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

Investor Presentation June 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 30th June 2019, unless stated otherwise. 2 4-Sep-19

Bank Muscat Introduction 3 4-Sep-19

Bank Muscat at a glance Ownership as of June 2019 Overview  #1 Bank in Oman with a significant active customer base with ~2 million clients and a workforce of 3,778 employees as of 30 th June 2019. Royal Court Others, 35.53 Affairs, 23.63  Established in 1982, headquartered in Muscat with 169 branches across Oman, 2 branches overseas, and 3 representative offices Dubai  Fully diversified commercial bank offering corporate and retail banking Public Financial services Authority for Group LLC,  Primarily domestic dominated operations with over 95% of operating Social 11.77 income generated in Oman Insurance,  Meethaq – pioneer of Islamic Banking services in Oman, officially 5.13 ONIC, 9.90 launched in January 2013 with full fledged product and services offering  Listed on the Muscat Securities Market (with a market cap of USD 3,279 Ministry of Civil Service million as of 30th June 2019), London Stock Exchange & Bahrain Stock Defence Pension Exchange Pension Fund, 7.55 Fund, 6.49 Key Financials Bank Muscat Footsteps I n US$ Millions, unless Jun-19 2018 2017 2016 otherwise stated Total Assets 31,180 31,917 28,959 28,104 24,501 24,073 22,484 21,483 Gross Loans Deposits 20,722 21,981 19,268 19,369 Operating Income 608 1,160 1132 1081 243 466 460 459 Net Profit Tier 1 17.77% 18.14% 16.87% 14.75% Total CAR 18.86% 19.38% 18.56% 16.90% 113.79% 105.63% 112.26% 106.69% Loans to Deposit Ratio NPL Ratio 3.09% 3.09% 2.94% 2.91% 41.50% 42.61% 42.22% 41.83% Cost/Income ROA 1.54% 1.53% 1.61% 1.64% ROE 10.78% 10.83% 11.44% 12.50% 4 4-Sep-19

Bank Muscat – Key Highlights Dominant Franchise in Oman  Largest Bank in Oman by total assets of 35%, as of 30th June 2019, around the size of next 3 Omani banks combined. Highest Government Ownership Strong Financial Metrics  Market Capitalisation of USD 3,279 million as at 30th June  Stable and consistent financial 2019  Highest Government Ownership among performance  Largest branch network with 169 domestic branches Omani Banks   Solid topline income growth Royal Court Affairs: 23.63%  The only bank in Oman to be designated a “D-SIB”  Stable cost-to-income ratio despite  Significant direct and indirect business and infrastructure Government ownership through various expansion entities.  Strong and sustainable profitability Stable Operating Environment metrics:  Operating profit 2014-2018 CAGR  Stable banking sector of 3.9%  Prudential regulatory environment  Net profit 2014-2018 CAGR of  Stable political system in the Oman 2.4% with excellent diplomatic relationship Solid Capital Position in the region  Economic growth in Oman supported  Strong capitalization levels offering by increase in hydrocarbon production, strengthening and room for substantial growth  CAR of 18.86% as of 30 th June 2019 growing local demand, and discipline fiscal policy measures Stable Asset Quality Management  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 5 4-Sep-19

Operating Environment 6 4-Sep-19

Sultanate of Oman - Overview Kuwait Overview 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  Saudi Oman explicitly aims to create a neo-liberal free market economy, where the private sector Arabia is the driver of the economy as opposed to the state Oman  Population of 4.66mn as of Aug 2019 - predominantly represented by Omani Nationals who account for 56.6% of the total population  The economy will continue to grow with the following drivers: Key Indicators ( 1 ) 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 policy Budget Surplus\Deficit in OMR -1.9 Bn (Dec '18) -0.35 Bn (May '19) measures  Strengthening and growing local demand; increasing services and activities contribution Surplus\Deficit % of total revenue -19% -7.6% (May '19) to GDP Net Public Debt (% GDP) 50% Est 53%-55%  Govt. initiated a dedicated program called “Tanfeedh” to focus on economic diversification through focus on key sectors in phase 1 viz. manufacturing, logistics and (1) Source: National Center for Statistics (July ’19), Rating Reports: Moody’s and S&P as of Apr 2019 tourism GDP Growth GDP Composition as of Dec 2018 Other Public admin GDP Growth % services, 6.0% & defence, 5.0% 10.79% 4.7% 11.53% 5.0% Petroleum 2.8% Real Estate 4.0% Activities, Services, 34.94% 3.0% 1.9% 4.74% 2.0% Financial 1.1% Intermediation, 1.0% 5.99% ‐ 0.9% 0.0% Transport, 2014 2015 2016 2017 Est. 2018 Est. 2019 storage & ‐ 1.0% communication , ‐ 2.0% 5.32% Manufacturing Source: IMF data as of Apr 2019, & National Centre for Statistics & Information as of & Mining, July 2019 Hotels & Wholesale & Const., Elec. & 10.26% 7 Restaurants, retail trade, Water supply , 4-Sep-19 0.94% 7.25% 8.24%

Oman Banking Sector - Overview Overview Loans and Deposit Growth  The Omani banking sector comprises of 7 local banks, 2 specialized US$ billion Gross Loan: +10.5% Deposits: +7.1% banks, 9 foreign commercial banks and two full fledged Islamic Banks  The top 3 banks after bank muscat contribute around 36.3% of total sector assets. bank muscat represents 35% of total banking sector assets as of June 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 capitalization  Impleme nted Basel 3 regulation with effect from Jan 2014 Oman in the GCC banking sector Asset Quality (2) context (1) Assets as a % of GDP 183% 1000 250% 202% 160% 793 791 800 200% 625 159% 600 150% 433 390 109% 400 100% 219 193 79% 138 200 88 81 50% 64 40 0 0% UAE Saudi Qatar Kuwait Oman Bahrain Arabia Total Assets in $ Bn GDP in $ Bn Assets as a % of GDP (2) Source: Central Banks: Oman, UAE, KSA, Qatar & Kuwait as of Mar (1) GDP data is estimated for FY 2019 (Source: 8 4-Sep-19 2019, Bahrain as of Apr 2019. World Bank, National Central Banks)

Bank Muscat – Unrivalled leading Market Position in Oman Total Assets (USD Mn) Gross Loans (USD Mn) Deposits (USD Mn) Net Profit (USD Mn) 9 4-Sep-19

Bank Muscat – Dominant domestic franchise in the region Market Share ‐ Assets Market Share – Deposits Asset Quality Strong Capitalization 96.2% 135.5% 125.8% 234.3% 250.0% 1.1% 1.1% 200.0% 0.9% 0.9% 111.0% 2.3% 145.0% 2.0% 1.8% 150.0% 17.5% 106.0% 5.9% 20.4% 100.0% 17.8% 17.8% 4.9% 14.6% 14.6% 14.5% 3.1% 3.1% 50.0% 1.9% 1.8% 1.4% 0.0% QNB ENBD FAB NCB BM NBK CBQ CBQ QNB NCB BM FAB NBK ENBD Tier 1 Tier 2 NPL/GL LLR/NPL 10 4-Sep-19

Bank Muscat Business Overview 11 4-Sep-19

Bank Muscat Strategy – Key Pillars  Capitalize on growth opportunities in Oman  Infrastructure development projects and Government focus on economic diversification and developing tourism  Omanis entering the workforce; over 45% of the population is less than 19 years old  Leverage large network of branches and other delivery channels Consolidate Leading  Platform to focus on the growth potential Position in Oman  Cross sell opportunities among business lines and customer segments  Continue to focus on customer acquisitions and retention  Focus on fee based income  Scale up fee driven businesses both in the wholesale banking (transaction banking, investment banking, treasury) and personal banking (credit card, bancassurance, private banking)  Further enhance financial strength  Strong capitalization and stable returns Financial strength  Further enhance the diversified funding mix and large CASA deposit base.  Efficient management of operating costs  Pioneering investments in technology supporting growth plans  Multiple digital banking channels for sales and services Leverage on technology  Technology driven banking to enhance customer experience and improve internal efficiency and infrastructure  Customer Convenience and Service Quality investments  Innovative products and services offering  Customer centric approach through “To Serve you better, everyday” philosophy  Strengthen regional presence through focused and controlled expansion in GCC Regional Expansion  Leverage existing regional presence to scale up business growth  Focus on opportunities for controlled expansion in GCC and the region  Meethaq – Islamic banking platform Focus on Islamic Banking  Be the market leader in Islamic Banking Business Developments in Oman  Endeavor to offer full fledged products and services  Expansion of branch and channel network 12 4-Sep-19