of  

or
Sign in to continue reading...

Omani Banks’ Q1’18 Result Review -18 April

IM Insights
By IM Insights
5 years ago
Omani Banks’ Q1’18 Result Review -18 April

Provision


Create FREE account or Login to add your comment
Comments (0)


Transcription

  1. Omani Banks ’ Q1’18 Result Review      Date:April 18, 2018 Net profit up 10.5%YoY and 8.5%QoQ on lower provision charge Operating Income up 6.2%YoY (down 6.7%QoQ) while operating expenses were up 7.1%YoY and down 1.6%QoQ Net loans reached OMR 20.81bn (+7.2%YoY and +2.1%QoQ) Customer deposits touched OMR 19.74bn (+4.2%YoY and +4.0%QoQ) Loan to deposit ratio of the sector reached 105%, down from 107% but still above 103% a year ago. Combined operating profit showed lackluster performance All eight listed banks of Oman have posted a combined operating income of OMR 240mn (+6.2%YoY; -6.7%QoQ) in Q1’18. However, operating expenses were slightly higher than expected resulting in operating profit at OMR 125mn (+5.4%YoY; 11%QoQ) being 5% below our estimate. Provision Expense almost halved on QoQ basis and declined by 40%YoY The combined provision expense of banks, (excluding Ahli Bank which has not disclosed its provision charge for the quarter) declined by 40%YoY and 49%QoQ. Net profit beat our expectation by 7%, combined profit up by +10.5%YoY and +8.5%QoQ In spite of operating profit being slightly below expectation, total net profit surprised positively on exceptionally lower provision charges reported for Q1’18. The combined net profit of listed banks reached OMR 96.5mn, increasing by 10.5%YoY and 8.5%QoQ. Within the 8 banks, Bank Muscat (BKMB) and Bank Nizwa (BKNZ) posted QoQ declines and National Bank of Oman (NBOB) was the only bank which posted a YoY decline in its net profit for Q1’18. OMR mn Q1-17 Bank Muscat National Bank of Oman Bank Dhofar Bank Sohar Ahli Bank HSBC Oman Bank Nizwa Alizz Islamic Bank Total 61.9 18.9 17.3 6.6 7.1 5.7 1.3 -0.6 118.2 Q4-17 Q1'18 YoY Operating Profit 72.7 59.4 -4.0% 14.6 16.9 -10.5% 17.9 16.6 -4.4% 15.0 11.9 80.0% 9.8 9.2 30.2% 8.0 8.1 43.2% 1.8 1.9 42.7% 0.3 0.6 139.9 124.6 5.4% QoQ Q1-17 -18.3% 16.0% -7.4% -20.2% -6.0% 1.8% 3.7% 107.5% -11.0% 44.2 13.8 12.5 6.0 5.2 5.7 0.6 -0.7 87.3 Q4-17 Q1'18 Net Profit 46.6 44.8 9.5 12.6 12.8 13.6 6.0 8.9 6.9 7.1 5.5 8.1 1.5 1.0 0.2 0.3 88.9 96.5 YoY QoQ 1.3% -8.5% 8.6% 48.6% 36.4% 41.5% 75.8% -3.8% 32.6% 5.9% 47.5% 2.8% 48.4% -29.4% 101.2% 8.5% 10.5% Source: Company Financials, U Capital Research Amongst the banks, best operating performance was shown by HSBC Oman (HBMO). Its operating profit increased by 43.2%YoY and 1.8%QoQ and its net profit increased by 41.5%YoY and 48.4%QoQ. The next best performer was Bank Nizwa, which managed to increase its operating profit by 42.7%YoY and 3.7%QoQ. 1 P.O.BOX 1137, PC 111 – CPO, Sultanate of Oman l CR No. 1279406 l Tel: +968 2494 9000 l Fax: +968 2494 9099 l Email: info@u-capital.net l Web: www.u-capital.net
  2. Combined net loans reached OMR 20 .81bn & deposits reached OMR 19.74bn The combined net loans (including Islamic Finance Assets) of all 8 banks reached OMR 20.81bn, +7.2%YoY and +2.1%QoQ. Within the banks, Alizz Islamic Bank and Ahli Bank increased their net loans the most at 10.1%QoQ and 8.2%QoQ during Q1’18. The combined customer deposits reached OMR 19.74bn, up by 4.2%YoY and 4.0%QoQ. Both loan and deposit growth were in line with our estimates. Loan to deposit ratio of the sector reached 105%, down from 107% but still above 103% a year ago. Net Loans - Q1'18 BKIZ HBMO BKNZ 2% 3% 7% ABOB 9% Deposits - Q1'18 HBMO 10% BKMB 41% BKNZ 3% BKIZ 3% ABOB 8% BKSB 10% BKMB 39% BKSB 8% BKDB 15% NBO 13% BKDB 16% NBO 13% Source: Company Financials, U Capital Research From within the 8 banks, Bank Dhofar witnessed loan book contraction during the first quarter of the year. All banks successfully increased deposits, led by Bank Muscat, NBO and Bank Dhofar. Credit disbursal during Q1'18, OMR mn Depsits Raised during Q1'18, OMR mn 134.6 212.0 116.0 172.4 75.2 46.3 32.2 31.2 89.3 21.2 82.5 81.9 68.7 40.6 13.0 ABOB BKMB BKSB BKIZ HBMO BKNZ NBO (28.3) BKDB BKMB NBO BKDB BKNZ ABOB BKIZ HBMO BKSB Source: Company Financials, U Capital Research 2 P.O.BOX 1137, PC 111 – CPO, Sultanate of Oman l CR No. 1279406 l Tel: +968 2494 9000 l Fax: +968 2494 9099 l Email: info@u-capital.net l Web: www.u-capital.net
  3. Appendix Omani Banks Coverage Universe Name BKMB BKDB NBOB BKSB ABOB HBMO BKNZ BKIZ Mkt Cap Last Px Target Price Upside / P/B'18e, (OMR mn) (OMR) (OMR) (Downside) (x) (%) P/E'18e, (x) ROE'18e, (%) Div Yield'18e, % Rating 1,120.0 0.380 0.495 30% 0.62 6.23 11% 6.7% BUY 460.9 0.189 0.222 17% 0.94 9.45 8% 5.4% Hold 310.6 0.191 0.214 12% 0.75 8.30 9% 7.9% Hold 290.5 0.148 0.173 17% 0.90 9.25 9% 3.4% Accumulate 231.9 0.155 0.179 15% 0.82 7.75 11% 6.5% Hold 210.0 0.105 0.140 33% 0.62 10.50 6% 5.7% Accumulate 130.5 0.087 0.114 31% 0.93 12.43 7% - BUY 81.0 0.081 0.092 14% 1.01 40.50 2% - BUY Mkt Cap (OMR mn) 1,452.4 1,278.5 1,116.4 1,428.2 1,440.6 1,238.1 1,096.0 1,120.0 935.4 982.6 857.3 885.0 993.8 460.9 310.6 290.5 210.0 231.9 132.0 81.0 Last Px (OMR) 2.421 0.404 0.398 3.529 0.604 1.651 0.398 0.380 4.351 0.322 2.765 2.214 0.604 0.189 0.191 0.148 0.105 0.155 0.088 0.081 Px Change (1M), % 4% -5% -5% 22% 2% 4% -1% -3% -6% -4% -3% -6% 4% -7% -4% 5% -2% -2% 1% 7% Px Target & Rating Effective Date 24-Dec-17 24-Dec-17 24-Dec-17 24-Dec-17 24-Dec-17 24-Dec-17 21-Mar-18 21-Mar-18 Source: Bloomberg, U Capital Research Peer Group Comparison Name BANK ALBILAD ABU DHABI ISLAMIC BANK COMMERCIAL BANK OF DUBAI COMMERCIAL BANK PQSC BOUBYAN BANK K.S.C SAUDI INVESTMENT BANK/THE UNION NATIONAL BANK/ABU DHAB BANKMUSCAT SAOG BLOM BANK GULF BANK DOHA BANK QPSC BANK AUDI SAL COMMERCIAL BANK OF KUWAIT BANK DHOFAR SAOG NATIONAL BANK OF OMAN SAOG BANK SOHAR HSBC BANK OMAN AHLI BANK Bank Nizwa Alizz Islamic Bank Average Median P/B'18e, (x) 1.08 0.98 0.81 2.52 0.58 0.62 0.93 1.13 0.81 0.72 1.10 0.94 0.75 0.90 0.62 0.82 0.94 1.01 0.96 0.91 P/E'18e, (x) 13.4 10.8 8.6 10.8 21.7 6.2 6.2 4.8 12.4 8.6 5.1 12.2 9.5 8.3 9.3 10.5 7.8 12.6 40.5 11.53 9.45 ROE'18e, Div Yield'18e, % % 14% 3.1% 18% 3.5% 14% 5.3% 7% 4.2% 2.0% 10% 10% 6.1% 11% 6.7% 9.9% 4.0% 9% 8.0% 7.1% 3.8% 8% 5.4% 9% 7.9% 9% 3.4% 6% 5.7% 11% 6.5% 7% 2% 0.10 5.4% 0.09 5.4% Source: Bloomberg, U Capital Research 3 P.O.BOX 1137, PC 111 – CPO, Sultanate of Oman l CR No. 1279406 l Tel: +968 2494 9000 l Fax: +968 2494 9099 l Email: info@u-capital.net l Web: www.u-capital.net
  4. Ubhar Capital SAOC (U Capital) Website: www.u-capital.net PO Box 1137 PC 111, Sultanate of Oman Tel: +968 2494 9034/35 Fax: +968 2494 9099 Email: research@u-capital.net Disclaimer: This report has been prepared by research department in Ubhar Capital SAOC (U Capital), and is provided for information purposes only. Under no circumstances is to be used or considered as an offer to sell or solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained therein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such, and the company accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents. All opinions and estimates included in this document constitute U Capital’s Research department judgment as of the date of production of this report, and are subject to change without notice. This report may not be reproduced, distributed or published by any recipient for any purpose. 4 P.O.BOX 1137, PC 111 – CPO, Sultanate of Oman l CR No. 1279406 l Tel: +968 2494 9000 l Fax: +968 2494 9099 l Email: info@u-capital.net l Web: www.u-capital.net