National Bank of Oman reported a 21 per cent drop in its first-quarter net profit as operating income fell amid the coronavirus pandemic.
Net profit for the three months ending March 31 declined to 9.8 million Omani rials (Dh93.60m), the lender said in a statement to the Muscat Securities Market, where its shares trade. Operating income fell 5 per cent year-on-year to 30.7m rials.
Net interest income and income from Islamic financing dropped 2.6 per cent to 22.3m rials. Operating expenses during the period also declined 0.6 per cent to 15.5m rials, the bank said.
Lenders worldwide are facing a decline in profitability amid slowing loan growth and falling interest rates as the pandemic disrupts the global economy, which is set to slide into the deepest recession since the Great Depression of the 1930s. The International Monetary Fund last month projected a 3 per cent contraction in global output for 2020 and said the outlook for the world economy is worse than the 2008 global economic crisis.
Governments across the region are unveiling incentive packages to support the economy. Earlier this year, Oman’s central bank introduced an 8 billion rial incentive package for financial institutions to ease Covid-19's effects on its economy.
The central bank also cut its repo rate by 75 basis points to 0.5 per cent and ordered banks to cut fees, adjust their capital and credit ratios and be flexible with repayments for up to six months, especially for small and medium-sized businesses.
The bank's total assets at the end of the first quarter rose 7 per cent year-on-year to 3.82bn rials and customer deposits and unrestricted investment accounts climbed 6.3 per cent to 2.69bn rials. Loans, advances and financing activities for customers increased 3.1 per cent to 2.87bn rials.
Oman's finance ministry also ordered all government departments to cut an additional 5 per cent from their planned spending in the wake of lower oil prices. Last month, Oman announced plans to cut 10 per cent of spending by departments of 4.7bn rials from an overall budget of 13.2bn rials.
