Muscat : Oman's biggest bank — Bank Muscat — anticipates a credit growth of 9 per cent this year, which is against the projected banking industry growth in the region of 8-10 per cent, said a top-level official of the bank here yesterday. Bank Muscat's net loans and advances and Islamic finance last year grew by 9.7 per cent to touch OMR6,143 million from OMR5,601 million for the same period of previous year. So, the anticipated credit growth this year could be around OMR553 million , against incremental loan growth of OMR542 million posted in 2013. "I think the higher spending of the government will provide opportunities for banks (to extend credit). Some of the projects that were awarded in the recent past will definitely require finance this year," Ahmed M. Al Abri , chief operating officer of Bank Muscat, told journalists on the sidelines of analysts' meeting here. Project finance He said Oman Refineries and Petroleum Industries Company (Orpic) and other state-owned companies are looking for project finance, which will enable banks to achieve better growth in their loan book. Orpic is planning to raise as much as $3 billion for its refinery expansion and to repay some its earlier loans. Al Abri also said that young Omanis joining the workforce and salary hike are other factors that would drive demand for consumer loan this year. "Those who joined (the workforce) last year will borrow from banks this year. The next growth will come from increase in salaries," he added. Echoing a similar view, AbdulRazak Ali Issa , chief executive of Bank Muscat, said that the budget will support growth and stimulate the private sector. "Infrastructure projects will continue to give a fillip to the economy as well as generate employment opportunities as part of the Eighth Five-Year Plan strategy. The 2014 investment expenditure is estimated at OMR3.2 billion , which is 24 per cent of the overall public expenditure." "The banking sector will benefit from the government's policy aimed at balancing the economic and social development. Islamic banking operations will also contribute to the socio-economic development of Oman . The banking sector is expected to post positive results in 2014 in line with the overall economic activity in the country," noted Ali Issa . Mortgage finance portfolio Bank Muscat , which posted a 9.3 per cent growth in net profit at OMR152.2 million last year, said its mortgage finance portfolio by end-2013 was 6 per cent of total loans (against a 15 per cent ceiling) and personal loan ratio is 33 per cent (against a ceiling of 35 per cent). The bank's net interest income grew by 2 per cent to OMR235.3 million as there was a pressure on margins. The bank's return on average assets marginally improved to 1.86 per cent in 2013 from 1.84 per cent in 2012. The return on average equity reduced to 14.49 per cent in 2013 from 15.42 per cent in 2012. BMI merger Bank Muscat's Bahrain joint venture – Bank Muscat International – recently merged with Al Salam Bank . This has resulted in Bank Muscat having a stake of 14.7 per cent in the merged entity. "The merged entity is a much bigger bank and it is a safe investment," noted Al Abri . Apart from AbdulRazak Ali Issa and Ahmed Al Abri , the Bank Muscat panel present at the meeting included Waleed Al Hashar , Group General Manager – Corporate Services, Sulaiman Al Harthy , Group General Manager – Islamic Banking, Abdullah Al Hinai , DGM - Investment Banking and FIs, T. Ganesh, Chief Financial Officer, and Sheikha Al Farsi , AGM - Financial Control, Strategy and Planning.
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