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 ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016

HSBC Bank Oman S.A.O.G. (‘HBON’) announces that at the Board of Directors’ (the ‘Board’) meeting held on Sunday, 29 January 2017, the Board approved HBON’s annual financial results for the year ended 31 December 2016.

 

  • Net profit increased by 31.0% to RO16.9m (compared to RO12.9m for the year ended 31 December 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 2.3% to RO75.2m compared to RO73.5m for the year ended 31 December 2015 during which we had some significant one-off transactions including the sale of our branches in India and Pakistan. 

     

  • Net interest income increased by 10.4% to RO54.3m (compared to RO49.2m for the year ended 31 December 2015). This underlying strength was 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 older high yield retail loans.

     

  • Net fee income decreased by 1.6% to RO12.3m (compared to RO12.5m for the year ended 31 December 2015) due to lower custody fees reflecting the MSM performance and lower trade finance fees reflecting declining trade numbers for Oman.

 

  • Net trading income increased by 11.4% to RO7.8m (compared to RO7.0m for the year ended 31 December 2015) mainly due to the non-repeat of the RO0.5m one-off foreign exchange loss incurred in 2015.

 

  • Other operating income fell to RO0.6m (compared to RO4.5m for the year ended 31 December 2015) primarily due to the non-repeat of the gain on the disposal of legacy investments of RO4.6m being booked in 2015.

     

  • A net charge of RO5.6m has been reported for loan impairment charges (compared to a net charge of RO3.4m for the same period in 2015) arising from retail-specific provisions of RO4.1m and the corporate general provision of RO2.1m attributed to the growth in corporate loans and advances.

     

  • Operating expenses fell 11.5% to RO48.4m (compared to RO54.7 for the year ended 31 December 2015) due to tight cost control.

     

  • Loans and advances, net of provisions and reserved interest, grew by 18.1% to RO1,418.4m (compared to RO1,200.8m  as at 31 December 2015).  Customer deposits increased by 3.6% to RO1,866.7m (compared to RO1,802.3m as at 31 December 2015).  The net loans to deposits ratio grew to 76.0% (compared to 66.6% as at 31 December 2015).

     

  • HBON’s capital adequacy ratio stood at 18.7% as at 31 December 2016 (compared to 19.4% as at 31 December 2015).

     

  • The Board of Directors proposes a cash dividend of RO0.005 per share (nominal value per share of RO0.100) amounting to RO10.0m for the full year 2016.

    The annual financial results and proposed cash dividends for the year ended 31 December 2016 are subject to the approval of the Central Bank of Oman and the shareholders of the bank.