated growth and the margin concerns, we believe that the major banks are trading at attractive levels”, say the analysts — Kanaga Sundar and Vijay Sridharan of GBCM in their research report.

At the same time, the industry sector revenue increased marginally by 2.1 per cent on year on year basis to RO 722.855 million. Seasonality played a major role during the quarter and had a significant impact in both the sales and profit. The total net profit of the Industry sector stood at RO 59.113 million as against Ro 41.651 million. Overall the numbers came below our estimates.

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Oman Daily Observer