Healthy Deposit addition, Expecting Credit growth

Q1FY2010 Preliminary results – Above our estimates

Healthy Deposit addition, Expecting Credit growth

Loan book growth declined on QoQ basis: Gross Loans & Advances of the bank showed a marginal decline of about 0.5% for the quarter. In absolute terms, the loan book declined by about RO 20.1 million. This is lower as compared to the total Oman banking sector credit addition of about RO 136.5 million during Jan-Feb 2010 (Source: CBO Monthly statistics report Feb 2010). The figure of net loans of the bank is not disclosed in the preliminary numbers.

At the current levels, Bank Muscat trades at 1.46X of FY2010E (P/BV), which is relatively cheaper as compared to the local banking sector average of 1.9X and also when compared to regional peers (P/BV c. 1.9X, Source: Bloomberg). GBCM Research expects the balance sheet addition to remain strong going forward on the back of expected revival in project financing along with continuing Government infrastructure spending. We maintain our ‘BUY’ rating on the stock with the revised target price of RO 1.057, an upside of 22.1% from the current levels.

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