Investor Presentation June 2020 Contents Bank Muscat Introduction - - PDF document

Investor Presentation June 2020

Contents

• Bank Muscat Introduction
• Operating Environment
• Bank Muscat Business - Overview
• Financial Performance
• Annexures

2

Note: The financial information is updated as of 30th June 2020, unless stated otherwise.

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Bank Muscat Introduction

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Bank Muscat at a glance

Overview

• # 1 Bank in Oman with a significant active customer base with over 2

million clients and a workforce of 3,821 employees as of 30th June 2020.

• Established in 1982, headquartered in Muscat with 170 branches across

Oman, 2 branches overseas, and 3 representative offices

• Fully diversified commercial bank offering corporate and retail banking

services

• Primarily domestic dominated operations with over 95% of operating

income generated in Oman

• Meethaq – pioneer of Islamic Banking services in Oman, officially

launched in January 2013 with full fledged product and services

• ffering
• Listed on the Muscat Securities Market (with a market cap of USD 2,870

million as of 30th June 2020), London Stock Exchange & Bahrain Stock Exchange

Key Financials

Royal Court Affairs, 23.63 Dubai Financial Group LLC, 11.77 Jabreen International Development, 9.99 Civil Service Pension Fund, 7.80 Ministry of Defence Pension Fund, 6.49 Public Authority for Social Insurance, 5.13 Others, 35.19

I n US$ Millions, unless

• therwise stated

June' 20 2019 2018 2017 Total Assets

32,360 31,925 31,917 28,959 Gross Loans 24,231 23,875 24,073 22,484 Deposits 22,239 20,894 21,981 19,271 Operating I ncome 585 1,227 1,160 1,132 Net Profit 181 482 467 459 Tier 1 18.74% 18.78% 17.98% 16.87% Total CAR 19.76% 19.72% 19.22% 18.45% Loans to Deposit Ratio 104.65% 110.37% 105.63% 112.26% NPL Ratio 3.65% 3.25% 3.09% 2.94% Cost/ I ncome 41.75% 41.50% 42.61% 42.22% ROA 1.12% 1.51% 1.53% 1.61% ROE 7.78% 10.73% 10.88% 11.44%

Major Shareholders as of June 2020 Bank Muscat Foot Steps

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Bank Muscat – Key Highlights

Management

• Largest Bank in Oman by total assets of 35.6%, as of

31st May 2020, around the size of next 3 Omani banks combined.

• Market Capitalisation of USD 2,870 million as at 30th

June 2020

• Largest branch network with 170 domestic branches
• The only bank in Oman to be designated a “D-SIB”

Strong Financial Metrics Stable Operating Environment Highest Government Ownership Dominant Franchise in Oman

• Highest Government Ownership among Omani

Banks

• Royal Court Affairs: 23.63%
• Significant direct and indirect Government
• wnership through various entities.
• Stable and consistent financial performance
• Solid topline income growth
• Stable cost-to-income ratio despite business

and infrastructure expansion

• Strong and sustainable profitability metrics:
• Operating income 2015-2019 CAGR of 3.7%
• Net profit 2015-2019 CAGR of 1.4%
• Stable banking sector
• Prudential regulatory environment
• Stable political system in the Oman with

excellent diplomatic relationship in the region

• Economic growth in Oman supported by

increase in hydrocarbon production, strengthening and growing local demand, and disciplined fiscal policy measures

• Stable and experienced management

with proven track record of successful

• rganic and inorganic growth
• Good corporate governance

Solid Capital Position

• Strong capitalization levels offering room for

substantial growth

• CAR of 19.76% as of 30th June 2020

Stable Asset Quality

• Conservative lending approach
• Strong risk architecture and policies
• Adequate asset quality metrics

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Operating Environment

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Sultanate of Oman - Overview

Overview Gov’t I nvestment Expenditure GDP Composition as of March 2020

(1) Source: National Center for Statistics (July ’20), Rating Reports: Moody’s and S&P as of Apr 2020

Oman Saudi Arabia UAE Qatar Bahrain Kuwait Note: Investment expenditure includes Civil Ministries development & Capital expenditure, Oil & Gas production

• 2nd Largest country in the GCC with an area covering approx. 309.5 thousand km2,

strategically located, sharing borders with Saudi Arabia, & UAE.

• Stable Political System, excellent diplomatic relations in the region
• Oman explicitly aims to create a neo-liberal free market economy, where the private

sector is the driver of the economy as opposed to the state

• Population of 4.51mn as of July 2020 - predominantly represented by Omani Nationals

who account for 60.4% of the total population

• The economy will continue to grow with the following drivers:
• The increase in hydrocarbon production
• The Government’s balanced support for the economy with disciplined fiscal policy

measures

• Strengthening

and growing local demand; increasing services and activities contribution to GDP

• Govt.

initiated a dedicated program called “Tanfeedh” to focus on economic diversification through focus on key sectors in phase 1 viz. manufacturing, logistics and tourism Petroleum Activities, 33.15% Manufacturing & Mining, 8.23% Const., Elec. & Water supply, 6.85% Wholesale & retail trade, 6.39% Hotels & Restaurants, 1.08% Transport, storage & communication, 5.06% Financial I ntermediation, 6.42% Real Estate Services, 4.40% Public admin & defence, 11.67% Other services I ncl Agri, Fishing & Base Chemicals, 16.75% 8,610 7,605 6,896 7,501 6,070 1,312 ‐ 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2015 2016 2017 2018 2019 Apr' 20

Investment Expenditure in USD Mn

Key I ndicators

(1)

2019 2020 Sovereign Ratings Moody's\S&P Ba1/BB Ba3/BB- Budget Surplus\Deficit in OMR

• 2.65 Bn (Dec '19)

0.18 Bn (Apr '20) Surplus\Deficit % of total revenue

• 25% (Dec '19)
• Est. '-23% (Dec '20)

Net Public Debt (% GDP) 53%-55% Est 55%-60%

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Oman Macro Overview



Oman’s economy has been some extend resilient to strong headwinds in spite of low oil prices in the past 5 years.



However, current pandemic situation coupled with further pressure on oil prices has increased the stress level of the government’s fiscal position.



Government has been taking major steps towards economic diversification and specific relief measures to support the economy:

• Tanfeedh initiatives, Duqum

developments, number of large projects in certain sectors including oil & gas, infrastructure, tourism and so on.

• Introduction of or revising key legislations with regard to foreign investments,

Public Private Partnership, Bankruptcy law, Banking law, Tax laws, Commercial Companies law etc.

• Key framework for Vision 2040 to navigate the economy in the long term.
• Short terms measures include job sector reforms initiated, Job Security Fund

established, prioritization of

• Govt. capital expenditure, key development

projects worth RO 300 million, rationalizing current and administrative expenditure of various ministries and government entities.

• Announced

number

• f

relief measures to support the economy and businesses in the near term which include tariff reduction or waiver, deferral instalments and others.



Local and international borrowings by sovereign and government entities to address the fiscal deficit.



According to IMF , due to the outbreak of the COVID-19, GDP growth is expected to fall to -2.8% in 2020 and pick up to 3% in 2021.

Source: Real GDP growth rate & Public Deficit forecast as per IMF reports as of Apr’ 20 69,740 66,205 70,504 79,171 76,039 0.0% ‐5.1% 6.5% 12.3% ‐4.0% ‐6.0% ‐4.0% ‐2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 55,000 60,000 65,000 70,000 75,000 80,000 85,000 2015 2016 2017 2018 2019

GDP Growth

In USD Millions Real GDP Growth 12,029 14,301 9,764 6,881 6,891 17% 22% 14% 9% 9% 0% 5% 10% 15% 20% 25% ‐ 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2015 2016 2017 2018 2019

Public Deficit

In USD Millions % of GDP

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Oman Banking Sector - Overview

Overview

• The Omani banking sector comprises of 7 local banks, 2 specialized

banks, 9 foreign commercial banks and two full fledged Islamic Banks

• The top 3 banks after bank muscat contribute around 35.7% of total

sector assets. bank muscat represents 35.6% of total banking sector assets as of May 2020

• Conservative and Prudent Regulator
• A number of regulations and caps in place to support the growth,

stability and sustainability of the Omani banking sector

• Adequate asset quality

with relatively low impaired assets and sound capitalization

• Implemented Basel 3 regulation with effect from Jan 2014

Loans and Deposit Growth

Gross Loan: + 6.1% Deposits: + 4.2% US$ billion

Oman in the GCC banking sector context(1)

Asset Quality(2)

(2) Source: Central Banks: Kuwait & KSA as of Jun’ 20. Oman, Bahrain, &

Qatar as of May’ 20. UAE as of Mar’ 20.

(1) GDP data is actual for FY 2019 (Source: World Bank,

National Central Banks)

50.8 59.7 65.1 67.1 68.9 47.2 54.5 59.2 61.4 62.5

2016 2017 2018 2019 May 2020

Gross loan Deposits 852 757 428 234 210 93 421 793 184 134 39 76 202% 95% 232% 175% 539% 123% 0% 100% 200% 300% 400% 500% 600% 200 400 600 800 1000 UAE Saudi Arabia Qatar Kuwait Bahrain Oman

Assets as a % of GDP

Total Assets in $ Bn GDP in $ Bn Assets as a % of GDP

852 757 428 234 210 93 5.6% 1.8% 1.9% 1.6% 4.8% 1.9%

‐3.0% 2.0% 7.0% 12.0%

UAE Saudi Arabia Qatar Kuwait Bahrain Oman

Total Assets NPL/ GLs

Amounts in USD Bn

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Banking Sector Overview Cont’d…

 Banking sector has performed relatively well in the last few years in spite of lower oil prices and challenging economic

situation.

 However, in the current year, sector performance has come under pressure due to uncertainty arising from the pandemic.  Central Bank of Oman (CBO) has been taking number of measures to support the economy and banking sector. Key

measures include;

• Loan installment deferral package offered to impacted businesses and individual borrowers
• Waiver of interest in cases of job loss / salary reduction.
• Waiver of certain fees for businesses and individuals
• Relaxation in risk classification on availing deferral package
• Additional liquidity support provided at concessional rates to banks
• Lending ratio limit relaxed providing scope for additional lending
• Capital stimulus by reducing regulatory limits. Prudential filter on IFRS 9 ECL introduced

 Banks in Oman are well positioned with good capital and liquidity level with these measures.

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Bank Muscat – Unrivalled leading Market Position in Oman

Total Assets (USD Mn) Gross Loans (USD Mn) Deposits (USD Mn) Net Profit (USD Mn)

6,486 8,226 6,239 9,309 9,579 10,680 32,361

Ahli Bank Oman Arab Bank HSBC Bank Oman Sohar International National Bank of Oman Bank Dhofar Bank Muscat

4,044 6,940 5,709 6,639 7,675 8,655 24,231

HSBC Bank Oman Oman Arab Bank Ahli Bank Sohar International National Bank of Oman Bank Dhofar Bank Muscat

4,260 5,821 6,704 4,971 6,834 7,273 22,239

Ahli Bank Sohar International Oman Arab Bank HSBC Bank Oman National Bank of Oman Bank Dhofar Bank Muscat

32 27 34 ‐8 41 39 181

Ahli Bank Oman Arab Bank Sohar International HSBC Oman Bank Dhofar National Bank of Oman Bank Muscat

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Bank Muscat – Dominant domestic franchise in the region

Market Share ‐ Assets Market Share – Deposits Asset Quality Strong Capitalization

9.2% 22.2% 27.7% 18.8% 35.6% 41.2% 62.4% CBQ ENBD FAB NCB BM NBK QNB 5.0% 2.0% 1.7% 3.6% 3.9% 1.8% 5.8% 90.0% 100.0% 140.0% 126.2% 91.0% 185.5% 116.9%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0%

CBQ QNB NCB BM FAB NBK ENBD

NPL/GL LLR/NPL

7.5% 28.2% 31.7% 20.4% 39.3% 35.4% 69.1% CBQ ENBD FAB NCB NBK BM QNB 17.3% 17.3% 15.2% 16.0% 18.7% 14.9% 15.0% 1.0% 1.2% 1.2% 0.9% 1.0% 1.9% 2.3% QNB ENBD FAB NCB BM NBK CBQ

Tier 1 Tier 2

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Bank Muscat Business Overview

Banks Vision & Strategic Pillars

Customer Centricity Efficiency & Productivity Agility & Innovation Market Leadership

To serve you better, everyday.

Leading in everything we do by offering simplified & integrated banking solutions.

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Bank Muscat Brand value  Customer convenience, High Service Quality and Customer centric approach through “To Serve you better, everyday” philosophy  Leading financial services provider with largest branch network & innovative

product and service offering

 Technology driven with multiple digital channels for sales and services  Dominant position size & proven resilience Strong Financial position  Strong financial position, Business capabilities & Shareholding  Strong Capital and Liquidity  Lending Power / Single Borrower size  Strong Profitability coupled with conservative credit provisioning policies  Market share leadership in loans and deposit. Human Resource strength  Capable Management  Talented and Young workforce

Current Situation and Strategy

Security

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“Safety, Security and Sustainability”

Health Risk  The Bank has been managing the current situation with a well planned approach.  Focus has been to support customers with number of measures while providing safe and secure working environment to our employees Liquidity Risk  Very strong liquidity position to ensure long-term sustainability  Continue to focus on stable deposit growth Capital Position  Continue to have a highest capital adequacy ratio  Capital mix is driven by strong core equity ratio Credit Risk  Continue to follow a conservative and prudent credit policy  Prudent provision policy and good level of provision coverage

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Bank Muscat Business Lines

Key Highlights Asset Contribution Profit Contribution

Corporate Banking

 Leading Corporate Bank Franchise offering

the full array

• f

corporate banking services

 ~ 7,200 corporate customers in Oman  Strong expertise in project finance  USD 11.63 bn

• 36% of total assets

 USD 76.36 mn

• 42% of total profit

Wholesale Banking

 Comprise of treasury, corporate finance,

asset management and financial institutions

 USD 6.98 bn

• 22% of total assets

 USD 46.49 mn

• 26% of total profit

Personal Banking

 Leading Retail Bank platform in Oman  Over 2 million retail customers in Oman  Largest

distribution network (149 conventional branches)

 USD 8.72 bn

• 27% of total assets

 USD 65.19 mn

• 36% of total profit

Meethaq – I slamic Banking

 RO

120 mn (c.US$ 311 mn) capital assigned to this business

 Officially

launched in January 2013, currently operating through 21 full fledged Islamic branches.

 USD 3.81 bn

• 12% of total assets

 USD 10.38 mn

• 6% of total profit

I nternational Operations

 Presence

in Saudi Arabia & Kuwait through a branch network, and 3 Rep

• ffices across Asia.

 USD 1.19 bn

• 4% of total assets

 USD -18.18 mn

• 10% of total profit

Import Trade 3.5% Export Trade 0.3% Wholesale & Retail Trade 1.9% Mining & Quarrying 6.9% Construction 3.8% Manufacturing 7.7% Electricity, gas and water 7.9% Transport and Communication 8.5% Financial Institutions 4.3% Services 8.9% Personal Loans 24.7% Agriculture and Allied Activities 0.2% Government 0.4% Real Estate 3.2% All Others 0.9% Housing Loans 15.9% Non‐Resident Lending 0.8%

Loans by sector: Deposits by segment:

0.24% 43.90% 30.67% 25.19% Financial Institutions Individual & Others Ministries & Other Gov Orginisations Private Commercial

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Corporate Banking

Amounts in USD mn.

Overview Opportunities Strategy

• Leading Corporate Banking Franchise
• Extensive and expanding range of products

and services

• Strong project finance capabilities
• Large corporate client portfolio with

c.7,200 customers and lead bank for top tier Omani corporate entities

• High level of sophistication differentiated

through technology led investments

• Commitment to maintain strong control
• ver asset quality
• Large number of infrastructure/

I ndustrial projects in the pipeline

• Privatisation and diversification drive by

Government

• I ncreasing business flows between Oman

and regional countries

• Leverage on leading position and expertise
• Reinforce presence in Oman across all segments

in the value chain

• Benefit from large infrastructure and industrial

projects in Oman

• Focus fee income generating business
• Transaction banking business to enhance fee

income

• Explore cross sell opportunities among business

lines

• Utilize presence in regional markets
• Grow GCC trade flows share

Corporate Loans- Peer comparison

Asset Growth Operating I ncome

US$ billion 14.51 5.38 4.14 4.30 2.80 3.81 4.26 BankMuscat Bank Dhofar NBO Sohar International HSBC Oman Ahli Bank Oman Arab Bank 10,273 10,623 10,846 11,596 11,232 11,636 2015 2016 2017 2018 2019 Jun' 20

Total Assets 297 319 343 373 377 191 2015 2016 2017 2018 2019 Jun' 20 Operating Income

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Wholesale Banking – Global Financial Institutions, Investment Banking & Treasury

Amounts in USD mn.

Overview Opportunities Strategy

• Treasury: funding, asset and liability

management requirements, offer structured solutions to corporate clients

• Corporate Finance: Leader in corporate advisory:

series of successful transactions and track record

• utside Oman
• Financial Institutions: trade, DCM and

correspondent banking services

• Asset Management: Largest Omani mutual fund

manager with potential for growth & expanding

• utside Oman. Investment solutions for high net

worth individuals

• Significant cross-sell opportunities to other

wholesale banking clients

• Leverage transaction experience in attracting new

corporate finance mandates

• Leverage regional expansion to introduce new

products

• Strong growth potential in the high net worth

market segment

• Strengthen Bank Muscat’s leading position

in specialised areas

• Utilize the presence in regional markets to

expand business

• Leverage specialised product expertise in other

markets

• Leverage on expertise built to further grow

the market share and increase the market potential

Securities Portfolio Asset Growth Operating I ncome

5,269 5,169 6,678 6,657 6,974 2016 2017 2018 2019 Jun' 20 Total Assets 156 162 172 193 71 2016 2017 2018 2019 Jun' 20 Operating Income

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Personal Banking

Amounts in USD mn.

Overview Opportunities Strategy

• Leading Personal Banking Franchise in Oman
• Over 1.90 million customers
• Front-runner across retail banking segments

including cards, bancassurance and remittances

• Largest delivery channel network in Oman

(170 branches, 467 ATMs, 128 CDMs, 147 FFMs and the best online platform in Oman)

• Substantial low cost retail deposit base
• Merchant acquiring market share of over 70%

by volume as of July 2020 and leading e-commerce business in Oman

• Government spending resulting in job

creation

• I ncrease in salaries through various

government initiatives

• Favorable demographics
• Over 45% of the population less than 19

years old

• Housing finance
• Leveraging on leading presence in the retail

segment

• Increase penetration and cross sell
• Explore new business and product lines
• Technology-led product development and

service offerings

• Enhance process efficiency and customer

convenience

• Focus on development and utilization of

e-delivery channels

Personal Loans- Peer comparison

Asset Growth Operating I ncome

US$ billion 9.71 3.27 3.54 1.90 2.68 2.34 1.24 BankMuscat Bank Dhofar NBO Ahli Bank Oman Arab Bank Sohar International HSBC Oman 7,514 8,148 8,553 8,940 8,742 2016 2017 2018 2019 Jun' 20

Total Assets 497 509 489 539 266 2016 2017 2018 2019 Jun' 20 Operating Income

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Meethaq – Islamic Banking

Amounts in USD mn.

Overview Opportunities Strategy

• One of the most successful I slamic banking
• peration in Oman since 2013
• 21 dedicated branches become operative

throughout the Sultanate

• Innovation in product offering and services to

create niche

• Established Sharia Board comprising of

experienced and reputable Sharia scholars

• Growth momentum continued since the launch

indicating potential in the market

• Shari’a governance structure ensures transparent

banking

• Large network at disposal to leverage business
• Awareness drives on Shari’a compliant banking

to increase customer base

• To be the market leader by far
• Full fledged product and service offerings
• I ncrease Meethaq exclusive branch

network to an optimum level

• Customer Centric approach and transparency
• Technology driven customer service delivery

within the Shari’a compliance ambit

Financing Portfolio Operating I ncome

2,259 2,566 2,940 3,096 3,122 500 1,000 1,500 2,000 2,500 3,000 3,500 2016 2017 2018 2019 Jun' 20 66 70 79 78 39 10 20 30 40 50 60 70 80 90 2016 2017 2018 2019 Jun' 20

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Financial Performance

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Financial Highlights – H1 2020

 Net Profit of USD 180.67 mn vs. USD 243.24 mn, a decrease of USD 62.59 mn or 25.7% over 2019  Net Interest / Net financing Income at USD 416.88 mn, higher by USD 3.92 mn or 0.95% over 2019  Other income at USD 168.02 mn, lower by USD 27.01 mn or 13.8% lower than 2019, mainly due to subdued business

conditions due to COVID-19 related lockdowns in Q2 2020 and waiver of certain fees due to regulatory measures

 Operating expenses at USD 244.23 mn, was lower by 3.2% compared to 2019  Net Impairment on financial assets of USD 125.19 mn, higher by USD 60.25 mn. The increase is mainly due to precautionary

and collective provisions made on a forward looking basis given the emerging stress in economic conditions as a result of the impact of COVID-19 and continued depression in oil prices.

 Operating profit decreased by 4.2% to USD 340.77 mn over 2019.  Net loans decreased by USD 306 mn or 1.3%; reflecting prepayments of certain large exposures in Q4 2019 and also the

general macro economic conditions evolving amidst the ongoing pandemic during the year

 Customer deposits increased by USD 1,517 mn or 7.3% reflecting trust of customers in the bank

23

Operating Performance & Profitability

Overview Net I nterest Margins

• Resilient operating performance
• Stable top line income growth – 5 year CAGR of 3.7%
• Stable cost to income ratio with marginal growth in costs
• Strong core revenue generation with net interest income and

commission & fees over 90% of total operating income

• Increasing focus on top line commission & fee income
• Stable net interest margin in spite of increasing cost of funds

Operating I ncome & Cost to I ncome Profitability

66% 65% 68% 67% 71% 23% 21% 22% 22% 19% 11% 14% 10% 11% 10% 41.8% 42.2% 42.6% 41.5% 41.8% 0% 20% 40% 60% 80% 2016 2017 2018 2019 Jun' 20

Net Interest Income Net Commission & fees Other Income Cost to income ratio

3.89% 4.18% 4.41% 4.61% 4.51% 1.33% 1.61% 1.88% 2.10% 2.00% 2.56% 2.57% 2.53% 2.51% 2.51% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 2016 2017 2018 2019 June' 20 Yield % Cost % Spread %

459 459 467 482 181 12.50% 11.44% 10.88% 10.73% 7.78%

1.64% 1.61% 1.53% 1.51% 1.12%

‐4.00% 1.00% 6.00% 11.00% 16.00% 21.00% 26.00% 70 120 170 220 270 320 370 420 470

2016 2017 2018 2019 Jun' 20 Net Profit RoAE RoAA Amounts in USD mn.

24

Asset Quality

Overview Loan Growth

• Stable loan book growth
• Conservative lending approach
• Focus on high quality assets with access to top tier

borrowers

• Strong project finance capabilities
• Diversified loan portfolio across sectors
• Conservative provisioning approach compliance with IFRS 9

Gross Loans by Sector I mpaired assets & Provisioning

Import Trade 3.5% Export Trade 0.3% Wholesale & Retail Trade 1.9% Mining & Quarrying 6.9% Construction 3.8% Manufacturing 7.7% Electricity, gas and water 7.9% Transport and Communication 8.5% Financial Institutions 4.3% Services 8.9% Personal Loans 24.7% Agriculture and Allied Activities 0.2% Government 0.4% Real Estate 3.2% All Others 0.9% Housing Loans 15.9% Non‐Resident Lending 0.8%

21,484 22,484 24,073 23,875 24,231 2.91% 2.94% 3.09% 3.24% 3.64% 8.4% 4.7% 7.1% ‐0.8% 1.5% ‐2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 2016 2017 2018 2019 Jun' 20 Gross loans in USD (LHS) NPL% (RHS) Loan Growth % (RHS)

Amounts in USD mn. 815 851 959 987 1,114 624 660 745 774 883 130.6% 128.9% 128.7% 127.5% 126.2%

120.0% 125.0% 130.0% 135.0%

2016 2017 2018 2019 Jun'20 Credit Provision NPL LLR/NPL

25

Funding & Liquidity

Overview Funding Mix

• Stable funding structure with a diversified funding base
• Largest deposit base in Oman with significant granularity
• Retail deposits comprise 44% of total deposits
• Top 20 depositors represent 25% of total deposits and comprise of top

tier Omani institutions

• Strong capitalization levels
• Highest CAR in Omani peers and one of strongest in GCC peers
• Well capitalised with Total CAR at 19.76% & Tier 1 at 18.74%.

Minimum regulatory requirement of 13.25 % and 11.25% respectively.

Liquid Assets Capital Adequacy Ratio

71% 69% 72% 69% 72% 8% 8% 8% 10% 8% 15% 17% 16% 17% 16% 6% 5% 4% 4% 4% 2016 2017 2018 2019 Jun' 20 Deposits Borrowings Equity Others 14.75% 16.87% 17.98% 18.78% 18.74% 2.15% 1.58% 1.24% 0.94% 1.02% 16.90% 18.45% 19.22% 19.72% 19.76% 15.00% 16.00% 17.00% 18.00% 19.00% 20.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2016 2017 2018 2019 Jun' 20 Tier 1 Ratio Tier 2 Ratio CAR Ratio

1,368 1,538 1,237 2,260 1,574 2,067 2,080 2,589 3,023 3,575

2,705 2,428 3,394 2,031 2,390

21.85% 20.88% 22.62% 22.91% 23.30% 2016 2017 2018 2019 Jun' 20 Bank Placements T Bills & GDBs Cash & equivalent Liquid Assets to Total assets Amounts in USD mn.

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Annexures

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27

Balance Sheet

Amount s in USD Mn 30-Jun- 20 31-Dec-19 31- Dec- 18 31-Dec- 17 31- Dec- 16 31-Dec-15

Cash and bal. with Central Bank 2,390 2,031 3,394 2,428 2,705 6,265 Due from banks 1,575 2,260 1,236 1,538 1,368 2,575 Loans and Advances 20,229 20,031 20,334 19,113 18,447 17,391 I slamic financing receivables 3,044 3,029 2,884 2,520 2,221 1,649 Non trading investments 4,268 3,753 3,298 2,668 2,748 4,068 Tangible fixed assets 185 205 181 187 194 199 Other assets (incl. invt in associates) 670 616 590 505 422 436

Tot al asset s 32,360 31,925 31,917 28,959 28,104 32,582

Bank deposits/ FRNs / Bonds 3,564 4,281 3,588 3,478 3,157 7,924 Customer deposits (incl. CDs) 19,574 18,210 19,491 16,778 17,389 17,502 I slamic Customer's Deposit 2,665 2,683 2,490 2,493 1,982 1,624 Other liabilities 1,447 1,478 1,239 1,087 962 1,034 Subordinated debt 51 68 102 315 430 625 Convertible bonds 84 167 246

Tot al liabilit ies 27,300 26,720 26,909 24,236 24,086 28,954

Share capital and premium 2,226 2,184 2,146 2,027 1,911 1,803 Total reserves 1,311 1,316 1,276 1,222 1,111 1,007 Cumulative changes in fair value

• 23
• 1
• 13

44 50 50 Retained profits 1,208 1,369 1,261 1,092 945 769 Shareholders' equity

4,722 4,868 4,669 4,385 4,017 3,629

Perpetual Tier I Capital

338 338 338 338 Tot al liabilit ies + shareholders' equit y 32,360 31,925 31,917 28,959 28,104 32,582 Key rat ios

Loans and advances/ customer deposits 104.6% 110.4% 105.6% 112.3% 106.7% 99.4% Shareholders' equity/ total assets 14.59% 15.25% 14.63% 15.14% 14.29% 11.14% Subordinated debt/ (debt + equity) 1.00% 1.28% 2.00% 6.71% 9.66% 14.68% BI S total capital ratio 19.76% 19.72% 19.22% 18.45% 16.90% 16.10%

18-Aug-20

28

Profit & Loss Statement

Amounts in USD Mn 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15

Net interest income 383 756 719 667 651 628 Net income from Islamic financing 34 68 72 64 61 48 Other operating income 168 403 370 402 369 382

Operating income

585 1,227 1,160 1,132 1,081 1,058 Operating costs (244) (509) (494) (478) (452) (444) 341 718 666 654 629 614 Net impairment losses on financial assets (125) (145) (112) (112) (102) (108) Gain/(loss) from associates

• - - 6 4 5

Profit before Tax

216 572 554 548 531 511 Taxation (35) (90) (88) (89) (72) (57)

Net Profit

181 482 467 459 459 454

Key ratios

Cost/income ratio 41.8% 41.5% 42.6% 42.2% 41.8% 42.0% Return on average assets 1.12% 1.5% 1.53% 1.61% 1.64% 1.72% Return on average equity 7.78% 10.7% 10.88% 11.44% 12.50% 13.68% Basic EPS (US$) 0.144 0.156 0.153 0.158 0.166 0.174 Share price (US$) 0.873 1.127 1.065 1.023 1.226 1.226