Bank muscat SAOG : Q3 2023 Financial Report

Official Use

Bank Muscat SAOG

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

This Document is classified as Official Use

Official Use

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

Contents	Page No.
1	Chairman's Report
2	Interim condensed consolidated statement of financial	1
position
3	Interim condensed consolidated statement of comprehensive	2
income
4	Interim condensed consolidated statement of changes in	3
equity
5	Interim condensed consolidated statement of cash flows	4
6	Notes to the interim condensed consolidated financial	5-26
statements

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						Page 1
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
		Unaudited	Audited		Unaudited
		30-Sep-2023	31-Dec-2022		30-Sep-2022
	Notes	RO' 000	RO' 000		RO' 000
Assets
Cash and balances with Central Banks		807,898		883,060	584,607
Due from banks	3	784,051		641,480	830,882
Loans and advances	4	8,329,406		7,967,470	7,778,622
Islamic financing receivables	4	1,535,948		1,449,424	1,450,503
Investments securities	5	1,821,559		1,571,984	1,782,400
Investment in associates	6	8,818		8,795	8,932
Other assets	7	156,792		185,465	237,749
Property, equipment and software		70,809		68,304		68,804
Total assets		13,515,281		12,775,982	12,742,499
Liabilities and equity
Liabilities
Deposits from banks	8	1,018,078		1,004,106	928,378
Customers' deposits	9	8,128,269		7,409,967	7,500,625
Islamic customers' deposits	9	1,356,508		1,236,854	1,208,330
Sukuk		46,501		45,876	46,515
Euro medium term notes		192,853		390,376	385,747
Other liabilities	10	415,899		400,973	453,614
Taxation		51,406		55,706		46,886
Total liabilities		11,209,514		10,543,858	10,570,095
Equity
Equity attributable to equity holders of parent:
Share capital	11	750,640		750,640	375,320
Share premium		156,215		156,215	531,535
General reserve		410,258		410,258	410,258
Legal reserve		139,229		139,229	119,149
Revaluation reserve		4,904		4,904	4,904
Cash flow hedge reserve		9,608		-	-
Cumulative changes in fair value		28,849		(587)	(11,815)
Foreign currency translation reserve		(3,791)		(3,881)	(3,495)
Impairment reserve / restructured loan reserve		2,136		2,330	2,335
Retained earnings		302,399		267,696		614,213
Total equity attributable to the equity holders		1,800,447		1,726,804	2,042,404
Perpetual Tier I capital		505,320		505,320		130,000
Total equity		2,305,767		2,232,124		2,172,404
Total liabilities and equity		13,515,281		12,775,982	12,742,499
Net assets per share (in RO)		0.240		0.230		0.544
Contingent liabilities and commitments	12	1,626,495		1,630,064		1,693,894

The interim condensed consolidated financial statements were approved by the Board of Directors on 26 October 2023. The attached notes 1 to 28 form part of these interim condensed consolidated financial statements.

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Page 2

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

		Unaudited			Unaudited
		-for nine months period ended-		-for three months period ended-
		30-Sep-2023	30-Sep-2022		30-Sep-2023		30-Sep-2022
	Notes	RO' 000	RO' 000		RO' 000		RO' 000
Interest income	13	416,863			341,350	144,610	118,756
Interest expense	14	(163,371)			(114,300)		(57,198)		(39,903)
Net interest income		253,492			227,050		87,412		78,853
Income from Islamic financing / investments	13	73,376			62,756	25,535	21,843
Distribution to depositors	14	(45,893)			(34,878)		(16,683)		(12,020)
Net income from Islamic financing		27,483			27,878	8,852	9,823
Net interest income and income from
Islamic financing		280,975			254,928	96,264	88,676
Commission and fee income (net)	15	67,446			67,654	22,260	21,307
Other operating income	16	32,781			33,038		11,491		8,348
Operating income		381,202			355,620	130,015	118,331
Operating expenses
Other operating expenses		(131,564)			(126,222)	(43,813)	(42,600)
Depreciation		(14,918)			(13,629)	(5,226)	(4,950)
		(146,482)			(139,851)		(49,039)		(47,550)
Share of results from associates	6	377			950	177	240
Net impairment losses on financial assets	17	(46,911)			(41,584)	(16,806)	(13,185)
		(193,016)			(180,485)		(65,668)		(60,495)
Profit before taxation		188,186			175,135	64,347	57,836
Tax expense		(29,310)			(26,845)		(9,792)		(8,803)
Profit for the period		158,876			148,290		54,555	49,033
Other comprehensive (expense) / income
Net other comprehensive (expense) / income to be reclassified
to profit or loss in subsequent periods, net of tax:
Translation of net investments in foreign operations		90			(997)	(117)	(430)
Change in fair value through other comprehensive income		(55)				(769)
(FVOCI) debt investments				(7,847)	(2,438)
Share of other comprehensive income of associates		(58)			(57)	(39)	(97)
Change in fair value of cash flow hedge		9,608			-	3,600	-
		9,585			(8,901)		2,675		(2,965)
Net other comprehensive (expense) / income not to be
reclassified to profit or loss in subsequent periods, net of tax:
Change in fair value of FVOCI equity investments		29,253			(7,030)	10,805	(1,288)
		29,253			(7,030)		10,805		(1,288)
Other comprehensive income / (expense) for the period		38,838			(15,931)		13,480		(4,253)
Total comprehensive income for the period		197,714			132,359		68,035		44,780
Total comprehensive income for the period attributable to
Equity holders of Parent Company		197,714			132,359	68,035	44,780
Profit attributable to
Equity holders of Parent Company		158,876			148,290	54,555	49,033
Earnings per share (in RO)
- Basic and diluted	18	0.020			0.019	0.007	0.007

Items in other comprehensive income are disclosed net of tax.

The attached notes 1 to 28 form part of these interim condensed consolidated financial statements.

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Page 3

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

								Foreign	Impairment
(Unaudited)						Cash flow	Cumulative	currency	reserve /			Perpetual
Share	Share	General	Legal	Revaluation	hedge	changes in	translation	restructured loan	Retained		Tier I
	capital	premium	reserve	reserve	reserve	reserve	fair value	reserve	reserve	profits	Total	Capital	Total
	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000
Balance at 1 January 2023	750,640	156,215	410,258	139,229	4,904	-	(587)	(3,881)	2,330	267,696	1,726,804	505,320	2,232,124
Profit for the period	-	-	-	-	-		-	-	-	158,876	158,876	-	158,876
Other comprehensive (expense) income	-	-	-	-	-	9,608	29,140	90	-	-	38,838	-	38,838
Total comprehensive (expense) income	-	-	-	-	-	9,608	29,140	90	-	158,876	197,714	-	197,714
Transfer within equity upon disposal of
FVOCI equity investments	-	-	-	-	-		296	-	-	(296)	-	-	-
Dividends paid (note 11 )	-	-	-	-	-		-	-	-	(112,596)	(112,596)	-	(112,596)
Transfer from restructured loan reserve to
retained earnings	-	-	-	-	-		-	-	(194)	194	-	-	-
Interest paid on Perpetual Tier 1 Capital										(11,475)	(11,475)		(11,475)
Balance as at 30 September 2023	750,640	156,215	410,258	139,229	4,904	9,608	28,849	(3,791)	2,136	302,399	1,800,447	505,320	2,305,767
								Impairment
							Foreign	reserve /
(Unaudited)						Cumulative	currency	restructure			Perpetual
Share	Share	General	Legal	Revaluation	changes in	translation	d loan	Retained		Tier I
	capital	premium	reserve	reserve	reserve	fair value	reserve	reserve	earnings	Total	Capital	Total
	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000	RO' 000
Balance at 1 January 2022	357,448	531,535	410,258	119,149	4,904	2,855	(2,498)	2,346	594,847	2,020,844	130,000	2,150,844
Profit for the period	-	-	-	-	-	-	-	-	148,290	148,290	-	148,290
Other comprehensive (expense) income	-	-	-	-	-	(14,934)	(997)	-	-	(15,931)	-	(15,931)
Total comprehensive (expense) income	-	-	-	-	-	(14,934)	(997)	-	148,290	132,359	-	132,359
Transfer within equity upon disposal of FVOCI
equity investments	-	-	-	-	-	264	-	-	(264)	-	-	-
Dividends paid (note 11 )	-	-	-	-	-	-	-	-	(107,234)	(107,234)	-	(107,234)
Issue of bonus shares (note 11 )	17,872	-	-	-	-	-	-	-	(17,872)	-	-	-
Transfer from restructured loan reserve to retained
earnings	-	-	-	-	-	-	-	(11)	11	-	-	-
Interest paid on Perpetual Tier 1 Capital	-	-	-	-	-	-	-	-	(3,565)	(3,565)	-	(3,565)
Balance as at 30 September 2022	375,320	531,535	410,258	119,149	4,904	(11,815)	(3,495)	2,335	614,213	2,042,404	130,000	2,172,404

Appropriations to legal reserve and sub-ordinated loan reserve are made on an annual basis.

The attached notes 1 to 28 form part of these interim condensed consolidated financial statements.

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Page 4

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

		Unaudited		Unaudited
		30-Sep-2023		30-Sep-2022
		RO' 000		RO' 000
Operating activities
Profit for the period before taxation	188,186	175,135
Adjustments for :
Depreciation	14,918	13,629
Net impairment losses on financial assets	46,911	41,584
Share of results from associates	(377)	(950)
Profit on sale of Property and equipment	(1)	-
Profit on investments	(323)	(8,829)
Dividend income	(6,019)	(4,559)
Operating profit before working capital changes	243,295		216,010
Due from banks	41,242	26,972
Loans and advances	(408,570)	8,319
Islamic financing receivables	(95,306)	(98,064)
Other assets	38,265	(64,275)
Deposits from banks	292,920	(262,143)
Customers' deposits	718,302	(103,426)
Islamic customers' deposits	119,654	37,775
Other liabilities	16,577	62,188
Cash from / (used in) operating activities	966,379		(176,644)
Income taxes paid	(33,389)	(32,501)
Net cash from / (used in) operating activities	932,990		(209,145)
Investing activities
Dividend from an associate	296	227
Dividend income	6,019	4,559
Purchase of investments	(46,565)	(135,795)
Proceeds from sale of investments	67,302	35,237
Net movement in property and equipment	(17,422)	(8,246)
Net cash from / (used in) investing activities	9,630		(104,018)
Financing activities
Dividends paid	(112,596)	(107,234)
Repayment of Euro medium term notes	(192,500)	(44,608)
Interest on Perpetual Tier I capital	(11,475)	(3,565)
Net cash from / (used in) financing activities	(316,571)		(155,407)
Net change in cash and cash equivalents	626,049	(468,570)
Cash and cash equivalents at 1 January	928,934	1,395,450
Cash and cash equivalents at 30 September	1,554,983		926,880
Cash and cash equivalent comprises of the following:
Cash and balances with Central Banks		807,392	584,100
Treasury bills	512,773	463,502
Due from banks	478,764	436,500
Deposits from banks	(243,946)	(557,222)
		1,554,983		926,880

The attached notes 1 to 28 form part of these interim condensed consolidated financial statements.

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Page 5

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2023

1. LEGAL STATUS AND PRINCIPAL ACTIVITIES

Bank Muscat SAOG (the Bank or the Parent Company) is a joint stock company incorporated in the Sultanate of Oman and is engaged in commercial and investment banking activities through a network of 179 branches (30 September 2022 : 174 branches) within the Sultanate of Oman and one branch each in Riyadh, Kingdom of Saudi Arabia and Kuwait. The Bank has representative offices in Dubai, United Arab Emirates, Singapore and Tehran, Iran. The Bank operates in Oman under a banking license issued by the Central Bank of Oman (CBO) and is covered by its deposit insurance scheme. The Bank has its primary listing on the Muscat Stock Exchange.

As at 30 September 2023, the Bank operates in 6 countries (2022: 6 countries) and employed 4,146 employees (30

September 2022: 3,920 employees).

During 2013, the Parent Company inaugurated "Meethaq Islamic banking window" ("Meethaq") in the Sultanate of Oman to carry out banking and other financial activities in accordance with Islamic Shari'a rules and regulations. Meethaq operates under an Islamic banking license granted by the CBO on 13 January 2013. Meethaq's Shari'a Supervisory Board is entrusted to ensure Meethaq's adherence to Shari'a rules and principles in its transactions and activities. The principal activities of Meethaq include: accepting customer deposits; providing Shari'a compliant financing based on various Shari'a compliant modes; undertaking Shari'a compliant investment activities permitted under the CBO's Regulated Islamic Banking Services as defined in the licensing framework. Meethaq has 27 branches (September 2022 - 24 branches) in the Sultanate of Oman.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

The unaudited interim condensed consolidated financial statements for the nine months period ended 30 September 2023 of the Bank are prepared in accordance with International Accounting Standard (IAS) 34, 'Interim Financial Reporting', applicable regulations of the Central Bank of Oman (CBO) and the Capital Market Authority (CMA).

The unaudited interim condensed financial statements have been prepared on the historical cost basis, modified to include the revaluation of freehold land and buildings and the measurement at fair value of derivative financial instruments, FVOCI investment securities and investment recorded at fair value through profit or loss. The carrying values of recognised assets and liabilities that are designated as hedged items in fair value hedges that would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships.

The Islamic window operation of the Parent Company; "Meethaq" uses Financial Accounting Standards ("FAS"), issued by Accounting and Auditing Organisation for Islamic Financial Institutions ("AAOIFI"), for preparation and reporting of its financial information. Meethaq's financial information is included in the results of the Bank, after adjusting financial reporting differences, if any, between AAOIFI and IFRS.

The functional currency of the Bank is the Rial Omani (RO). These unaudited interim condensed consolidated financial statements of the Bank are prepared in Rial Omani, rounded to the nearest thousands, except as indicated.

The unaudited interim condensed consolidated financial statements do not contain all information and disclosures required for full financial statements prepared in accordance with International Financial Reporting Standards and should be read in conjunction with the Bank's annual consolidated financial statements as at 31 December 2022. In addition, results of the Bank for the period ended 30 September 2023 are not necessarily indicative of the results that may be expected for the financial year 2023.

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