NBO shakes off unrest with record profits

Unruffled by recent political unrest, National Bank of Oman vastly increases lending and exceeds analysts' estimates.

National Bank of Oman (NBO) shrugged off unrest in the sultanate earlier this year to smash past analysts' estimates with record profits.

Oman's second-biggest lender reported net profits for the second quarter of the year of 9.4 million rials, an increase of 17.5 per cent compared with a year earlier. Analysts polled by Bloomberg News had expected profits of 7.4m rials.

NBO shares rose 0.91 per cent in trading yesterday to 0.332 rials, having risen 3.75 per cent since the start of the month.

With Oman's political unrest easing, the effect on the bank's income appears to have been little more than a hiccup, said Murad Ansari, a financial analyst at EFG-Hermes.

"The fact that the second-quarter numbers have come in higher than expected tells you that things have recovered since that phase," he said.

Increased corporate lending and steadily improving macroeconomic conditions leading to growing levels of wealth for Omanis were the two factors that spurred the bank towards higher profits.

"For the moment, it seems that a lot of it was driven by loan growth," Mr Ansari said, adding that greater availability of credit was the factor that "surprised everybody".

Lending surged from the end of March, with loans and advances to customers rising 9.5 per cent to 1.54 billion rials.

Deposits rose 7.4 per cent to 1.45bn rials as the local economy continued to improve.

However, the pronounced growth in new loans prompted some analysts to speculate that the gains were a one-off.

Oman's government boosted spending to head off a continuation of the unrest that broke out in late February.

The sultanate remained restive throughout March and April, but there has been little upheaval since.

Oman's real GDP growth should reach 4.4 per cent this year, according to the IMF.