Oman’s top banks see 34.2 per cent decline in H1 profits: Report

A majority of Oman’s banks are feeling the impact of tightening operating conditions, according to a report by multinational professional services firm KPMG.
The report, titled ‘GCC listed banks results: Six months ended on June 30, 2020’, covers financial institutions across countries including Oman, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.
It shares information on trends in the GCC on credit loss provisions reported by banks and a summary of significant regulatory support provided in each GCC country.
Oman’s banks saw a decline in credit flow, revenue compression and significant increase in non-performing loans, the report stated.
The average profits of banks in Oman for H1’20 declined by 34.2 per cent compared to H1’19, primarily on account of increase in expected credit losses by 120.9 per cent compared to H1’19 on loans and advances to customers.
The exception to the trend was Bank Nizwa, Oman’s leading Islamic bank, which registered a 37 per cent growth in its net profits for first half of the year, which rose to $15.3 million, compared to $11.2 million for the same period last year.
“The effect of COVID-19 and the consequent lockdowns by governments has impacted several sectors globally. The banking industry is no exception. Oman’s economy and the banking sector have taken a hit due to the slowdown in the economy and the decline of oil prices’’, KPMG said in a statement on the report.
Across the GCC, governments and central banks announced various economic support measures. Central Bank Oman, in its first stimulus package, reduced interest rates and urged banks to consider reducing the existing fees related to various banking services and avoid introducing any new fees for the duration of 2020.
Ravikanth Petluri, Partner and Head of Financial Services at KPMG in Oman, commented: “Our analysis shows that Oman’s banks are facing headwinds from the drop in global interest rates in response to Covid-19 and a low oil price environment. This impact, coupled with a negative view on the economic indicators in 2020, is clearly reflected in the H1’20 results analysed by KPMG for Oman’s banks. Barring one exception, a majority of Oman’s top banks have continued to build their loss allowances during the first two quarters of 2020.”