Muscat: Bank Muscat shareholders yesterday approved a proposal to raise the authorised capital of the bank from OMR250 million to OMR350 million, with a nominal value of 100 baisas each. The extra-ordinary general meeting of shareholders also approved to increase the issued share capital from OMR203.85 million divided into 2.038 billion shares to OMR215.23 million divided into 2.15 billion shares with a nominal value of 100 baisa each.
The board of directors' recommendation to issue convertible bonds at the rate of 15 per cent per share of the issued share capital of the bank, as part of the dividend for 2012, also received the endorsement of shareholders. For the year 2012, the bank will give 40 per cent dividend, 25 per cent in cash and 15 per cent in the form of mandatory convertible bonds.
Important decisions at the annual general meeting included the election of new members of the board of directors for the bank as well as the appointment of Sharia Supervision Committee for Meethaq Islamic banking window operations.
Shaikh Khalid bin Mustahail Al Mashani, chairman, presided over the EGM and AGM meetings at the bank's head office. Shaikh Khalid bin Mustahail Al Mashani said: "Amid the challenging global economic and financial situation, the key business lines of the bank recorded healthy performance on expected lines."
Bank Muscat shareholders would receive cash dividend of 25 baisas per ordinary share of 100 baisas each aggregating to OMR50.96 million on bank's existing share capital.
In addition, they will receive dividend in the form of mandatory convertible bonds of 15 baisas per ordinary share of 100 baisas each aggregating to OMR30.58 million. The mandatory convertible bonds will carry a coupon rate of 4.5 per cent per annum.
On maturity, the bonds will be converted to ordinary shares of the bank by using a 'conversion price' which will be calculated by applying 20 per cent discount to threr-month average share price of the bank on Muscat Securities Market (MSM) prior to conversion.
These bonds will mature after a period of three years from the date of issuance. The bonds will be listed on MSM.
Bank Muscat achieved a net profit of OMR139.2 million for the year ended December, 2012 as against a net profit of OMR117.5 million reported in 2011, an increase of 18.5 per cent. Net interest income increased by 8.6 per cent to OMR230.4 million in 2012 from OMR212.1 million reported during the year 2011. Increase in net interest income is attributable to improvement in net interest margin and asset growth. Non-interest income at OMR93.2 million was higher by 13.5 per cent compared to the year 2011.
Operating expenses for the year ended December 2012 was at OMR134.6 million, an increase of 11.4 per cent as compared to 2011. Increase in operating expenses is attributable to higher manpower cost and operating expenses related to investment in technology and facilities.
The cost to income ratio for the year 2012 was at 41.6 per cent as compared to 41.1 per cent in 2011. Impairment for credit losses for last year was OMR57.9 million as against OMR56.1 million in 2011. Increase in impairment for credit losses was mainly due to creation of general provision in line with the loan growth. During the year 2012, the bank was able to recover OMR33.5 million from impairment for credit losses as against OMR25.6 million recovered in 2011.
Share of loss from associates was OMR3.4 million in 2012 as against OMR3.5 million in 2011. The bank has considered higher share of loss from BMI Bank on a conservative basis considering credit loss.
Net loans and advances increased by 16.2 per cent to OMR5,601 million as against OMR4,819 million for the previous year. Customer deposits, including certificate of deposits (CDs), increased by 10.9 per cent to OMR5,378 million as against OMR4,850 million by end-December, 2011. During the year 2012, demand deposits increased by 26.1 per cent, savings deposits increased by 21 per cent and term deposits reduced by 4 per cent.
The return on average assets marginally improved from 1.79 per cent in 2011 to 1.84 per cent in 2012. The return on average equity improved to 15.42 per cent in 2012 as compared to 15.37 per cent in 2011. The basic earnings per share was 72 baisas in 2012 as against 65 baisas in 2011. The bank's capital adequacy ratio stood at 16.32 per cent by end-December, 2012 after appropriation for dividend for the year 2012 against the minimum required level of 12 per cent by the Central Bank of Oman.