Bank Sohar -Equity Report -11-07-2012

Gross Loan book grew 4.3% QoQ: As at end of H1 2012, the gross loan book of the bank stands at RO 1.125 billion, showing an increase of 12.3% on a YoY basis. The same has increased by 4.3% sequentially which is in line with our estimates. In absolute terms, total gross loan addition of Bank Sohar during Q2 stood at RO 46.656 million as compared to an addition of RO 36.988 during Q1 2012. Gross loan book of the bank has increased 8% year to date (YTD).

Our revised 12M fair value of the Bank is at RO 0.171 (combination of Excess Return valuation and PBV valuation models), which provides an upside of 17% from the current levels. With the correction in stock price, we upgrade the stock to an Accumulate rating. At the current levels, the stock also provides an attractive FY12E dividend yield of c. 6.6% levels (assuming dividend payout of 50%) which acts as a cap to the downside for the stock looking at a medium term horizon.