Muscat: Seven months on, after the completion of the merger between HSBC Oman branch and Oman International Bank, the merged entity, HSBC Bank Oman, has posted financial performance for the year ended December, 2012, which is subject to the approval of the Central Bank of Oman and the shareholders of the bank.
Since the merger, priority has been given to the integration of the two entities. But at the same time, the bank has recorded a 60.2 per cent increase in operating income and an 81.5 per cent increase in net interest income as per IFRS accounting. Management is now focused on achieving growth opportunities through the combined entity. Since the completion of the merger, planned integration expenses of OMR13.9 million have contributed to a rise in total operating expenses to OMR48.7 million for the year.
This, together with higher impairment charges, led to a reduction in net profit from OMR15.5 million to OMR5.8 million in 2012. However, during the period, HSBC Bank Oman achieved many significant operational and strategic milestones that have positioned the bank favourably for 2013.
"In the short time since the merger in June, management has achieved the integration of two complex organisations on time and on budget. As a result, the board is satisfied that HSBC Bank Oman now has the right organisational infrastructure and banking system in place to support its strategy for growth during 2013," said Simon Cooper, chairman of HSBC Bank Oman.
Customer deposits soar
The major costs of integration consisted of upgrades in information-technology platforms, rebranding and refurbishment of the branch network, and enhancing the provision of ATM services to customers.
"Systems integration was completed in November," added Cooper. "From then, all HSBC Bank Oman branches have had access to an international-standard banking and management system, supporting consistent procedures across every branch. Customers can now access the expanded range of services at all HSBC Bank Oman branches across Oman, and they are already benefitting from a more competitive lending proposition across the network."
Customer deposits stood at OMR1,851 million on December 31, 2012, up 147.8 pe cent compared to the same period in 2011. OMR1,014 million of the increase arose from the business consolidation, while the remaining OMR89 million was a direct result of growth in deposits by HSBC Bank Oman.
Loans and advances, net of provisions and interest reserves, rose to OMR1,194 million, as on December 31, compared with OMR454 million, as on December 31, 2011. Of the OMR685 million increase, 92.6 per cent was due to the merger, while the balance came from new growth in advances from the Bank.
"Under challenging conditions, significant progress was achieved, thanks to the commitment, patience, and support of the bank's loyal customers and the hard work and dedication of all its employees," said Ewan Stirling, chief executive of HSBC Bank Oman.
"In only seven months, HSBC Bank Oman brought more than 400,000 customers onto a single systems platform, unified working practices through group-wide training and development programmes, and rebranded the entire branch network to reflect the new entity. Importantly, our customers are now beginning to feel the benefits of being part of the HSBC family."
Loans without guarantor
Stirling also noted, "HSBC Bank Oman customers can visit any branch for their banking needs, not only their account-holding branch, and can use any ATM across the country. In addition, customers can now also apply for a loan without the need for a guarantor." He pointed out that these advantages were not previously available to OIB customers.
Reflecting the bank's intention to conserve capital for future growth, the board of directors proposed a cash dividend of one baisa per share with a nominal value of 100 baisas each, amounting to OMR2 million for the year 2012. HSBC Bank Oman will now shift its focus to a new growth plan for the business, developing existing relationships, connecting customers to more opportunities, and delivering an increasingly consistent and superior customer experience.
HSBC Bank Oman offers its customers a comprehensive suite of local and international products and services that aims to fulfil all their banking and financial needs. The bank has recently announced that it is setting up an International Trade SME Fund and will be announcing a number of initiatives in the near future that will further enrich the HSBC banking experience.