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Wed 17 Apr 2013 01:25 PM

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Bank Muscat's Q1 profit slumps on fraud incident

Oman's largest lender posts 25% drop in net profit after booking provision to cover losses

Bank Muscat's Q1 profit slumps on fraud incident
Oman finance, Oman banking, Oman finance

Bank Muscat, Oman's largest lender, posted a 25.1 percent drop in its first-quarter net profit on Wednesday as the bank booked additional provisions related to a prepaid travel card fraud incident.

The lender made a quarterly profit of OR25m ($64.9m) in the three months to March 31, compared with a profit of OR33.4m in the prior-year period, it said in a statement to the Muscat bourse.

Five analysts polled by Reuters had, on average, estimated a first-quarter profit of OR26.5m.

Bank Muscat made a OR15m one-off provision after some of its prepaid travel cards were hit by fraud, the statement added.

The lender said in late-February it would have to take an impairment charge of up to OR15m after a small number of the cards were hit by fraud - an amount United Securities calculated was around 10.5 percent of the bank's estimated 2013 earnings.

The cards allow users to carry currencies abroad rather than using their debit or credit cards in foreign countries, which can be expensive.

Credit impairments for the three-month period stood at OR7.4m, down 40.8 percent on the corresponding period of 2012, the bank said..

Loans and advances grew to OR5.49bn at the end of the first quarter, up 10 percent from OR4.99bn at the same point last year. Deposits increased 9 percent over March 31, 2012, the bank said, rising to OR5.51bn from OR5.06bn.

Bank Muscat priced a $500m bond on March 18, the first time it has printed a dollar deal since 2004.

It also raised OR75.1m through an equity placement with the International Finance Corporation, a unit of the World Bank, in February.

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