BANKING SURVEY 2006
A new number one, sharp rises and steep falls, the survey gives you a ring side view of all the action in the sector
BusinessToday reports
Change is the only constant in life, the adage seems to be a perfect fit for the banking sector in Oman – all banks on BusinessToday's survey have changed ranks since 2005, reflecting the churn in the sector. BankMuscat reclaims the No. 1 position, which it had lost to Oman Arab Bank in 2005. The latter slips drastically to the No. 4 spot. The strategies of the two banks are, in a sense, a study in contrast. BankMuscat has gone in for volume and marketshare while OAB has pursued a margin-driven growth strategy.
ASSET QUALITY |
Banks |
NPL to Gr loan* |
Score |
BankMuscat |
4.78 |
25 |
OAB |
4.89 |
20 |
Bank Dhofar |
7 |
15 |
NBO |
11.26 |
10 |
OIB |
12.67 |
5 |
Cross currents at work
Two others who deserve special mention are Bank Dhofar and NBO. Both banks move up in the ranking with a robust performance. Bank Dhofar tops the charts on profitability and
efficiency indicators. NBO is trumps on growth. The results may be a bit startling, but with the sector opening up to fresh competition this may just be the tip of the iceberg. As new banks join the fray, there is a growing rea-lisation that old mindsets need to give way to fresh thinking. And this seems to be happening in most banks.
As the new (and old) banks lure experienced professionals with better opportunities and packages, managing human resources better has moved centrestage. The other common strand amongst all banks is a sense of urgency about upgrading their technology platform. Finally, niches and segments which were hitherto considered to be also-rans are being touted as the next big wave – from SME financing to home loans. These are interesting times for the banking sector and the customer is sure to emerge as the biggest beneficiary.
The total tally 2006
|
| |
Weighted Score |
BankMuscat |
Bank Dhofar |
NBO |
OAB |
OIB |
Value |
Score |
Value |
Score |
Value |
Score |
Value |
Score |
Value |
Score |
Total Assets (ROmn) |
1 |
2,954.85 |
5 |
694.79 |
2 |
1,082.44 |
4 |
540.39 |
1 |
919,50 |
3 |
EPS (RO) |
5 |
0.73 |
25 |
0.45 |
20 |
0.38 |
10 |
0.417 |
15 |
0.347 |
5 |
Net Profit per Employee (RO’000) |
3 |
31.07 |
12 |
31.65 |
15 |
28.57 |
6 |
23.8 |
3 |
28.69 |
9 |
Return on Equity (%) |
5 |
19.94 |
10 |
23.31 |
25 |
17.26 |
5 |
22.27 |
20 |
21.87 |
15 |
Return on Avg Capital (%) |
5 |
76.06 |
25 |
45.69 |
20 |
38.03 |
10 |
44.44 |
15 |
37.86 |
5 |
Return on Average Earning Assets (%) |
5 |
2.65 |
5 |
3.57 |
20 |
3.69 |
25 |
3.33 |
15 |
3.19 |
10 |
Op. Expenses to Net Op. Income (%) |
5 |
40.8 |
15 |
38.99 |
20 |
44.9 |
5 |
43.16 |
10 |
38.9 |
25 |
NPL to Gross Loan (%) |
5 |
4.78 |
25 |
7 |
15 |
11.26 |
10 |
4.89 |
20 |
12.67 |
5 |
Growth in Deposits (%) |
5 |
34.35 |
25 |
9.8 |
10 |
30.02 |
20 |
16.59 |
15 |
3.88 |
5 |
Growth in Loans (%) |
5 |
31.81 |
25 |
15.41 |
10 |
23.95 |
20 |
21.5 |
15 |
1.25 |
5 |
Net Profit Growth (%) |
5 |
33 |
15 |
41.8 |
20 |
49.7 |
25 |
10.4 |
5 |
18.9 |
10 |
Net Profit Growth (RO’000) |
5 |
14,988 |
25 |
5,931 |
15 |
10,097 |
20 |
1,425 |
5 |
4,167 |
10 |
Growth in NPL (%) |
5 |
-3.33 |
15 |
5.17 |
5 |
-14.45 |
25 |
-10.09 |
20 |
1.9 |
10 |
Interest Spread (%) |
4 |
62.63 |
12 |
62.06 |
8 |
59.27 |
4 |
74.38 |
20 |
65.99 |
16 |
TOTAL SCORE |
|
|
239 |
|
205 |
|
189 |
|
179 |
|
133 |
Profitability Indicators |
Banks |
EPS
(RO) |
Return on Equity |
Return on Avg Capital |
Return on Avg Earning Assets |
Interest Spread |
Score |
Bank Dhofar |
0.45 |
23.31 |
45.69 |
3.57 |
62.06 |
89 |
OAB |
0.417 |
22.27 |
44.44 |
3.33 |
74.38 |
85 |
BankMuscat |
0.73 |
19.94 |
76.06 |
2.65 |
62.63 |
77 |
NBO |
0.38 |
17.26 |
38.03 |
3.69 |
59.27 |
54 |
OIB |
0.347 |
21.87 |
37.86 |
3.19 |
65.99 |
51 |
Capitalisation Indicators |
Banks |
Total Assets |
Growth in Deposits |
Score |
BankMuscat |
2,954.85 |
34.35 |
30 |
NBO |
1082.44 |
30.02 |
24 |
OAB |
540.39 |
16.59 |
16 |
Bank Dhofar |
694.79 |
9.8 |
12 |
OIB |
919.5 |
3.88 |
8 |
Efficiency Indicators |
Banks |
Op. exp Op income |
Net profit per emp |
Score |
Bank Dhofar |
38.99 |
31.65 |
35 |
OIB |
38.9 |
28.69 |
34 |
BankMuscat |
40.8 |
31.07 |
27 |
OAB |
43.16 |
23.8 |
13 |
NBO |
44.9 |
28.57 |
11 |
2006 RANKING
1 BANKMUSCAT
2 BANK DHOFAR
3 NBO
4 OAB
5 OIB
Methodology
The financial ratios were worked out by Ernst & Young's Muscat office from the 2006 annual reports of the respective banks. All banks were ranked on 14 individual parameters. The final ranking was arrived at by adding up their scores on all these parameters.
Explanations
* BankMuscat's operating income does not include results of its associates.
* Basic earnings per share have been adjusted as if the nominal value of a share was RO10.
* Share capital does not include share premium
* Bank Dhofar and National Bank of Oman's deposits do not include interest bearing subordinated liabilities, convertible bonds and private placements
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