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 RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2016

HSBC Bank Oman S.A.O.G. (‘HBON’) announces that at the Board of Directors’ (the ‘Board’) meeting held on Wednesday, 27 July 2016, the Board approved HBON’s unaudited financial results for the six months ended 30 June 2016.

  • Net profit increased by 51.9% to RO7.9m (compared to RO5.2m for the same period in 2015) due to higher operating income and lower operating expenses partly offset by higher loan impairment charges.

  • Net operating income, before loan impairment charges, increased by 3.6% to RO37.4m compared to RO36.1m for the same period last year during which we had some significant one-off transactions including the sale of our branches in India. 

  • Net interest income increased by 10.0% to RO26.5m (compared to RO24.1m for the same period in 2015) due to higher interest income from corporate lending coupled with rising yields from the investment of surplus liquidity in government securities,  partially offset by lower interest income received from retail customers due to the run-off of high yield retail loans which were written some years ago in a higher interest rate environment..

  • Net fee income decreased by 4.4% to RO6.5m (compared to RO6.8m for the same period in 2015) due to lower wealth management and custody fees, the latter as a result of subdued activity on the MSM.

  • Net trading income increased by 20.6% to RO4.1m (compared to RO3.4m for the same period in 2015) due to higher foreign exchange volumes at improved margins as well as the non-repeat of the RO0.2m  foreign exchange loss incurred in 2015.

  • Other operating income fell to RO0.3m (compared to RO1.9m for the same period in 2015) due to the gain on the disposal of HBON’s India operations of RO0.8m and other legacy investments of RO0.7m being booked in 2015.

  • A net charge of RO3.4m has been reported for loan impairment charges (compared to a net charge of RO2.2m for the same period in 2015) arising from retail-specific provisions of RO2.4m and the corporate general provision of RO1.8m attributed to the growth in corporate loans and advances. These were partly offset by a net recovery of RO1.2m from corporate customers.

  • Operating expenses fell 10.5% to RO24.8m (compared to RO27.7m for the same period in 2015) due to tight cost control.

  • Loans and advances, net of provisions and reserved interest, grew by 6.4% to RO1,399.1m (compared to RO1,314.7m as at 30 June 2015) largely from our  corporate loan book. Customer deposits decreased by 5.7% to RO1,834.3m (compared to RO1,945.2m as at 30 June 2015) due to a continuing reduction in Government and corporate deposits as the rest of the market bid more aggressively for deposits. The net loans to deposits ratio improved to 76.3% (compared to 67.6% as at 30 June 2015).

  • HBON’s capital adequacy ratio stood at 18.4% as at 30 June 2016 (compared to 17.5% as at 30 June 2015), representing a continuing strong capital base for future growth.