Bank Muscat Q2 profit slumps 62%

Oman's Bank Muscat second-quarter profit fell 62 per cent, according to Reuters calculations, partly because of provisions against potential losses at two Saudi conglomerates.

Oman's largest bank by market value said yesterday it took RO40.2 million (Dh383.5m, $104.4m) in provisions in the second quarter. Part of that was for its "exposures to two large business groups in Saudi Arabia, Al Gosaibi and the Saad Group".

Bank Muscat said first-half net profit rose five per cent to RO60.4m, but did not give a quarterly breakdown. According to Reuters calculations, Bank Muscat's second-quarter net profit fell 62 per cent to RO12m ($31.17m) from RO31.29m in the same quarter of 2008.

The average second-quarter profit forecast of three analysts polled by Reuters was RO43.47m.

One analyst applauded Bank Muscat for disclosing its exposure to family-owned Saudi groups Saad and Ahmad Hamad Algosaibi and Brothers (Ahab) which are undergoing debt restructuring.

Many Gulf Arab banks have said they face potential write-downs.

"In my view the results are positive and investors will push the shares up... in the coming sessions as the uncertainty over the Saudi losses has been addressed," said Sunil Dhall, Vice-President at Gulf Baader Capital Markets in Muscat.

Saudi banks have until now not commented on their exposure to Saad and Algosaibi, prompting analysts to say that more provisioning will come later in the year.

Bank Muscat said first-half net profit was RO60.4m from RO57.8m. The figure includes a RO53.2m post-tax gain on the sale of its stake in Indian bank HDFC.

Bank Muscat said in June the sale of its remaining stake in HDFC would boost second-quarter results by around RO21m.

Bank Muscat said its first-half results were preliminary and that it would report a more detailed income statement on June 30.

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