Ahli Bank

Ahli Bank SAOG (AHB) achieved a net profit of RO3.5mn in 1H08 as against a net profit of RO1.9mn reported during 1H07, thereby displaying a brisk growth of 86.1%, owing to its entry into the commercial banking arena and finding success in tapping low cost deposits to pay off its otherwise expensive sources of funding.

AHB has set its foot firmly and growing at a very rapid pace increasing its number of branches and ATMs to keep up with the growth achieved in 1H08. As at Dec’07 it had seven operative branches in Oman and plans to add another 11 branches in 2008 taking the total end of the year tally of branches to 18.

We believe that they would continue to build this effort by increasing the number of branches in the medium term at the same rate as in 2008. As a result we expect their balance sheet to grow by 61.0% in 2008. We expect the bank’s yields to improve further as they replace the high cost borrowings with low cost current and savings deposits.

The customer deposits were up by a whopping 64.9% in the 6M period increasing from RO152.2mn as at Dec’07 to RO251.1mn as at end of Jun’08 mainly on account of increase in time deposits.

AHB registered an EPS of RO0.034 in 2007 as compared to RO0.061 in 2006. The effect of capital increase and declining net income had a compounding effect in reducing the EPS. The bank’s ROAA declined from 2.4% in 2006 to 0.9% in 2007. Also, the ROAE decreased from 13.8% in 2006 to 4.0% in 2007.