Investor Presentation June 2020 Contents Bank Muscat Introduction - PDF document

Investor Presentation June 2020

Contents • Bank Muscat Introduction • Operating Environment • Bank Muscat Business - Overview • Financial Performance • Annexures Note: The financial information is updated as of 30th June 2020, unless stated otherwise. 2

Bank Muscat Introduction 3

Bank Muscat at a glance Overview Major Shareholders as of June 2020  # 1 Bank in Oman with a significant active customer base with over 2 million clients and a workforce of 3,821 employees as of 30 th June 2020. Royal Court Affairs,  Established in 1982, headquartered in Muscat with 170 branches across 23.63 Oman, 2 branches overseas, and 3 representative offices Others, 35.19  Fully diversified commercial bank offering corporate and retail banking services Dubai Financial  Primarily domestic dominated operations with over 95% of operating Group LLC, 11.77 income generated in Oman  Meethaq – pioneer of Islamic Banking services in Oman, officially Public Authority for Social Insurance, Jabreen launched in January 2013 with full fledged product and services 5.13 International offering  Listed on the Muscat Securities Market (with a market cap of USD 2,870 Development, 9.99 million as of 30 th June 2020), London Stock Exchange & Bahrain Stock Ministry of Defence Civil Service Exchange Pension Fund, 6.49 Pension Fund, 7.80 Key Financials Bank Muscat Foot Steps I n US$ Millions, unless June' 20 2019 2018 2017 otherwise stated Total Assets 32,360 31,925 31,917 28,959 Gross Loans 24,231 23,875 24,073 22,484 Deposits 22,239 20,894 21,981 19,271 Operating I ncome 585 1,227 1,160 1,132 Net Profit 181 482 467 459 Tier 1 18.74% 18.78% 17.98% 16.87% Total CAR 19.76% 19.72% 19.22% 18.45% Loans to Deposit Ratio 104.65% 110.37% 105.63% 112.26% NPL Ratio 3.65% 3.25% 3.09% 2.94% Cost/ I ncome 41.75% 41.50% 42.61% 42.22% ROA 1.12% 1.51% 1.53% 1.61% ROE 7.78% 10.73% 10.88% 11.44% 4 18-Aug-20

Bank Muscat – Key Highlights Dominant Franchise in Oman  Largest Bank in Oman by total assets of 35.6%, as of 31st May 2020, around the size of next 3 Omani banks Highest Government Ownership Strong Financial Metrics combined.  Market Capitalisation of USD 2,870 million as at 30th  Highest Government Ownership among Omani June 2020  Stable and consistent financial performance Banks  Largest branch network with 170 domestic branches   Royal Court Affairs: 23.63% Solid topline income growth  The only bank in Oman to be designated a “D-SIB”  Significant direct and indirect Government  Stable cost-to-income ratio despite business ownership through various entities. and infrastructure expansion  Strong and sustainable profitability metrics: Stable Operating Environment  Operating income 2015-2019 CAGR of 3.7%  Net profit 2015-2019 CAGR of 1.4%  Stable banking sector  Prudential regulatory environment  Stable political system in the Oman with Solid Capital Position excellent diplomatic relationship in the region  Economic growth in Oman supported by  Strong capitalization levels offering room for increase in hydrocarbon production, strengthening and growing local demand, substantial growth  CAR of 19.76% as of 30th June 2020 and disciplined 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 18-Aug-20

Operating Environment 6

Sultanate of Oman - Overview Kuwait Overview Bahrain  2 nd Largest country in the GCC with an area covering approx. 309.5 thousand km 2 , Qatar strategically located, sharing borders with Saudi Arabia, & UAE. UAE  Stable Political System, excellent diplomatic relations in the region Saudi  Oman explicitly aims to create a neo-liberal free market economy, where the private Arabia Oman sector is the driver of the economy as opposed to the state  Population of 4.51mn as of July 2020 - predominantly represented by Omani Nationals who account for 60.4% of the total population (1) Key I ndicators 2019 2020  The economy will continue to grow with the following drivers: Sovereign Ratings Moody's\S&P Ba1/BB Ba3/BB-  The increase in hydrocarbon production  The Government’s balanced support for the economy with disciplined fiscal policy Budget Surplus\Deficit in OMR -2.65 Bn (Dec '19) 0.18 Bn (Apr '20) measures Surplus\Deficit % of total revenue -25% (Dec '19) Est. '-23% (Dec '20)  Strengthening and growing local demand; increasing services and activities Net Public Debt (% GDP) 53%-55% Est 55%-60% contribution to GDP  Govt. initiated a dedicated program called “Tanfeedh” to focus on economic (1) Source: National Center for Statistics (July ’20), Rating Reports: Moody’s and diversification through focus on key sectors in phase 1 viz. manufacturing, logistics S&P as of Apr 2020 and tourism Gov’t I nvestment Expenditure GDP Composition as of March 2020 Investment Expenditure in USD Mn Other services I ncl Agri, Fishing & Base 10,000 Chemicals, 16.75% 8,610 9,000 Public admin & 7,605 7,501 Petroleum 8,000 defence, 11.67% 6,896 Activities, 33.15% 7,000 6,070 6,000 Real Estate 5,000 Services, 4.40% 4,000 3,000 Financial 2,000 1,312 I ntermediation, Manufacturing & 1,000 6.42% Mining, 8.23% ‐ 2015 2016 2017 2018 2019 Apr' 20 Transport, storage Const., Elec. & 7 18-Aug-20 & communication, Water supply, Hotels & Wholesale & retail 5.06% 6.85% Restaurants, 1.08% trade, 6.39% Note: Investment expenditure includes Civil Ministries development & Capital expenditure, Oil & Gas production

Oman Macro Overview  Oman’s economy has been some extend resilient to strong headwinds in spite of GDP Growth low oil prices in the past 5 years. 85,000 79,171 14.0%  However, current pandemic situation coupled with further pressure on oil prices has 12.0% 76,039 80,000 12.3% increased the stress level of the government’s fiscal position. 10.0% 8.0% 75,000 70,504  Government has been taking major steps towards economic diversification and 6.5% 6.0% 69,740 specific relief measures to support the economy: 70,000 4.0% 66,205 2.0%  Tanfeedh initiatives, Duqum developments, number of large projects in 65,000 0.0% 0.0% certain sectors including oil & gas, infrastructure, tourism and so on. ‐ 2.0% 60,000  Introduction of or revising key legislations with regard to foreign investments, ‐ 4.0% ‐ 4.0% ‐ 5.1% Public Private Partnership, Bankruptcy law, Banking law, Tax laws, 55,000 ‐ 6.0% 2015 2016 2017 2018 2019 Commercial Companies law etc.  In USD Millions Real GDP Growth Key framework for Vision 2040 to navigate the economy in the long term. Public Deficit  Short terms measures include job sector reforms initiated, Job Security Fund established, prioritization of Govt. capital expenditure, key development 16,000 25% 14,301 projects worth RO 300 million, rationalizing current and administrative 14,000 22% expenditure of various ministries and government entities. 12,029 20% 12,000  9,764 Announced number of relief measures to support the economy and 10,000 17% 15% 14% businesses in the near term which include tariff reduction or waiver, deferral 8,000 6,881 6,891 instalments and others. 9% 9% 10% 6,000 4,000  5% Local and international borrowings by sovereign and government entities to address 2,000 the fiscal deficit. ‐ 0%  According to IMF , due to the outbreak of the COVID-19, GDP growth is expected to 2015 2016 2017 2018 2019 fall to -2.8% in 2020 and pick up to 3% in 2021. In USD Millions % of GDP 8 Source: Real GDP growth rate & Public Deficit forecast as per IMF reports as of Apr’ 20

Oman Banking Sector - Overview Amounts in USD Bn Overview Loans and Deposit Growth  The Omani banking sector comprises of 7 local banks, 2 specialized Gross Loan: + 6.1% US$ billion Deposits: + 4.2% 68.9 67.1 banks, 9 foreign commercial banks and two full fledged Islamic Banks 65.1 62.5 61.4 59.7 59.2 54.5  The top 3 banks after bank muscat contribute around 35.7% of total 50.8 47.2 sector assets. bank muscat represents 35.6% of total banking sector assets as of May 2020  Conservative and Prudent Regulator  A number of regulations and caps in place to support the growth, stability and sustainability of the Omani banking sector 2016 2017 2018 2019 May 2020  Adequate asset quality with relatively low impaired assets and sound capitalization Gross loan Deposits  Implemented Basel 3 regulation with effect from Jan 2014 Asset Quality (2) Oman in the GCC banking sector context (1) Assets as a % of GDP 12.0% 1000 600% 852 539% 793 757 500% 800 5.6% 7.0% 4.8% 400% 600 1.9% 232% 421 428 300% 1.8% 1.9% 1.6% 400 2.0% 202% 200% 234 210 123% 175% 184 134 200 93 76 100% 95% 852 757 428 234 210 39 93 ‐ 3.0% 0 0% UAE Saudi Arabia Qatar Kuwait Bahrain Oman UAE Saudi Arabia Qatar Kuwait Bahrain Oman Total Assets NPL/ GLs Total Assets in $ Bn GDP in $ Bn Assets as a % of GDP 9 18-Aug-20 (2) Source: Central Banks: Kuwait & KSA as of Jun’ 20. Oman, Bahrain, & (1) GDP data is actual for FY 2019 (Source: World Bank, Qatar as of May’ 20. UAE as of Mar’ 20. National Central Banks)