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Thu 19 Apr 2007 06:03 PM

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Bank Muscat eyeing Gulf acquisitions

Oman’s largest bank is looking to boost foreign profit by increasing investments, as Q1 profits up over 30%.

Bank Muscat, Oman's largest lender, said it is mulling acquisitions in the Gulf as it seeks to boost the share of profit from foreign operations almost four-fold by 2012 to mitigate against competition at home.

It also plans to spend $50 million to marginally increase its 22 percent stake in India's Centurion Bank of Punjab, which is buying Lord Krishna Bank. The additional investment would allow it to maintain its stake after the merger.

The bank, which this month opened its first branch in Saudi Arabia - the world's largest oil exporter - wants to increase foreign operations' share of profit to 25 percent in five years from 7 percent in 2006, led by India, Saudi Arabia and Bahrain.

"This is our target; 25 percent of profit comes from outside Oman in five years," AbdulRazak Ali Issa said in an interview in Mumbai on Thursday.

Bank Muscat expects first-quarter profit to exceed last year's equivalent three months by at least 30 percent as the oil-driven economy grows, the bank's chief executive said today.

A 30-percent rise would imply net income of about 17.2 million riyals ($44.69 million) in the three months to March 31, compared with 13.25 million riyals in the year-earlier period, according to Reuters calculations. That would make it a record.

"The first quarter is more than 30 percent," AbdulRazak Ali Issa told Reuters in Mumbai, when asked about profit growth.

"With the oil price as it is, there is a huge revenue coming into the country," Issa said, without being more specific about what drove profit.

Kuwait-based Global Investment House and Muscat-based Gulf Investment Services forecast in a Reuters survey last month that earnings would be a range of 17.06 million riyals to 17.52 million riyals.

Oman's economy may grow by 4.5 percent this year, compared with 6.5 percent last year, according to Standard Chartered.

Almost 50 percent of Oman's gross domestic product depends on the oil and natural gas industries.

Oil prices in New York have tripled from the start of 2002. They traded at $61.83 per barrel at 1335 GMT.

"The government has been very prudently deploying that into the hydrocarbon sector, and now into real estate and tourism. That drives the growth," Issa said.

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