HSBC Bank Oman reports profits up 31 per cent, names new chairman

30/01/2017 11:54 AST

In a statement to the Muscat Securities Market, HSBC Bank Oman reported net profit increased by 31 per cent to OMR 16.9 million (compared to OMR 12.9 million for the year ended 31 December 2015) due to higher operating income and lower operating expenses partly offset by higher loan impairment charges.

Net operating income, before loan impairment charges, increased by 2.3 per cent to OMR 75.2 million. Net interest income increased by 10.4 per cent to OMR 54.3 million due to higher interest income from corporate lending coupled with rising yields from the investment of surplus liquidity in government securities, partially offset by lower interest income received from retail customers due to the run-off of older high yield retail loans.

Net fee income decreased by 1.6 per cent to OMR 12.3 million (compared to OMR 12.5 million for the year ended 31 December 2015) due to lower custody fees reflecting the MSM performance and lower trade finance fees reflecting declining trade numbers for Oman. Net trading income increased by 11.4 per cent to OMR 7.8 million (compared to OMR 7 million for the year ended 31 December 2015) mainly due to the non-repeat of the OMR 0.5m one-off foreign exchange loss incurred in 2015.

Other operating income fell to OMR 0.6 million (compared to OMR 4.5 million for the year ended 31 December 2015) primarily due to the non-repeat of the gain on the disposal of legacy investments of OMR 4.6 million being booked in 2015.

A net charge of OMR 5.6 million has been reported for loan impairment charges (compared to a net charge of OMR 3.4m for the same period in 2015) arising from retail-specific provisions of OMR 4.1 million and the corporate general provision of OMR 2.1 million attributed to the growth in corporate loans and advances.

Operating expenses fell 11.5 per cent to OMR 48.4 million (compared to OMR 54.7 for the year ended 31 December 2015) due to tight cost control.

Loans and advances, net of provisions and reserved interest, grew by 18.1 per cent to OMR 1,418.4 million (compared to OMR 1,200.8 million as at 31 December 2015). Customer deposits increased by 3.6 per cent to OMR 1,866.7 million (compared to OMR 1,802.3 million as at 31 December 2015). The net loans to deposits ratio grew to 76.0 per cent (compared to 66.6 per cent as at 31 December 2015).

HSBC Bank Oman’s capital adequacy ratio stood at 18.7 per cent as at 31 December 2016 (compared to 19.4 per cent as at 31 December 2015).

The Board of Directors proposes a cash dividend of OMR 0.005 per share (nominal value per share of OMR 0.100) amounting to OMR 10 million for the full year 2016. The annual financial results and proposed cash dividends for the year ended 31 December 2016 are subject to the approval of the Central Bank of Oman and the shareholders of the bank.

In a separate statement the bank also announced the appointment of Sir Sherard Cowper-Coles as a Director and Chairman of the Bank following the Board Meeting held on 29 January 2017. This change was prompted by the resignation of outgoing Chairman, David Eldon, who is taking on additional responsibilities elsewhere in the HSBC Group.

Sir Sherard has nearly 40 years of experience of working in the region, including as UK Ambassador to Saudi Arabia from 2003 to 2007, together with recent experience within the HSBC Group Head Office. In October 2013, he was appointed as the Senior Advisor to the HSBC Group Chairman and Group Chief Executive. In addition to his new role as Chairman of HSBC Bank Oman, Sir Sherard is the Group Head of Government Affairs, a Director of HSBC Bank Egypt S.A.E, as well as being Chairman of the UK arm of the Omani British Friendship Association.

CPI Financial