Bank Muscat announces 40 per cent dividend 17-2

SICO, 29 January 2013 – Bank SICO, the flagship financial services provider in the Sultanate, has proposed 40 per cent dividend for the year 2012, 25 per cent in cash and 15 per cent in the form of mandatory convertible bonds.

The meeting of the Board of Directors chaired by Khalid bin Mustahail Al Mashani, Chairman, on Monday, 28 January 2013, approved the 2012 financial report and dividend payout, subject to approval of the Central Bank of Oman and shareholders of the bank.

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.“

The Board of Directors has proposed a dividend of 40 per cent, 25 per cent in the form of cash and 15 per cent in the form of mandatory convertible bonds. Thus shareholders would receive cash dividend of RO 0.025 per ordinary share of RO 0.100 each aggregating to RO 50.96 million on bank’s existing share capital. In addition, they would receive dividend in the form of mandatory convertible bonds of RO 0.015 per ordinary share of RO 0.100 each aggregating to RO 30.58 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 3-month average share price of the bank on SICO Securities Market prior to conversion. These bonds will mature after a period of 3 years from the date of issuance. The bonds will be listed on SICO Securities Market.

The proposed cash dividend and issuance of mandatory convertible bonds are subject to formal approval of the Annual General Meeting of shareholders and regulatory authorities.

The bank achieved a net profit of RO 139.2 million for the year ended 31 December 2012 as against a net profit of RO 117.5 million reported in 2011, an increase of 18.5 per cent. Net interest income increased by 8.6 per cent to RO 230.4 million in 2012 from RO 212.1 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 RO 93.2 million was higher by 13.5 per cent compared to the year 2011

Operating expenses for the year ended 31 December 2012 was at RO 134.6 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 the year ended 31 December 2012 was RO 57.9 million as against RO 56.1 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 RO 33.5 million from impairment for credit losses as against RO 25.6 million recovered in 2011. Share of loss from associates was RO 3.4 million in 2012 as against RO 3.5 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 RO 5,601 million as against RO 4,819 million as at 31 December 2011. Customer deposits, including CDs, increased by 10.9 per cent to RO 5,378 million as against RO 4,850 million as at 31 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 were RO 0.072 in 2012 as against RO 0.065 in 2011. The bank’s capital adequacy ratio stood at 16.32 per cent as on 31 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.