Muscat: Bank Muscat has proposed a 40 per cent dividend, with 25 per cent in cash and 15 per cent in the mandatory convertible bonds, for 2012. Shareholders will receive a cash dividend of OMR0.025 per ordinary share of OMR0.100, each aggregating to OMR50.96 million of the bank's existing share capital, said a bank release.
In addition, they will receive dividends in the form of mandatory convertible bonds of OMR0.015 per ordinary share of OMR0.100, 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, using a 'conversion price,' which will be calculated by applying a 20-per cent discount to the three-month average share price of the bank on the Muscat Securities Market prior to the conversion. These bonds will mature after a period of three years from the date of issuance. The bonds will be listed on the Muscat Securities Market.
The meeting of the board of directors on Monday approved the financial report and dividend payout, subject to the approval of the Central Bank of Oman and the shareholders of the bank.
Khalid bin Mustahail Al Mashani, Chairman, remarked: "Amidst the challenging global economic and financial situation, the key business lines of the bank recorded healthy performance on expected lines."
Bank Muscat said the proposed cash dividend and issuance of mandatory convertible bonds are subject to the formal approval of the annual general meeting of the shareholders and regulatory authorities.
The bank achieved a net profit of OMR139.2 million for the year ended December 2012, against a net profit of OMR117.5 million, reported in 2011, showing 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 in the previous year. The increase in net interest income is attributable to the improvement in the net interest margin and asset growth. Non-interest income at OMR93.2 million was higher by 13.5 per cent, compared with 2011.
Operating expenses for last year was at OMR134.6 million, an increase of 11.4 per cent, compared with 2011. The increase in operating expenses is attributable to the increase in manpower cost and operating expenses related to the investment in technology and facilities. The cost to income ratio for the year 2012 was at 41.6 per cent, compared with 41.1 per cent in 2011. The impairment for credit losses for last year was OMR57.9 million, against OMR56.1 million in 2011.
The increase in impairment for credit losses was mainly due to the creation of the 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 versus OMR25.6 million recovered in 2011. The share of loss from associates was OMR3.4 million in 2012, against OMR3.5 million in the previous year. The bank has considered a higher share of loss from BMI Bank on a conservative basis that considers credit loss.
Net loans and advances increased by 16.2 per cent to OMR5,601 million, against OMR4,819 million by end-December 2011. Customer deposits, including CDs, increased by 10.9 per cent to OMR5,378 million, against OMR4,850 million on December 31, 2011.
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, compared with 15.37 per cent in 2011. The basic earnings per share were OMR0.072 in 2012, against OMR0.065 in 2011.