HSBC Oman to pay first dividend since merger

HSBC Bank Oman, Oman's fourth-largest lender by assets, has recommended its first dividend payment to shareholders since its merger, after posting a narrowing loss in the fourth quarter.

The lender, created in June 2012 by the merger of HSBC's Omani assets and Oman International Bank, will pay a
cash dividend of 0.0038 rials per share for 2013, a statement to the Muscat stock exchange said on Wednesday.

The lender made a net loss of 1.8 million rials ($4.67 million) in the three months to Dec. 31, compared to a net loss
of 4.77 million rials in the corresponding period of 2012, according to Reuters calculations.

The earnings missed the estimate from Gulf Baader Capital Markets, who expected a net profit for the period of 3.85
million rials.

Reuters calculated the net profit figure based on the bank's previous financial results. It posted a full-year net profit of 10.9 million rials, compared to 5.8 million rials in the previous year, the bourse filing said.

The bank's annual performance was aided by a net recovery in impairment charges of 2.2 million rials, which it attributed to recoveries from corporate clients and cash released from its general provisions which it no longer needed to put aside because of lower overall lending in 2013.

Loans and advances dropped 17.9 percent in 2013 to 980.5 million rials. Deposits also fell 3.2 percent over the same
timeframe, the statement added.

HSBC Bank Oman had been dragged down in its 2012 full-year and fourth-quarter numbers by high integration costs and increased provisioning following the merger.

Fitch Ratings said in an October 21 note that profitability in 2013 would be weak at HSBC Oman, lagging peers, due to
one-off integration costs and higher loan impairment charges before rebounding in 2014

Meanwhile, Bank Muscat said on Wednesday that its board proposed a cash dividend of 25 percent and an additional 15 percent payout through the issue of mandatory convertible bonds.

The three-year convertible bonds will pay a coupon of 4.5 percent annually and have a conversion price of 20 percent below the three-month average share price at the time of conversion, the Omani lender said in a bourse statement.

The total dividend payout of 40 percent by the largest lender in Oman is the same as in 2012, Reuters data show.