Investor Presentation Dec 2019 Contents o Bank Muscat Introduction o - PDF document

Investor Presentation Dec 2019

Contents o Bank Muscat Introduction o Operating Environment o Bank Muscat Business – Overview o Financial Performance o Annexure Note: The financial information is updated as of 31st Dec 2019, unless stated otherwise. 23 ‐ Feb ‐ 20 2

Bank Muscat Introduction 23 ‐ Feb ‐ 20 3

Bank Muscat at a glance Owner Ownershi hip as as of of Dec Dec 2019 2019 Over Ov ervi view ew  #1 Bank in Oman with a significant active customer base with ~2 million Royal Court clients and a workforce of 3,818 employees as of 31st Dec 2019. Affairs, 23.63  Established in 1982, headquartered in Muscat with 169 branches across Oman, 2 branches overseas, and 3 representative offices Others, 35.20  Fully diversified commercial bank offering corporate and retail banking services  Primarily domestic dominated operations with over 95% of operating Dubai Financial Public Authority income generated in Oman Group LLC, 11.77 for Social  Meethaq – pioneer of Islamic Banking services in Oman, officially Insurance, 5.13 Jabreen launched in January 2013 with full fledged product and services International offering Development, Ministry of  Listed on the Muscat Securities Market (with a market cap of USD 3,488 Civil Service 9.99 Defence Pension million as of 31 st Dec 2019), London Stock Exchange & Bahrain Stock Pension Fund, Fund, 6.49 Exchange 7.80 Ke Key Financi nancials Bank Mu Bank Muscat at Fo Footste steps I n US$ Millions, unless otherwise 2019 2018 2017 2016 stated Total Assets 31,925 31,917 28,959 28,104 Gross Loans 23,875 24,073 22,484 21,484 Deposits 20,894 21,981 19,271 19,371 Operating I ncome 1,227 1,160 1,132 1,081 Net Profit 482 467 459 459 Tier 1 18.78% 17.98% 16.87% 14.75% Total CAR 19.72% 19.22% 18.45% 16.90% Loans to Deposit Ratio 110.37% 105.63% 112.26% 106.69% NPL Ratio 3.25% 3.09% 2.94% 2.91% Cost/ I ncome 41.50% 42.61% 42.22% 41.83% ROA 1.51% 1.53% 1.61% 1.64% ROE 10.73% 10.88% 11.44% 12.50% 23 ‐ Feb ‐ 20 4

Bank Muscat – Key Highlights Domi Do minant nant Franc Franchise in in Oma Oman  Largest Bank in Oman by total assets of 34.71%, as of 31st Dec 2019, around the size of next 3 Omani banks combined. Highe Hi ghest Gove Govern rnment Ownershi Ownership Str Strong Fi Financ nancial ial Me Metrics  Market Capitalisation of USD 3,488 million as at 31 st Dec 2019  Highest Government Ownership among  Stable and consistent financial  Largest branch network with 169 domestic branches Omani Banks performance  The only bank in Oman to be designated a “D ‐ SIB”  Royal Court Affairs: 23.63%  Solid topline income growth  Significant direct and indirect  Stable cost ‐ to ‐ income ratio despite Government ownership through various business and infrastructure entities. expansion  Strong and sustainable profitability Stable Stab le Operat Operating Envir Environment metrics:  Stable banking sector  Operating income 2015 ‐ 2019  Prudential regulatory environment CAGR of 3.7%  Stable political system in the Oman  Net profit 2015 ‐ 2019 CAGR of 1.4% with excellent diplomatic relationship Solid So lid Capi Capital tal Posi Positio ion in the region  Economic growth in Oman supported  Strong capitalization levels offering by increase in hydrocarbon room for substantial growth production, strengthening and  CAR of 19.72% as of 31 st Dec 2019 growing local demand, and discipline fiscal policy measures Stab Stable le Asse Asset Qual Qualit ity Ma Management nagement  Stable and experienced management  Conservative lending approach with proven track record of successful  Strong risk architecture and policies organic and inorganic growth  Adequate asset quality metrics  Good corporate governance 23 ‐ Feb ‐ 20 5

Operating Environment 23 ‐ Feb ‐ 20 6

Sultanate of Oman - Overview Overview Kuwait  2 nd Largest country in the GCC with an area covering approx. 309.5 thousand km 2 , Bahrain strategically located, sharing borders with Saudi Arabia, & UAE. Qatar  Stable Political System, excellent diplomatic relations in the region UAE  Oman explicitly aims to create a neo ‐ liberal free market economy, where the Saudi Arabia private sector is the driver of the economy as opposed to the state Oman  Population of 4.64mn as of Feb 2020 ‐ predominantly represented by Omani Nationals who account for 58.1% of the total population (1)  The economy will continue to grow with the following drivers: Key I ndicators 2018 2019  The increase in hydrocarbon production Sovereign Ratings Moody's\S&P Baa3/BB Ba1/BB  The Government’s balanced support for the economy with disciplined fiscal Budget Surplus\Deficit in OMR -1.9 Bn (Dec '18) -1.9 Bn (Nov '19) policy measures  Surplus\Deficit % of total revenue -19% -20% (Nov '19) Strengthening and growing local demand; increasing services and activities contribution to GDP Net Public Debt (% GDP) 50% Est 53%-55%  Govt. initiated a dedicated program called “Tanfeedh” to focus on economic (1) Source: National Center for Statistics (Nov ’19), Rating Reports: Moody’s and S&P as of Apr 2019 diversification through focus on key sectors in phase 1 viz. manufacturing, logistics and tourism GDP Growth GDP Composition as of Sep 2019 GDP Growth % Other services, 9.35% 6.0% 5.0% Public admin & 4.7% defence, 5.0% 11.74% 3.7% Petroleum 4.0% 2.8% Activities, Real Estate 35.50% 2.2% Services, 3.0% 4.79% 2.0% Financial 0.3% I ntermediation, 1.0% 6.74% ‐ 0.9% Manufacturing 0.0% Transport, & Mining, 2014 2015 2016 2017 2018 Est. 2019 Est. 2020 storage & 9.32% ‐ 1.0% communication , 5.80% ‐ 2.0% Hotels & Source: IMF & World Bank as of Oct 2019 Const., Elec. & Wholesale & Restaurants, Water supply, 23 ‐ Feb ‐ 20 7 retail trade, 1.03% 8.30% 7.43%

Oman Banking Sector - Overview Overview Loans and Deposit Growth  The Omani banking sector comprises of 7 local banks, 2 specialized banks, 9 US$ billion Gross Loan: +6.1% 67.1 Deposits: +4.2% 65.1 foreign commercial banks and two full fledged Islamic Banks 60.2 59.7 59.2 54.5 52.9  The top 3 banks after bank muscat contribute around 36.3% of total 51.0 50.8 47.2 sector assets. bank muscat represents 34.71% of total banking sector assets as of Dec 2019  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 2015 2016 2017 2018 Nov 2019 capitalization Gross loan Deposits  Implemented Basel 3 regulation with effect from Jan 2014 Oman in the GCC banking sector context (1) Asset Quality (2) Assets as a % of GDP 12.0% 900 250% 793 791 202% 183% 800 160% 200% 625 700 5.6% 5.6% 7.0% 600 159% 150% 433 500 390 1.9% 400 1.8% 1.9% 109% 1.6% 100% 300 219 2.0% 79% 193 138 200 50% 88 81 64 40 100 793 702 426 232 206 92 0 0% ‐ 3.0% UAE Saudi Qatar Kuwait Oman Bahrain UAE Saudi Arabia Qatar Kuwait Bahrain Oman Arabia Total Assets NPL/ GLs Total Assets in $ Bn GDP in $ Bn Assets as a % of GDP 23 ‐ Feb ‐ 20 8 (1) GDP data is estimated for FY 2019 (Source: World (2) Source: Central Banks: KSA & Qatar as of Dec ‘19, Oman, Kuwait & Bahrain as of Bank, National Central Banks) Nov ‘19 and UAE as of May ‘19.

Bank Muscat – Unrivalled leading Market Position in Oman Gross Loans (USD Mn) Total Assets (USD Mn) Bank Muscat Bank Muscat 31,925 23,875 Bank Dhofar Bank Dhofar 11,234 8,265 National Bank of Oman National Bank of Oman 9,465 7,582 Sohar International Sohar International 9,104 6,673 HSBC Bank Oman Ahli Bank 6,623 5,445 Oman Arab Bank Oman Arab Bank 6,377 5,278 Ahli Bank HSBC Bank Oman 6,543 4,112 Deposits (USD Mn) Net Profit (USD Mn) Bank Muscat 20,894 Bank Muscat 482 Bank Dhofar 7,644 National Bank of Oman 134 National Bank of Oman 6,577 Bank Dhofar 79 HSBC Bank Oman 5,379 HSBC Bank Oman 76 Oman Arab Bank 5,005 Sohar International 89 Sohar International 5,447 Oman Arab Bank 53 Ahli Bank 4,447 Ahli Bank 81 23 ‐ Feb ‐ 20 9 Note: Oman Arab Bank Financials as of Sep’ 19

Bank Muscat – Dominant domestic franchise in the region Market Share – Deposits Market Share ‐ Assets 68.0% 61.0% 41.7% 36.8% 34.7% 34.7% 33.4% 30.3% 28.2% 23.5% 18.9% 18.9% 9.5% 7.6% CBQ ENBD FAB NCB BM NBK QNB CBQ ENBD FAB NCB NBK BM QNB Asset Quality Strong Capitalization 82.1% 127.5% 300.0% 272.2% 112.3% 0.9% 250.0% 0.9% 1.1% 0.8% 2.3% 1.9% 200.0% 93.0% 2.0% 18.0% 133.0% 150.0% 5.6% 100.0% 4.9% 18.8% 17.4% 17.2% 100.0% 15.9% 14.6% 14.4% 3.2% 3.2% 50.0% 1.9% 1.9% 1.1% 0.0% QNB ENBD FAB NCB BM NBK CBQ CBQ QNB NCB BM FAB NBK ENBD Tier 1 Tier 2 NPL/GL LLR/NPL 23 ‐ Feb ‐ 20 10 Note: NCB Financials as of Sep’ 19

Bank Muscat Business Overview 23 ‐ Feb ‐ 20 11