National Bank of Oman (NBO) is well poised to offer Islamic Banking products as soon as the final guidelines and the necessary approvals are received from the Central Bank of Oman, the Deputy Chairman Mohammed Mahfoodh al Ardhi stated in the Chairman’s Report of the bank’s financial performance for the six months to June 30, 2012.

“The shareholders of the bank, have, at an extraordinary general meeting held on June 10, 2012, approved the Board of Directors’ recommendation for the appointment of a Sharia supervisory board for the bank’s Islamic Banking window. The bank has also launched its Sharia compliant brand named ‘Muzn’,” Al Ardhi said.

The bank’s net profit grew by 17 per cent to RO 19.9 million for the six months ended June 30, 2012, from RO 17 million for the corresponding period in 2011. The bank closed its half year with an operating profit of RO 28.3 million, an increase of 14 per cent, compared with the same period last year.

Operating income grew by RO 5 million to RO 50.6 million for the first half, up from RO 45.6 million in 2011 due, mainly, to an increase in net interest income arising from higher loan disbursals and a decrease in the overall cost of funds. The bank’s low cost deposits increased by RO 211 million compared with end of June 2011 leading to a decrease in the cost of funds from 2.31 per cent to 1.96 per cent.

Total operating expenses for the six months ended June 2012 were at RO 22.4 million, an increase of 7 per cent over the first six months of year 2011, mainly due to higher staff costs and marketing expenses.

However, the cost to income ratio improved from 45.9 per cent as at the end of June 2011 to 44.2 per cent at June 30, 2012 reflecting the increase in operating income.
Net impairment losses for 2012 stood at RO 5.2 million, RO 0.3 million higher than the same period in 2011.

“This can be attributed to an increase in impairment of investments classified under the available for sale category whilst credit losses on customer loans declined in 2012. The non-performing loan ratio improved to 2.65 per cent at June 30, 2012 from 2.94 per cent at December 31, 2011, whilst the bank’s provision coverage ratio stands at over 100 per cent at the end of the first half of 2012,” the Chairman said.

Total net advances grew by 11 per cent to RO 1.86 billion from RO 1.67 billion at December 31, 2011. The bank’s deposit grew by a robust RO 228 million in the first six months of the year, bringing the total deposits to RO 1.83 billion at the end of June, an increase of 14 per cent over December 2011.