Bank Muscat - Investor Presentation December 2013

Agenda

I. Bank Muscat Introduction 4

II. Operating Environment 7

III. Bank Muscat Business Overview 12

IV. Financial Performance 23

V. Annexure 27

Note: All the financial data is as of 31st Dec 2013 ,unless stated otherwise.

I. Bank Muscat Introduction

Bank Muscat at a GlanceOverview Ownership

Bank Muscat Growth – Footsteps of a Leader Throughout Decades

#1 Bank in Oman with a significant customer base in excess of 1.47 million

clients and a workforce of 3,360 employees as of 31st December 2013

Established in 1982, headquartered in Muscat with 142 branches across

Oman, 2 branches overseas, and 2 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 offering

Long term Bank Rating : Moody’s A1 , Fitch A- , S&P A-

Listed on the Muscat Securities Market, London Stock Exchange & Bahrain

Stock Exchange.

Market cap of US$3.56 billion as of 31th Dec 2013, the largest in Oman

1982

Meethaq launched

20131993

Merger between Bank of Muscat & Bank Al Ahli Al Omani

2002

Acquisition of the Bahraini operations of ABN AMRO

2004

Acquisition of 49% stake in BMI Bank

2007

Acquisition of strategic stake in Mangal Keshav Holdings

1st Branch in Saudi Arabia

2010

1st Branch in Kuwait

2011

Muscat Capital LLC launched

20121996

Dubai Rep Office

2003 20062005 2008 2009

Singapore Rep Office

20012000

Merger with Commercial Bank of Oman

Establishment of Bank of Muscat

4

Royal Court Affairs

24%

Ministry of Defence

Pension Fund 6%

Dubai Financial

Group LLC13%

GDR5%

IFC5%

Others47%

Bank Muscat – Key Highlights

Management

Largest Bank in Oman with a market share of 37.26% in terms of assets as of 31st Dec 2013

Market Capitalisation of USD 3.56 billion

Largest branch network with 142 domestic branches

Strong Financial Metrics

Stable Operating EnvironmentStable Asset Quality

Highest Government Ownership

Dominant Franchise in Oman

Highest Government Ownership among Omani Banks

Royal Court Affairs: 23.56%

Indirect Government ownership of 15% through various pension funds

Conservative lending approach

Strong risk architecture and policies

Adequate asset quality metrics

Most profitable bank in Oman

Strong and sustainable profitability metrics:

-Operating profit 2008-2013 CAGR of 7.5%

-Net profit 2008-2013 CAGR of 10.2%

Solid macroeconomic conditions

Stable banking sector

Prudential regulatory environment

Stable and experienced management with proven track record of successful organic and inorganic growth

Good corporate governance

Solid Capital Position

Strong capitalization levels offering room for substantial growth

CAR of 16.50% as of 31st Dec 2013

Ratings: A1/A-/A-

5

II. Operating Environment

Petro activities47%

Trade, tourism & real estate

11%

Others18%

Mfg,mining & construction

16%

Transport & Communication

4%

FI's4% Petro

activities 19%

Trade, tourism& real estate 26%

Others 22%

Mfg,mining & construction 17%

Transport & Communication

8%

FI's 8%

Oman

SaudiArabia

Yemen

North Sudan

EgyptPakistan

India

Libya

Chad

Afghanistan

Sultanate of Oman – Overview

Overview

Source: Central Bank of Oman and EIU January 2013 Report.

GDP Growth GDP Composition – “Vision 2020”

US$ billion

Key Indicators (1) 2011 2012E

Sovereign Ratings A1/A/-

Current Account US$10.7bn US$9.05bn

International Reserves US$14.3bn US$14.7bn

Net Public Debt (% GDP) 4.5% 4.1%

(1) Economist Intelligence Unit – January 2013

2020

7

37 4261

4859

73 78

5.5% 6.7%

12.8%

1.1%

4.8% 4.0% 5.0%

2006 2007 2008 2009 2010 2011 2012

GDP in Current Prices (US$bn)Real GDP (% Change)

2nd Largest country in the GCC with an area covering approx. 309.5 thousands Km2, strategically located, sharing borders with Saudi Arabia and UAE

Stable Political System – Monarchy led by His Majesty Sultan Qaboos who commands wide popular support and respect from Omani citizens.

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.

The economy will continue to grow at high rates driven by several factors, such as: The increase in hydrocarbon production and stability in its prices. The Government’s continuous pursue of a stimulus fiscal policy and a backing

monetary policy. A strengthened and growing local demand

“Vision 2020” – focuses on diversification, industrialization and privatization, with the objective of reducing economic reliance on oil revenues and the hydrocarbon sector contribution to GDP.

2013

Oman Banking Sector – Overview

Overview

The Omani banking sector comprises of 9 local banks, 2 specialized banks, and 9 foreign commercial banks

The top 3 banks contribute to around 62% of total sector assets and Bank Muscat represents 37.26% of total sector

Conservative and Prudent Regulator

A number of regulations and caps in place to support the growth, stability and sustainability of the Omani banking sector

Royal Decree introducing Islamic banking activities in Oman

Two new Islamic banks “Al Izz” and “Nizwa”

License to existing banks for Islamic Operation ( incl. Bank Muscat’s Meethaq)

Adequate asset quality with relatively low impaired assets and sound capitalization

Loans and Deposit Growth

The Omani Banking Sector carries a Banking Industry Country Risk Assessment (BICRA) score of 4 and is well positioned on a GCC, emerging market and global basis

Gross Loan: +17.1%Deposits: +16.9%

US$ billion

Source: GCC Central Bank websites and S&P BICRA Report February 2013.Notes: (1) Moody’s as of February 2013 and Central Bank websites based on the latest available figures for the GCC banking sectors. US$/ AED: 3.67, US$/ SAR: 3.749, US$/ QAR: 3.64, KD/ US$: 0.284, and OMR/ US$: 0.385

Oman in the GCC banking sector context(1)

Country BICRAEconomic

RiskIndustry

riskCanada ► 2 2 2Saudi Arabia ► 2 3 2UK ► 3 4 3USA ► 3 3 4Brazil ► 4 5 3Kuwait ► 4 4 5Oman ► 4 4 4Qatar ► 4 4 5UAE ► 5 5 5Bahrain ► 6 6 6Spain ► 6 7 5Ireland ► 7 7 7

BICRA Positioning – Group 4 US$ billion

8

521

412 243 183 185

58

7.9%

1.9%

2.6%

5.5%7.1%

3.9%

-3.0%

2.0%

7.0%

12.0%

UAE Saudi Arabia Qatar Kuwait Bahrain OmanTotal Assets NPL/ GLs

16.9

24.025.5 27.9

32.537.2

39.4

16.922.5 23.8

27.332.7

36.840.5

2007 2008 2009 2010 2011 2012 2013

Gross loan Deposits

Bank Muscat – Unrivaled Leading Market Position in Oman

Total Assets Gross Loans

Deposits Net Profits

US$ million US$ million

US$ millionUS$ million

9

2,481

2,985

3,591

4,656

5,660

5,979

14,665

Ahli Bank

Oman Arab Bank

Bank Sohar

Bank Dhofar

National Bank of Oman

HSBC Bank Oman

Bank Muscat

3,479

3,783

4,898

5,769

6,767

7,523

22,043

Ahli Bank

Oman Arab Bank

Bank Sohar

Bank Dhofar

HSBC Bank Oman

National Bank of Oman

Bank Muscat

28

65

68

70

107

152

395

HSBC Bank Oman

Ahli Bank

Oman Arab Bank

Bank Sohar

Bank Dhofar

National Bank of Oman

Bank Muscat

2,626

2,885

2,907

3,386

5,149

5,602

17,259

Ahli Bank

Oman Arab Bank

HSBC Bank Oman

Bank Sohar

Bank Dhofar

National Bank of Oman

Bank Muscat

12.9%

13.9% 12.4%16.4% 16.5% 17.2%

13.8%

15.0%1.4%

1.8% 3.8%

0.6%1.0%

2.7%6.8%

0.0%

BBK CBQ BM NBK NCB NBAD ENBD QNBTier 1 Tier 2

Bank Muscat – Dominant Domestic Franchise in the Region

Sector Contribution – Assets (1)

Sector Contribution – Deposits (1)

Asset Quality (1)

Adequate Capitalization (1)

Source: (1) Information for all the banks is based on latest published reports.GCC Central Banks. Banks’ financial Statements.US$/ AED: 3.67, US$/ SAR: 3.749, US$/ QAR: 3.64, KD/ US$: 0.284, BHD/US$:0.377 and OMR/ US$: 0.385

14.3% 15.7% 16.2% 17.0% 17.5% 19.9% 20.6% 15.0%

Assets as % of Total Sector Assets Deposits as % of Total Sector Deposits

10

4.6%12.4% 17.0% 17.9%

24.4%36.1% 38.0%

48.7%

BBK CBQ NBAD ENBD NCB NBK BM QNB

4.7%12.3%

20.8% 18.4%10.6%

27.9%35.9%

65.0%

BBK CBQ ENBD NBAD NCB NBK BM QNB

3.6%1.6% 1.6% 2.9% 3.5%

2.0%

9.1%

13.3%

63.0%

123.2%

165.9%

126.9%104.5%

199.8%

75.1%

58.7%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

CBQ QNB NCB BM NBAD NBK BBK ENBDNPL/GL LLR/NPL

III. Bank Muscat Business Overview

Bank Muscat Strategy – Key Pillars

Consolidate Leading Position in Oman

Capitalize on growth opportunities in Oman

Infrastructure development projects and Government focus on economic diversification and developing tourism

Omanis entering the workforce; over 49% of the population less than 25 years old Leverage large network of branches and other delivery channels

Platform to focus on the growth potential

Cross sell opportunities Focus on fee based income

Scale up fee driven businesses both in the retail (credit card, asset management, private banking) and corporate (investment banking) segments

Leverage on existing platform and investments

Pioneering investments in technology supporting growth plans

Increase efficiency

Continuous customer service and support improvements

Regional Expansion Strengthen regional presence through focused and controlled expansion in GCC

Leverage existing regional presence to scale up business growth

Focus on Islamic Banking Developments in Oman

Meethaq – Islamic banking platform

Full fledged product and service offerings, standard of excellence, customer centric approach and transparency

12

Bank Muscat – Business Lines

Corporate Banking

Retail Banking

Wholesale Banking

International Operations

Meethaq

Key Highlights Asset Contribution

Leading Corporate Bank Franchise offering the

full array of corporate banking services

c. 4,000 corporate customers in Oman

Strong expertise in project finance

US$ 9.34bn

42% of total asset

Profit/ (Loss)

US$117.5 mn

29.7% of total profit

Leading Retail Bank platform in Oman

Over 1.47 million retail customers in Oman

Largest distribution network

US$ 6.10bn

27% of total asset

US$172.10 mn

43.50 % of total profit

Comprise of treasury, brokerage, corporate

finance, asset management and private banking

services

Financial Institutions

US$ 4.10bn

19% of total asset

US$ 95.10mn

24.10% of total profit

Presence in GCC, India and Singapore through

overseas branches, rep offices and subsidiaries

US$ 1.79bn

8% of total asset

US$ Loss (5.4 mn)

-1.4% of total profit

Fully fledged Islamic product and services offering

capabilities

OMR 150mn (c.US$388mn) capital assigned to this

business

Officially launched in January 2013 with a plan to

expand the network to 7 branches

US$ 775mn

4% of total asset

US$ 16 mn

4.1% of total profit

13

5,556 5,696 6,0387,107

8,752 9,346

2008 2009 2010 2011 2012 2013Total Assets

162 177206 213 226 229

2008 2009 2010 2011 2012 2013Operating Income

Corporate Banking

Overview Opportunities Strategy

Large number of infrastructure/ Industrial projects in the pipeline

Privatisation and diversification drive by Government

Increasing 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 on less capital intensive and fee income generating business

Explore contractor financing opportunities

Utilize presence in regional markets

Grow GCC trade flows share

Leading Corporate Banking Franchise

Extensive and expanding range of products and services

Strong project finance capabilities

Large corporate client portfolio with c.4,000 customers and lead bank for top tier Omani corporate entities

High level of sophistication differentiated through technology led investments

Commitment to maintain strong control over asset quality

Corporate Loans – Peer Comparison

Asset Growth Operating Income

US$ million US$ millionUS$ million

14

10.06

2.89 2.822.18 1.79 1.77 1.68

Bank

Mus

cat

Bank

Dho

far

NBO

Bank

Soh

ar

HSB

C O

man

Om

an A

rab

Bank

Ahl

i Ban

k

Retail Banking

Overview Opportunities Strategy

Government spending resulting in job creation

Increase in salaries through various government initiatives

Favorable demographics

Over 49% of the population less than 25 years old

Housing finance

Leveraging on leading presence in the retail segment

Increase penetration and cross sell

Technology-led product development and service offerings

Enhance process efficiency

Focus on development and utilization of e-delivery channels

Leading Retail Banking Franchise in Oman

Over 1.47 million customers

Front-runner across retail banking segments including cards, bancassuranceand remittances

Largest delivery channel network in Oman (138 branches, 430 ATMs, 164 CDMs and the best online platform in Oman)

Substantial low cost retail deposit base

Merchant acquiring market share of over 65% by volume in 2012 and leading ecommerce business in Oman

Retail Loans – Peer Comparison Asset Growth Operating Income

US$ million US$ million

15

6.46

2.742.26

1.22 1.14 1.12 1.11

Bank

Mus

cat

NBO

Bank

Dho

far

Ahl

i Ban

k

HSB

C O

man

Bank

Soh

ar

Om

an A

rab

Bank

4,862 4,954 5,1886,097 6,005 6,056

2008 2009 2010 2011 2012 2013

Total Assets

303 300 298357

425 424

2008 2009 2010 2011 2012 2013

Operating Income

137111

171 172 160 153

2008 2009 2010 2011 2012 2013Operating Income

4,198 3,773 3,327

4,6313,869 4,080

2008 2009 2010 2011 2012 2013Total Assets

Wholesale Banking

Overview Opportunities Strategy

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

Focus on fee income

Inorganic growth

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 outside Oman

Financial Institutions: trade, DCM and correspondent banking services

Brokerage: Leadership position on Muscat Securities. Strong client base

Asset Management: Largest Omani mutual fund manager with potential for growth and expanding outside Oman. Investment solutions for high net worth individuals

Securities portfolio(1)

Asset Growth Operating Income US$ million US$ million

(1)Securities portfolio represents Bonds & T-Bills .(2) Others include Baa1 to Baa3 securities and unrated Banks.

16Aaa to Aa3

94%

A1 to A38%

Others (1)

5%

Islamic Banking – Meethaq

Overview Opportunities Strategy

Exponential growth in the first year of 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

Full fledged product and service offerings

Increase Meethaq exclusive branch network

Customer Centric approach and transparency

Technology driven customer service delivery within the Shari’a compliance ambit

Plan to have 15 branches by the end of 2nd

year and expand thereafter

Establishment of Meethaq as a brand in its own right

Most successful Islamic banking operation in Oman during 2013

6 dedicated branches become operative throughout the Sultanate

Innovation in product offering and services to create niche

Established Sharia Board comprising of well experienced and reputable Sharia scholars

Meethaq – Product and Portfolio Development US$ million

Financing Portfolio

17

Consumer

Corporate

Investment & Treasury

Asset Management

2013 2014

Home, auto finance, saving and

current a/c, E-banking, debit and

Ujra card

Child saving accounts, employee

saving funds, Ijara products

Murabaha (goods LC), vehicle and

equipment financing, sukuk

underwriting

Government checking accounts

with profit distribution

Wakala and interbank Mudaraba Sukuk issue and advisory, FX

hedging products

Real estate and

Equity Funds5 74

167260

403

739

2008 2009 2010 2011 2012 2013

1312

14

22

30

44.0

2008 2009 2010 2011 2012 2013

Operating Income

1,042774 644

939

1,929 1,786

2008 2009 2010 2011 2012 2013

Total Assets

International Operations

Overview Opportunities Strategy

Assets Operating Profit US$ millionsUS$ millions

(1)

18(1) Excluding one off adjustment of US$157mn gain in relation to the sale of sale of the bank’s investment in HDFC Bank, India.

Presence in GCC, India and Singapore

Branches in Kuwait and Saudi Arabia

Rep offices in UAE and Singapore

97% stake in Muscat capital LLC – Saudi based, CMA licensed entity

49% stake in BMI Bank Bahrain

Large banking markets in Saudi Arabia and Kuwait

Pan GCC network offering opportunities for business and trade synergies

Increasing trade/business opportunities between GCC and Asia

Efficiency: rationalization of back-office costs – sharing of operational costs

Focus on existing GCC operations

Solidify position and increase profitability

Drive synergies within the group

Scale up business volumes to attain desired return

Capture trade / business flows between GCC and Asia

International Operations cont’d

Country Entity Overview Strategy

KSA

Bank Muscat Riyadh Branch

Launched in 2007.

As of December 31, 2013, total Net Loans & Advances

were US$ 591 mn, outstanding LCs/LGs were US$ 273

mn and customer deposits stood at US$ 938 mn.

For the 12 months of 2013, branch posted net profit

after provisions of US$ 6.8 mn.

Enhance scale through continued focus on corporate and

treasury businesses

Currently, selective approach to asset growth – medium-size

ticket, contract-backed funded & unfunded business.

Focus on bulk deposits from large corporate and HNI clientele

Cost containment and increase shared resources with HO

Muscat Capital

97% owned subsidiary launched in 2009, focus on

brokerage, asset / wealth management and corporate

finance advisory services .

For the 12 months of 2013, Muscat Capital reported

revenues of US$ 4.6 mn and a net loss after zakat

(taxes) of US$ 0.8 mn.

Scale up business volume and leverage Bank Muscat presence

in other markets

Leverage institutional relationships in brokerage in Oman as

well as focus on selected HNW customers in KSA

Leverage expertise built in Oman in Corporate

Finance/Advisory

Kuwait Bank Muscat Kuwait Branch

Launched in 2010, focus on corporate, trade and

treasury businesses.

As of December 31, 2013, total Net Loans & Advances

were US$ 99 mn, outstanding LCs/LGs were US$ 315

mn and customer deposits stood at US$ 296 mn.

For the 12 months of 2013, branch posted net profit

after provisions of US$ 1.5 mn.

Strategy/Business Focus - Primarily on corporate customers for

corporate, trade and treasury products, as well as contract

financing for Govt. and related entities. Cautious approach to

credit growth.

Scale up business volumes with a focus on quality lending

Leverage off low operating cost base

19

International Operations cont’d

Country Entity Overview Strategy

Bahrain BMI Bank

49% owned retail commercial bank in Bahrain

Network of 10 local branches, 26 ATMs, 1

overseas branch in Qatar Financial Centre,

21.33% stake in Gulf African Bank, Kenya and

50% stake in BMI Offshore Bank, Seychelles.

As on December 31, 2013, total assets of US$

1.9 bn, shareholder funds of US$ 223 mn and

Capital adequacy of 16.4 %.

For the 12 months of 2013, BMI Bank posted

net profit after provisions of US$ 7.6 mn, BM’s

share of which was US$ 3.7 mn.

Combination with Al Salam Bank in progress.

Bank Muscat will own 14.7% of the combined entity (which will be

Islamic) as a result of the combination, and will be the largest

shareholder.

Investment to be continued to be held as an associate.

Combined bank to benefit from increased scale and larger capital

base, as well as increased revenue streams from the additionl of new

business lines (investment banking)

India Mangal Keshav

45.7% ownership as on 31 Dec 2013.

Small entity; marginally profit-making. Entity has

been unable to scale up. Core share brokerage

business has continued to decline in the last 2-3

years on account of market conditions.

Depreciation of the Indian Rupee has also led to

diminution in the value of the investment.

BM is therefore exiting the investment.

Exit is through buy-back of shares by the company.

The first tranche of buy back was completed in Feb 2014, wherein

48% of the bank’s shares have been brought back and BM’s

shareholding is now reduced to 30.4%.

Exit is expected to be substantially completed in 2014

20

Diverse Income & Asset Base across Segments

Assets

Deposits

Loans & Advances

Net Profit

21

Corporate 29.7%

Retail 43.5%

Wholesale 24.1%

Islamic Banking 4.1%

Intl -1.4%

Ministries & Other Gov

Orginisations 41%

Private Commercial

23%

Financial Institutions 1%

Individual & Others 36%

Wholesale 19%

Corporate 42%

Retail 27%

Intl. 8%

Islamic Banking 4%

Services 10%Mining &

quarrying 6%

Manufacture 7%

Real estate 4%

Wholesale & Retail trade 3%

Import & Export Trade 5%

FIs 5%

Utilities & Transport 16%

Personal 32%

Housing 7%Construction 4% Others 2%

IV. Financial Performance

Bank Muscat – Financial Highlights Dec 2013

ROAA & ROAE

Impairment & Recoveries for Credit LossesNet Loans & Advances (Incl. Islamic)

Net Interest Income & Income from Islamic financing

Net Profit

Customer Deposits (Incl. Islamic)

YTD Dec 13: USD 395 millionYTD Dec 12: USD 362 millionIncrease of 9.32%

YTD Dec 13: USD 611 millionYTD Dec 12: USD 599 millionIncrease: by 2.13%

Impairment:YTD Dec 13 : USD 131 million YTD Dec 12 : USD 150 million

Recoveries: YTD Dec 13 : USD 84 millionYTD Dec 12 : USD 87 million

As at 30 Dec 13: USD 15,955 mioAs at 30 Dec 12: USD 14,548 mioGrowth : 9.67%

As at 30 Dec 13 : USD 14,787 mioAs at 30 Dec 12: USD 13,968 mioGrowth : 5.86%

Return on average assetsAs at 31 Dec 13: 1.86%As at 31 Dec 12: 1.84%

Return on average equityAs at 31 Dec 13: 14.49%As at 31 Dec 12: 15.69%

23

Operating Performance and Profitability

Comments

Operating Income Composition

Operating Income & Cost to Income(2)

Profitability (2)

Resilient operating performance throughout the financial turmoil Solid top line income growth – 5 year CAGR of 13%

Increase in operating expenses Manpower Cost Business expansion

Strong core revenue generation with net interest income and commission and fees contributing to over 90% of total operating income Increasing focus on top line commission and fee income

generation Solid Profitability

US$ Millions

US$ Millions

(1) Other income: Profit on sale of non-trading investments, Dividend income and other income.

US$ Millions

24

449 615 756690 764 841

884

40.7%

35.6%

28.2%38.8%

41.1%41.6%

42.2%

0.0

10.

20.

30.

40.

50.

60.

70.

80.

90.

2007 2008 2009 2010 2011 2012 2013Operating Income Cost/ Income

72% 68%60%

71% 72% 71% 65%

22% 23%17%

20% 21% 22%24%

4%

2% 5%

20%

2% 4% 3% 3%3%

2007 2008 2009 2010 2011 2012 2013

Net Interest Income Net Commission & fees Net Income Islamic Other Income (1) FX Income

219 243 191 264

305 362 395

25.8%

14.8%10.9%

14.6%15.4%

15.4%14.5%

2.35% 1.83% 1.24% 1.74% 1.80% 1.84% 1.86%-

6

2

2

2007 2008 2009 2010 2011 2012 2013Net Profit RoAE RoAA

Asset Quality

Comments Loan Growth

Gross Loans – Sector Breakup Impaired Assets and Provisioning

US$ Millions

US$ Millions

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

Adequate provisioning of impaired asset Conservative approach – provisioning in line with the

higher of either IFRS or CBO requirements Non specific loan loss provisions of 2% on retail

portfolio and 1% on corporate portfolio

25

7,26110,009 10,525 10,894

12,97615,096

17,259

3.37%2.80%

4.98%4.19% 2.98%

2.99% 2.53%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2007 2008 2009 2010 2011 2012 2013

Gross Loans NPL/ GLs

282 326

555484 458

548 565

245 280

547 457

387

451437

115.4% 116.6% 101.5%

105.9%118.4%

121.4% 129.2%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

2007 2008 2009 2010 2011 2012 2013LLR NPL LLR/NPL

Services 10%Mining &

quarrying 6%

Manufacture 7%

Real estate 4%

Wholesale & Retail trade 3%

Import & Export Trade 5%

FIs 5%

Utilities & Transport 16%

Personal 32%

Housing 7%Construction 4% Others 2%

55% 54% 55% 63% 67% 68% 67%

22% 28% 28% 18% 16% 14% 14%15% 12% 12% 13% 12% 13% 14%7% 6% 5% 6% 5% 5% 5%

2007 2008 2009 2010 2011 2012 2013Others Equity Borrowings Deposits

Funding and Liquidity

Comments Funding Mix

Liquid Assets Capital Adequacy Ratio

20,555

Stable funding structure with a diversified funding base

Largest deposit base in Oman with significant granularity

Retail deposits comprise 34.84% of total deposits

Top 10 depositors represent 12.45% of total deposits and comprise of top tier Omani institutions

Adequate liquidity

Strong capitalization levels

Highest CAR among Omani peers and one of strongest among GCC peers

US$ Millions

US$ Millions

18,77415,19715,19815,65810,955

16.32%15.93%14.78%14.72%12.63%15.14%

22,162

16.50%

26

1,2671,176 1,579 1,886 2,145 1,723 1,512

1,5272,799 2,638

1,429 2,2571,886 2,252

- 367 60 78 174 727 521

25.50% 27.73% 28.15% 22.33% 24.38% 21.09% 19.44%

2007 2008 2009 2010 2011 2012 2013Cash & equivalent Placements with banks T Bills Liquid Assets

12.58%10.36% 11.14% 11.85% 11.30% 12.64% 13.20%

2.56%

2.27%3.58% 2.93% 4.63%

3.68% 3.30%

2007 2008 2009 2010 2011 2012 2013Tier 1 Ratio Tier 2 Ratio

V. Annexure

Bank Muscat – Organisation Structure 2013

Chief Internal Auditor, GM

HR, DGM

Group General ManagerRetail, Investment and Global

Markets

Compliance, AGM

Retail, GM

CFO, AGM

Investment Bkg & FI, DGM

IT, Ops and Infrastructure,

GM

Board Secretary, DGM

Chief Risk Officer, GM

Treasury, AGM *

Credit, GM

Branches, DGM

Cards and E-Banking, AGM

Corporate Banking

AGM

SME, AGM

Project Finance,

DGM

Investment Bkg, AGM

Operations, DGM

Support Services, DGM

Head, HR

Fin. Control, Planning

&Strategy, AGM

Chief Operating Officer

Direct/Inst.

Sales, AGM

Credit and Recovery,

AGM

International Ops, AGM

Group General ManagerCorporate and

Intl. Operations

CEO Saudi Br, AGM

Ahmed F Al Balushi

COO Saudi Br, AGM

Ahmed Al Ojaily

CEO Muscat Capital, AGM

Abdulwahed Al Murshidi

Group General Manager

Islamic Banking

Group General Manager Corporate Services

Overseas Ops.

IT, DGM

PMO, Planning & Control DGM

Corp. Comm. and CSR,

AGM

Chief Executive

Chairman’s Office, AGM Board

28

Priority Banking, DGM

* also reports in to Group GM Retail for Retail Enterprises business

Balance SheetAmounts in US$ Millions

29

31-Dec-13 31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08Cash and bank (incl. placements) 3,764 3,609 4,403 3,315 4,218 3,975Loans and Advances 15,230 14,548 12,518 10,410 9,969 9,682Islamic financing receivables 725 0Non trading investments 1,460 1572 891 694 375 983Tangible fixed assets 173 180 186 194 68 57Other assets (incl. invt in associates) 690 646 777 584 566 960Total assets 22,043 20,555 18,774 15,198 15,197 15,658

Bank deposits/FRNs 2,303 2,092 1,914 2,014 3,665 3,959Customer deposits (incl. Bonds and CDs) 14,545 13,968 12,741 9,705 8,474 8,544Islamic Customer's Deposit 241 - - - - -Other liabilities 1,042 1034 989 934 720 1,003Subordinated debt 641 675 869 477 490 295Convertible bonds 121 42 84 84 84 –Total liabilities 18,894 17,811 16,513 13,129 13,349 13,801

Share capital and premium 1,733 1,538 1,185 1,133 1,063 1,063Total reserves 846 722 591 493 373 313Cumulative changes in fair value 43 21 3 24 13 180Retained profits 527 464 397 335 315 301Shareholders' equity 3,148 2,745 2,261 2,069 1,848 1,856Total liabilities + shareholders' equity 22,042 20,556 18,774 15,198 15,197 15,658

Key ratiosLoans and advances/customer deposits 104.15% 103.10% 98.20% 107.30% 117.60% 113.30%Shareholders' equity/total assets 14.28% 13.35% 12.00% 13.60% 12.20% 11.90%Subordinated debt/(debt + equity) 16.92% 19.74% 27.80% 18.70% 20.90% 13.70%BIS total capital ratio 16.50% 15.10% 15.93% 14.78% 15.20% 13.02%

Profit and LossAmounts in US$ Millions

30

31-Dec-13 31-Dec-12 31-Dec-11 31-Dec-10 31-Dec-09 31-Dec-08

Net interest income 578 599 551 486 453 421 Net income from Islamic financing 33 -

Other operating income 272 242 213 203 303 194

Operating income 884 841 764 690 756 615

Operating costs (373) (350) (314) (267) (213) (219)

510 491 450 422 543 396

Recoveries from impairments 84 87 67 45 29 34

Credit loss impairments (131) (150) (146) (121) (255) (64)

Other impairments (12) (12) (9) (7) (60) (77)

Gain/(loss) from associates 3 (9) (9) (33) (27) (8)

Profit before Tax 455 407 354 306 229 282

Taxation (59) (46) (49) (42) (37) (38)

Net Profit 395 362 305 264 192 244

Key ratios

Cost/income ratio 42.24% 41.60% 41.10% 38.80% 28.20% 35.60%

Return on average assets 1.86% 1.84% 1.80% 1.74% 1.24% 1.83%

Return on average equity 14.49% 15.42% 15.37% 14.64% 10.90% 14.80%

Basic EPS (US$) 0.187 0.187 0.197 0.171 0.178 0.226

Share price (US$) 1.52 1.46 1.99 2.514 2.14 2.07

Disclaimer Statement The information and opinions contained in this document have been compiled or arrived at by bank muscat from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. The information contained in this document is published for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient. The bank does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents. This document is strictly confidential and may not be reproduced, distributed or published for any purpose.

Thank You

“WECAN DOMORE.”

You may reach us on : IR@bankmuscat.com