investor presentation sept 2015 - bank muscat:: home muscat growth – footsteps of a leader...

Agenda

I. bank muscat Introduction 3

II. Operating Environment 6

III. bank muscat Business Overview 10

IV. Financial Performance 21

V. Annexure 26

Note: The financial information is updated as of 30 Sept 2015, 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 1.76 million clients and a workforce of 3,663 employees as of 30th September 2015

Established in 1982, headquartered in Muscat with 150 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 BBB+ , S&P A‐ Listed on the Muscat Securities Market, London Stock Exchange & Bahrain

Stock Exchange.

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

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

2014

Merger of BMI Bank with Al Salam Bank, Bahrain

Exit of stake in Mangal Keshav

Royal Court Affairs24%

Dubai Financial Group LLC

12%

Ministry of Defence Pension

Fund6%

Civil Services Pension Funds

5%

Muscat Overseas Group4%

IFC 5%

Others44%

bank muscat – Key Highlights

Management

Largest Bank in Oman with a market share of 41.91% in terms of assets as of 30th Sept 2015

Market Capitalisation of USD 3.25 billion Largest branch network with 150 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: 23.58%

Indirect Government ownership of more than 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 2010‐2014 CAGR of 9.6%‐Net profit 2010‐2014 CAGR of 16.50%

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 15.93% as of 30th Sept 2015

5

II. Operating Environment

Oman

SaudiArabia

Yemen

North Sudan

EgyptPakistan

India

Libya

Chad

Afghanistan

Sultanate of Oman – Overview

Overview

Source: Central Bank of Oman and EIU December 2014 Report.

GDP Growth GDP Composition – “Vision 2020”

US$ billion

(1) Economist Intelligence Unit – January 2014

2020

7

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; driving growth within the services and activities

contribution to GDP.

“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.

2015

Petro activities19%

Trade, tourism & real estate

26%

Others22%

Mfg,mining & construction

17%

Transport & Communication

8%

FI's8%

Key Indicators (1) 2013E 2014F

Sovereign Ratings A1/A/‐

Current Account Balance

US$2.1bn US$4.5bn

International Reserves US$15.5bn US$16.6bn

Net Public Debt (% GDP)

7.00% 7.30%

Petro activities44%

Trade, tourism & real estate

11%

Others20%

Mfg,mining & construction

16%

Transport & Communication

5%

FI's4%

4261

46 5768

75 77 78

6.7%

12.8%

1.1%

4.8% 4.1%5.8%

4.7% 4.6%

2007 2008 2009 2010 2011 2012 2013 2014GDP in Current Prices (US$bn) Real GDP (% Change)

Oman Banking Sector – Overview

Overview

The Omani banking sector comprises of 9 local banks, 2 specialized banks, 9 foreign commercial banks and two full fledged Islamic Banks.

The top 3 banks contribute to around 68% of total sector assets and Bank Muscat represents 42% 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

Adequate asset quality with relatively low impaired assets and sound capitalization

Implementing Basel 3 regulation with effect from Jan 2014

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: +11.9%Deposits: +13.3%

US$ billion

Source: *S&P BICRA Report October 2015.Notes: (1) 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) BICRA Positioning – Group 4 *US$ billion

8

630

580243 179 185

68

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

27.932.5

37.2

44.2 43.747.2

27.332.7

36.844.2 45.0 47.1

2010 2011 2012 2013 2014 Sep‐15Gross loan Deposits

Peer Comparison of Banking Industry Country Risk Assessment (BICRA) Scores --Economic risk factors -- Oman Kuwait Qatar UAE BahrainBICRA Group 4 4 4 5 6Economic Resilience Intermediate Low Low Low HighEconomic Imbalances Low Intermediate High High IntermediateCredit risk in the economy High High Intermediate High HighEconomic risk 4 4 4 5 6Institutional framework Intermediate Very High Intermediate Intermediate IntermediateCompetitive dynamics Intermediate Intermediate High High Very HighSystemwide funding Intermediate Low Intermediate Intermediate IntermediateIndustry risk 4 5 5 5 6

bank muscat – Unrivaled Leading Market Position in Oman

Total Assets Gross Loans

Deposits Net Profit

US$ million US$ million

US$ millionUS$ million

9

4,997

4,888

5,784

5,948

8,470

8,670

32,377

Ahli Bank

Oman Arab Bank

Bank Sohar

HSBC Bank Oman

National Bank of Oman

Bank Dhofar

bank muscat

3,442

4,065

3,964

4,886

6,226

6,626

19,031

Ahli Bank

Bank Sohar

Oman Arab Bank

HSBC Bank Oman


Bank Dhofar

bank muscat

3,971

3,579

3,969

4,434

6,810

7,143

18,306

Oman Arab Bank

HSBC Bank Oman

Ahli Bank

Bank Sohar


Bank Dhofar

bank muscat

21

55

55

55

86

112

353

HSBC Bank Oman

Oman Arab Bank

Ahli Bank

Bank Sohar

Bank Dhofar


bank muscat

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

11

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. 3,550 corporate customers in Oman Strong expertise in project finance

US$ 10.12bn

31% of total asset

Profit Contribution

US$117.45mn

33.2% of total profit

Leading Retail Bank platform in Oman Over 1.80 million retail customers in Oman Largest distribution network

US$ 6.86bn

21% of total asset

US$107.27mn


Comprise of treasury, corporate finance, asset management and private banking services

Financial Institutions

US$ 12.13bn

37% of total asset

US$ 106.32mn

30% of total profit

Presence in GCC and Singapore through overseas branches, rep offices and subsidiary

US$ 1.64bn

5% of total asset

US$ 8.93mn


OMR 50mn (c.US$130mn) capital assigned to this business.

Officially launched in January 2013. Currently operating through 11 full fledged Islamic branches with a plan to expand the network to 25 branches by the end of 3rd year and expand thereafter

US$ 1.63bn

5% of total asset

US$ 13.88mn


12

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.3,550 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

13

11.19

3.66 3.662.85 2.43 2.35 2.12

BankMuscat

Bank

Dho

far

NBO

Bank

Soh

ar

HSBC Oman

Ahli Ba

nk

Oman

Arab

Bank

6,038 7,1078,752 9,346 10,134 10,117

2010 2011 2012 2013 2014 Sept‐15

Total Assets

206 213226 229

247

209

2010 2011 2012 2013 2014 Sept‐15

Operating Income

Retail Banking


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 1.80 million customers

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

Largest delivery channel network in Oman (150 branches, 458 ATMs, 183 CDMs and the best online platform in Oman)

Substantial low cost retail deposit base

Merchant acquiring market share of over 80% by volume in 2015 and leading ecommerce business in Oman

Retail Loans – Peer Comparison Asset Growth Operating Income US$ million US$ million

14

7.33

3.08 2.88

1.68 1.43 1.35 1.22

BankMuscat

Bank

Dho

far

NBO

Ahli Ba

nk

Oman

Arab

Bank

Bank

Soh

ar

HSBC Oman

5,1886,097 6,005 6,056 6,551 6,861

2010 2011 2012 2013 2014 Sept‐15

Total Assets

298 357425 424 432

340

2010 2011 2012 2013 2014 Sept‐15Operating Income

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

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.

15

Aaa to Aa399.13%

A1 to A30.08%

Others (1)0.79%

3,3274,631 3,869 4,080

5,776

12,131

2010 2011 2012 2013 2014 Sept‐15

Total Assets

171 172 160 153209

162

2010 2011 2012 2013 2014 Sept‐15

Operating Income

Islamic Banking – Meethaq


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

Establishment of Meethaq as a brand in its own right

Meethaq – Product and Portfolio Development US$ million

Loan Portfolio

16

Consumer

Corporate

Investment & Treasury

Asset Management

2015Child saving accounts, employee saving funds, Ijara products

Government checking accounts with profit distribution

Sukuk issue and advisory, FX hedging products

Real estate andEquity Funds

One of the most successful Islamic banking operation in Oman since 2013

13 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

Growth momentum continued in the second 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

167 260403

739

1,0601,278

0

500

1,000

1,500

2010 2011 2012 2013 2014 Sept‐15

Loans (USD)

International Operations


Assets Operating Profit US$ millionsUS$ millions

(1)

17(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.(2) Includes US$25 million being gain on acquisition of BMI bank by Al Salaam 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

Presence in GCC and Singapore

Branches in Saudi Arabia and Kuwait

Rep offices in UAE and Singapore

99.99% stake in Muscat capital LLC – Saudi based, CMA licensed entity

14.7% stake in Al Salam Bank Bahrain

Exited from Mangal Keshav Securities Ltd in August 2015.

644939

1,929 1,786 1,700 1,638

2010 2011 2012 2013 2014 Sept‐15

Total Assets

14

22

30

44

61

35

2010 2011 2012 2013 2014 Sept‐15

Operating Income

International Operations cont’d

18

Country Entity Overview Strategy

KSA

Bank Muscat Riyadh Branch

Launched in 2007.

As of 30 Sept 2015, Net Loans & Advances were US$ 816 mn, outstanding LCs/LGs were US$ 595 mn and customer deposits stood at US$ 915 mn.

Consequent to some provisions taken during the period, the branch posted a net loss of US$ 10 mn for the period ended 30 Sept 2015.

Enhance scale through continued focus on corporate, trade 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

99.99% owned subsidiary launched in 2009, focus on brokerage, asset / wealth management and corporate finance advisory services.

For the period ended 30 Sept 2015, Muscat Capital reported operating income of US$ 2.96 mn and a net profit after zakat (taxes) of US$ 1.70 mn.

Scale up business volume while containing costs

For brokerage and wealth management, focus on institutions and select 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 30 Sept 2015, Net Loans & Advances were US$ 270 mn, outstanding LCs/LGs were US$ 341 mn and customer deposits stood at US$ 239 mn.

For the period ended 30 Sept 2015, the branch posted a net profit of US$ 1.7 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

International Operations cont’d

19

Country Entity Overview Strategy

BahrainAl Salam Bank Bahrain (“ASBB”)

The bank is a 14.7% shareholder in ASBB. Bank Muscat is locked‐in for a period of 3 years.

ASBB posted a consolidated net profit of US$ 36.7 mn for the period ended 30 Sept 2015

Bank Muscat is reporting share of profit from ASBB with a lag of one quarter. The share of profit taken for the full year 2015 was US$ 6.7 mn.

Dividend payment for the year 2014 was received in March amounting to US$ 4.1 mn.

The market value of the bank’s holding in ASBB shares as on 30 Sept 2015 was US$ 92 mn, as compared to the carrying value of US$ 123 mn on that date.

The combined entity is expected to benefit shareholders from increased scale and larger capital base, as well as increased revenue streams from the addition of new business lines (investment banking)

Diverse Income & Asset Base across Segments

Assets

Deposits

Loans & Advances

Net Profit

20

Corporate, 33.2%

Retail, 30.3%

Wholesale, 32.9%

Islamic Banking, 3.9%

Intl, 2.5%

Wholesale 37%

Corporate 31%

Retail 21%

Intl. 5%

Islamic Banking5%

Services 11%Mining &

quarrying 6%

Manufacture 7%

Real estate 3%Wholesale & Retail trade 2%

Import & Export Trade 5%

FIs 5%Utilities &

Transport 15%

Personal 30%

Housing 9%

Construction 4% Others 3%

Ministries & Other Gov

Orginisations35%

Private Commercial 26%

Financial Institutions 3%

Individual & Others 37%

IV. Financial Performance

bank muscat – Financial Highlights September 2015

ROAA & ROAE

Impairment & Recoveries for Credit LossesNet Loans & Advances & Islamic Financing

Net Interest Income & Income from Islamic financing

Net Profit

Customer Deposits (Incl. Islamic)

YTD Sep 15: USD 354 millionYTD Sep 14: USD 329 millionIncrease of 7.50%

YTD Sep 15: USD 493 millionYTD Sep 14: USD 475 millionIncrease: by 3.79%

Impairment:YTD Sep 15 : USD 111 million YTD Sep 14 : USD 106 million

Recoveries: YTD Sep 15 : USD 66 millionYTD Sep 14 : USD 51 million

As at 30th Sep15 : USD 18,307 mioAs at 30th Sep14 : USD 16,693 mioGrowth : 9.67%

As at 30th Sep15 : USD 19,030 mioAs at 30th Sep14 : USD 17,095 mioGrowth : 11.31%

Return on average assetsAs at 30th Sep15: 1.82%As at 30th Sep14: 1.86%

Return on average equityAs at 30th Sep15 : 14.07%As at 30th Sep14 : 14.04%

22

Operating Performance and Profitability

Comments

Operating Income Composition

Operating Income & Cost to Income

Profitability

Resilient operating performance throughout the financial turmoil Solid top line income growth – 5 year CAGR of 9.6%

Increase in operating expenses Manpower Cost Business expansion

Strong core revenue generation with net interest income and commission and fees contributing to over 80% of total operating income Increasing focus on top line commission and fee income

generation Solid Profitability

US$ Millions

US$ Millions

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

US$ Millions

23

756 690 764841 884 995

520

28.9% 38.8% 41.1% 41.6% 42.2% 41.2% 41.6%

0.0102030405060708090

2009 2010 2011 2012 2013 2014 June'15Operating Income Cost/ Income

690 764 841884 995

786

2010 2011 2012 2013 2014 Sept'15

65% 70% 69% 65% 59% 58%

18% 20% 22% 24%25% 23%

4%4% 5%

17% 10% 10% 3% 12% 15%

2010 2011 2012 2013 2014 Sept'15

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

264 305 362 395 426

354

14.6% 15.4% 15.4% 14.5% 13.4% 14.07%

1.74% 1.80% 1.84% 1.86% 1.79% 1.82%‐

1

6

1

1

2

2

2010 2011 2012 2013 2014 Sept'15Net 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

24

10,89412,976

15,096 16,521 18,298 18,307

4.19% 2.98% 2.99% 2.65% 2.84% 3.03%

0.0

1.0

2.0

3.0

4.0

5.0

2010 2011 2012 2013 2014 Sept'15

Gross Loans NPL/GLs

Services 11%Mining &

quarrying 6%

Manufacture 7%

Real estate 3%Wholesale & Retail trade 2%Import & Export

Trade 5%FIs 5%

Utilities & Transport 15%

Personal 30%

Housing 9%

Construction 4% Others 3%

484 458548 565

672 731457

387 451437 520 511

105.9%118.4%

121.4% 129.2% 129.4% 143.0%

0

4

2010 2011 2012 2013 2014 Sept'15LLR NPL LLR/NPL

Funding and Liquidity

Comments Funding Mix

Liquid Assets Capital Adequacy Ratio

32,375 Stable funding structure with a diversified funding base Largest deposit base in Oman with significant granularity Retail deposits comprise 36% of total deposits

Top 10 depositors represent 21% 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

25,26822,04320,55518,77415,197

15.92%16.32%15.93%14.78% 15.93%

25

16.50%

1,886 2,145 1,723 1,512 2,5897,709

1,429 2,2571,886 2,252 2,283

2,332

78 174 727 583 1,014 2,066

22.33% 24.38% 21.09% 19.72% 23.29% 37.39%

2010 2011 2012 2013 2014 Sept'15Cash & equivalent Placements with banks T Bills Liquid Assets

63% 67% 68% 66% 68% 59%

18% 16% 14% 13% 15% 27%13% 12% 13% 14% 13% 11%6% 5% 5% 6% 3% 4%

2010 2011 2012 2013 2014 Sept'15

Deposits Borrowings Equity Others

11.85% 11.30% 12.64% 13.20% 13.03% 12.97%

2.93% 4.63%3.68% 3.30% 2.89% 2.96%

2010 2011 2012 2013 2014 Sept'15Tier 1 Ratio Tier 2 Ratio

V. Annexure

bank muscat – Organisation Structure Chief Internal Auditor

Head‐ HR

Group General ManagerRetail, Investment and Global

Markets

Compliance

Head‐Retail CFO

Head‐Investment Bkg

& FIHead IT, Ops and Infrastructure

Board Secretary

Chief Risk Officer

Head‐Treasury

Head‐ Credit

Head‐Branches

Head‐Cards and E‐Banking

Head ‐Corporate Banking

Head‐SME

Head –Project Finance

Head‐Investment Bkg.

Head‐Operations

Head‐Support Services

Head –Fin. Control, Planning

& Strategy

Chief Operating Officer

Head‐Direct/

Inst. Sales

Head‐Credit and Recovery

Head International

Ops

Group General ManagerCorporate and Intl. Operations

CEO Saudi Br, AGM

Ahmed F Al Balushi

Group General Manager

Islamic Banking

Group General Manager Corporate Services

Overseas Ops.Head‐IT

Head‐PMO, Planning & Control

Head‐Corp. Comm.

and CSR

Chief Executive

Chairman’s Office Board

27

Head‐Priority Banking

Balance SheetAmounts in US$ Millions

28

30‐Sep‐15 30‐Sep‐14 31‐Dec‐14 31‐Dec‐13

Cash and bal. with Central Bank 7,709 3,037 2,174 1,512 Due from banks 2,332 2,449 2,699 2,252 Loans and Advances 17,054 15,694 16,584 15,230 Islamic financing receivables 1,253 1,000 1,039 725 Non trading investments 3,173 2,124 1,925 1,460 Tangible fixed assets 176 180 187 173

Other assets (incl. invt in associates) 679 773 660 690 Total assets 32,375 25,257 25,268 22,043

Bank deposits/FRNs /Bonds 7,774 2,928 2,803 2,303 Customer deposits (incl. CDs) 17,605 16,496 16,482 14,545 Islamic Customer's Deposit 1,425 599 735 241 Other liabilities 1,179 1,123 1,057 1,042 Subordinated debt 625 625 623 641 Convertible bonds 246 162 161 121 Total liabilities 28,853 21,932 21,861 18,894

Share capital and premium 1,803 1,775 1,774 1,733Total reserves 991 918 1,003 889Retained profits 728 632 630 527Shareholders' equity 3,522 3,325 3,407 3,149

Total liabilities + shareholders' equity 32,375 25,257 25,268 22,043

Key ratios

Loans and advances/customer deposits 96.87% 95.13% 102.36% 107.90%

Shareholders' equity/total assets 10.88% 13.16% 13.48% 14.29%

Subordinated debt/(debt + equity) 15.06% 15.81% 15.47% 16.92%Capital Adequacy Ratio‐ Badel III 15.93% 15.53% 16.50% 15.10%

Profit and Loss

Amounts in US$ Millions

29

30‐Sep‐15 30‐Sep‐14 31‐Dec‐14 31‐Dec‐13

Net interest income 457 442 589 578 Net income from Islamic financing 36 32 43 33 Other operating income 293 270 362 272 Operating income 786 745 995 884 Operating costs (327) (305) (410) (373)

459 440 585 510 Recoveries from impairments 66 51 67 84 Credit loss impairments (111) (106) (168) (131)Other impairments (10) (8) (4) (12)Gain/(loss) from associates 5 2 4 3 Profit before Tax 408 380 484 455 Taxation (54) (50) (60) (59)Net Profit 354 329 424 395

Key ratiosCost/income ratio 41.65% 40.98% 41.21% 42.24%Return on average assets 1.82% 1.86% 1.79% 1.86%Return on average equity 14.07% 14.04% 13.39% 14.49%

Basic EPS (US$) 0.156 0.145 0.151 0.187

Share price (US$) 1.42 1.77 1.70 1.58

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