3rd Quarter Results (preliminary)

BankMuscat announces preliminary results for Q310

YTD Net profit at RO. 72.2 million

MUSCAT, 14 October 2010 - BankMuscat (SAOG), the leading financial services provider in the Sultanate, announced a net profit of RO 72.2 million for the nine months ended 30 September 2010 compared to RO 80.4 million reported during the same period in 2009.

The net profit for the nine months ended 30 September 2009 included RO 53.2 million of post-tax gain on sale of HDFC Bank investment, RO 8.5 million losses on available-for-sale investment portfolio and around RO 30 million of credit losses towards Saudi branch exposures. Excluding these one-off items, the adjusted net profit for the nine month period in 2009 was RO 65.7 million. Thus, on a like to like comparison, the net profit for the nine months ended 30 September 2010 showed an increase of 10 per cent over the same period in 2009.

The key highlights of the results for the nine-month period ended 30 Sep 2010 are as follows:

1) Net interest income increased by 8 per cent to RO 137.1 million during the nine months ended 30 Sep 2010 from RO 126.8 million reported during the corresponding period in 2009.

2) Non-interest income was higher by 10 per cent compared to the nine months period ended 30 Sep 2009, excluding the gain on HDFC Bank investment and realised losses on Available-for-Sale investment.

3) Operating expenses for nine months ended 30 Sep 2010 was at RO 75.5 million, an increase of 17.5 per cent as compared to the same period in 2009. The increase in operating expense is attributable to the long-term vision and strategy to develop the banking infrastructure by way of technology investments, expansion of delivery channel network and business to provide better service and maintain the leadership position.

4) Impairment for credit losses for the nine-month period in 2010 was RO 30 million as against RO 68.7 million in 2009.

5) Share of loss from associates was RO 8.8 million for the nine months ended 30 Sep 2010 as against RO 5.3 million in 2009. Higher share of loss of was due to BMI Bank net loss for the quarter due to higher credit losses as some of the exposures did not perform as expected in Q310.

6) Gross loans and advances increased by 5 per cent to RO 4,109 million as against RO 3,921 million as at 30 Sep 2009.

7) Customer deposits, including CDs, increased by 4 per cent to RO 3,442 million as against RO 3,298 million as at 30 Sep 2009.

Amounts in RO millions

# includes. HDFC bank investment pre-tax gain of RO 60.5 M

The results are subject to the approval of Board of Directors. The Bank will release the final results along with complete set of financial statements for the nine-month period ended 30 Sep 2010 after the necessary approval by the Board of Directors in the last week of October 2010.