Investor Presentation December 2020 Table of Contents

I. Introduction 3

II. Operating Environment 6

III. Business Overview 14

IV. Financial Performance 23

V. Annexure 28

2 I. Introduction

3 Bank at a glance

Overview Major Shareholders % as of Dec 2020  Largest Bank in with a significant active customer base with over 2 million clients and a workforce of 3,843 employees as of 31st Dec 2020. Royal Court Affairs,  Bank Muscat is rated Ba3 by Moody’s (negative), B+ by S&P (stable) and BB- by 23.63 Fitch (negative) Others, 35.12  Established in 1982, headquartered in Muscat with 173 branches across Oman, 2 branches overseas, and 3 representative offices Financial . Fully diversified commercial bank offering corporate and retail banking services Group LLC, 11.77 . Primarily domestic dominated operations with over 97% of operating income Public Authority for Jabreen generated in Oman Social Insurance, International . Meethaq – pioneer of Islamic Banking services in Oman, officially launched in 5.14 Development, 9.99 2013 with full fledged product and services offering Ministry of Defence Civil Service  Listed on the Muscat Securities Market (with a market cap of USD 3,325 million as of Pension Fund, 6.49 Pension Fund, 7.86 31st Dec 2020), London Stock Exchange & Bahrain Stock Exchange Key Financials Bank Muscat Footsteps

In USD Millions, unless otherwise 2020 2019 2018 2017 stated Merger of BMI Total Assets 32,347 31,924 31,917 28,959 Merger between Bank WITH Al Bank of Muscat Acquisition of Salam Bank, Gross Loans 24,243 23,877 24,073 22,484 & Bank Al Ahli Al the Baharaini Bahrain Omani Listed on 1st Branch in Deposits 21,759 20,894 21,981 19,271 operartions of 1st Branch in Meethaq the MSM in 1993 ABN AMRO Operating Income 1,186 1,227 1,160 1,132 launched Net Profit 424 482 467 459 Tier 1 19.74% 18.78% 17.98% 16.87% 1982 1993 2000 2002 2004 2007 2009 2010 2013 2014 Total CAR 20.77% 19.72% 19.22% 18.45% Loans to Deposit Ratio 106.7% 110.4% 105.6% 112.3% Acquisition Muscat NPL Ratio 3.62% 3.25% 3.09% 3.00% Establishment Mergerwith of 49% Capital LLC of Bank of Commercial stake in launched Cost/Income 39.39% 41.50% 42.61% 42.22% Muscat Bank of BMI Bank ROA 1.32% 1.51% 1.53% 1.61% Oman ROE 9.08% 10.73% 10.88% 11.44%

4 Bank Muscat has demonstrated strong financial resilience in 2020 with an increased asset base supported by high capitalization and stable operating income Bank Muscat – Key Highlights

Dominant Franchise in Oman » Largest Bank in Oman by total assets of USD 32.3bn and a dominant domestic market share of 35.1%, as of 31st Dec Strong Financial Metrics 2020, slightly over the size of next 3 Omani banks Highest Government Ownership combined » Stable and consistent financial performance » Highest Government Ownership among Omani » Largest branch network with 173 domestic branches Banks . Solid topline income growth » The only bank in Oman to be designated a “D-SIB” . Royal Court Affairs: 23.63% . Stable cost-to-income ratio despite business and infrastructure expansion » Significant direct and indirect Government ownership through various entities » Strong and sustainable profitability metrics: . Operating income 2017-2020 CAGR of 1.6% Stable Operating Environment

» Stable banking sector Solid Liquidity & Capital Position . Prudent regulatory environment » Stable political system in the Oman with » High liquidity with 22.6% of the balance sheet excellent diplomatic relationship in the region composed of liquid assets » Positioned to benefit from growth in Oman with » Strong capitalization levels offering room for economic diversification focus, favourable substantial growth population demographics and clear policy » CAR of 20.77% as of 31st Dec 2020 measures that would lead to the reduction of the deficit

Stable Asset Quality Management

» Conservative lending approach » Stable and experienced management with proven track » Strong risk architecture and policies record of successful organic and inorganic growth » Strong Board of Directors and corporate governance » Solid asset quality metrics practices

5

Source: Financial results as of Dec-20, Central Bank of Oman Statistical Bulletin II. Operating Environment

6 Sultanate of Oman – Fiscal Adjustment The Government made substantial fiscal adjustments to respond to the decline in oil prices after mid-2014. These efforts resulted in a much lower fiscal deficit reduced by cumulative of 9.7% of GDP from 2015 to 2019…

Non-hydrocarbon Tax revenues Non-hydrocarbon non- revenues (USD mn) tax revenue 2020 MTFP 69.7 63.6 (USD mn) (% GDP)  CIT increase 56.4 79.7  Current and capital 51.3 3,075 5.1% (12% to 15%) 46.0 6,902 2,345 budgets for civil, security 40.1 59.9 3,629 1.8%  50% excise and defence reduced by 50.6 tax on alcohol 10% 33.2  SOE current and capital 44.9 2015 2019 2015 2019 2015 2019 expenditures reduced 15.5  Current expenditure  Oman Investment Current expenditure Wages and benefits Defense & security excl. interest down 3.6% Authority is established to (9.0) (7.8) (excluding interests (USD mn) (% GDP) (13.4) (16.4) maximize dividends from (17.5) (17.7) (USD mn)  Reduction in fuel (M91) 8,856 8,722 and electricity subsidies the GREs 26,356 25,419 14.1% 11.6%  Defense and security  Excise tax raised on 2015 2016 2017 2018 2019 2020 spending down 13% alcohol and sweetened drinks  Wages and benefits flat  VAT law issued Government deficit (% GDP) Government debt (% GDP) Oil price (USD/bbl) 2015 2019 2015 2019 2015 2019 on a nominal basis  Introduction of Income Tax … following the establishment of Oman’s Tawazun Program is designed to achieve fiscal sustainability by mobilizing non-oil revenues and reducing spending in order to ensure a stable macroeconomic foundation for continued growth and development

Government Deficit With Fiscal Measures (% GDP) Government Debt With Fiscal Measures (% GDP)

(0.5) 82.7 (2.0) 81.0 (5.9) 79.7 (8.6) 75.7 (16.4) 71.7

2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 7

Source: IMF WEO, forecast prices for 2020 Strong Growth Prospects Oman’s growth prospects remain promising as energy prices recover and critical diversification projects approach completion. Oman has the foundation and dynamics for a strong post COVID-19 recovery

Overview Real GDP Growth and Real GDP

» While the pandemic has impacted the Omani economy, the government has (USD bn, %) taken measure to support the economy and promote growth including: . Tanfeedh initiatives, Dqum developments, number of large projects in certain sectors including oil & gas, infrastructure, tourism and others 76.0 75.5 74.7 74.9 74.9 9.00% 75.0

. Introduction of or revising key legislations with regard to foreign investments, 7.00% 74.0 4.7% Public Private Partnership, Bankruptcy law, Banking law, Tax laws, 5.00% Commercial Companies law etc. 73.0 5.0% 3.00% 72.0 71.1

. Key framework for Vision 2040 to navigate the economy in the long term. 1.00% 71.0

-1.00% 70.0 0.9% . Short terms measures include job sector reforms initiated, Job Security Fund 0.3%

-3.00% established, prioritization of Govt. capital expenditure, key development 69.0 (0.8%) projects, rationalizing current and administrative expenditure of various 68.0 -5.00% ministries and government entities. 2015 2016 2017 2018 2019

. Announced number of relief measures to support the economy and Real GDP Real GDP Growth Rate businesses in the near term which include tariff reduction or waiver, deferral instalments and others. Real GDP Growth Growth Rates by Sector

8% (Compound Annual Real GDP Growth for the Period 2015-2019)

9.0% 6% 7.2% 7.3% 5.0% 4.7% 7.0% 6.2% 4%

5.0% 4.3% 2% 3.8% 0.9% 2.6% 0% 0.3% 3.0% 2.0% (0.8%) 1.0%

-2% 1.0%

-4% 2015 2016 2017 2018 2019 -1.0% (1.2%)

Real Petroleum GDP Real Non Petroleum GDP Real GDP -3.0% Total Total non- Hotels and Financial Buildings and Mining and Transport, Public Manufacturing 8 Petroleum Petroleum Restaurants Intermediation Construction Quarrying Storage & Administration activities activities Communication and Defence

Source: National Center for Statistics & Information, World Bank Development Indicators Oman Banking Sector - Overview

Overview Loans and Deposit Growth

» The Omani banking sector comprises of 7 local banks, 2 specialized banks, 9 USD bn Gross Loan: +5.5% Deposits: +4.4% foreign commercial banks and two full fledged Islamic Banks » The top 3 banks after Bank Muscat contribute around 31.7% of total sector 67.1 69.3 65.1 63.2 assets. Bank Muscat represents 35.1% of total banking sector assets as of Dec 59.7 59.2 61.4 54.5 52.9 51.0 50.8 2020 47.2 » Conservative and Prudent Regulator . A number of regulations and caps in place to support the growth, stability and sustainability of the Omani banking sector . Implemented Basel 3 regulation with effect from Jan 2014 » Banking sector has demonstrated resilience in spite of lower oil prices and challenging economic situation and is well positioned with sound capital and 2015 2016 2017 2018 2019 2020 stable liquidity level Gross loan Deposits Yield and cost evolutions on loans and deposits1 Capitalization evolution2

USD mn 5.41% 5.47% 5.15% 5.25% 18.5% 4.88% 4.91% 18.2% 17.7% 17.1% 5.05% 4.79% 16.2% 12,984 12,079 12,633 3.93% 11,501 3.71% 10,302 2,790 2,854 2,526 2,684 2.91% 1.74% 1.95% 1.96% 2.46% 1.64% 1,922 1.21% 14.2% 14.4% 0.91% 1.65% 13.8% 1.62% 13.4% 1.25% 13.2% 0.85% 0.92% 0.99%

2015 2016 2017 2018 2019 2020 8,379 8,975 9,395 9,842 10,130 Local Curreny Loans Yield Foreign Curreny Loans Yield 2016 2017 2018 2019 2020 Local Currency Deposit Cost Foreign Currency Deposit Cost 9 CET1 capital AT1 and Tier 2 capital Total Capital Ratio CET1 ratio

Source: Central Bank of Oman Statistical Bulletin; Financial results of Oman banks as of Dec-20, Note: OMR/USD exchange rate equal to 2.597 1 Yield on loans and cost of deposits calculated as 12 months average figures, 2 Aggregation of capital across 7 local banks of Oman across years: Bank Muscat, Bank Dhofar, National Bank of Oman, Sohar International, Oman Arab Bank, Ahli Bank and HSBC Oman COVID-19 Response Measures The Government’s timely and supportive measures using a wide array of policy tools to limit the impact of the COVID-19 crisis showcase the effectiveness of decision-making. Government is Well Positioned to Contain The Crisis Spread of Virus has been Contained

» The government’s management of the crisis showcases its proactive leadership and the (COVID-19 daily cases in Oman) effectiveness of its decision-making 3,000 » In March 2020, a Supreme Committee (“SC”) was formed to supervise and oversee the 2,500 government’s response to the COVID-19 outbreak and to take all decisions related to the national response 2,000 » The SC and CBO have taken proactive and well-targeted fiscal, monetary and civil measures 1,500

» The government was proactive in its 2020 Budget by incorporating new fiscal measures and 1,000 introducing a new conservative oil price assumption of $47.6/barrel vs. $58/barrel earlier. The oil price assumption has been further reduced to a conservative $45/barrel on the 2021 500 budget. 0 » Moreover, banks in Oman are well capitalised, allowing them to endure headwinds and Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 withstand impact on capital from provisions taken in anticipation of non-performing loans

Key Measures taken by the Central Bank to support the economy

» Loan installment deferral package offered to impacted businesses and individual » Relaxation in risk classification on availing deferral package borrowers extended till Mar’21 » Additional liquidity support provided at concessional rates, limits and tenors » Modification of loan repayment terms for Government & Private Sector Retirees to banks and Pensioners » Lending ratio limit relaxed providing scope for additional lending » Waiver of interest in cases of job loss / salary reduction. » Capital stimulus by reducing regulatory limits. Prudential filter on IFRS 9 ECL » Waiver of certain fees for businesses and individuals introduced » Reducing the housing loan margin from 20% to 10% for first time home buyers » Reducing the minimum LCR limit from 100% to 75% for affected banks only

10

Source: WHO, Sultanate of Oman’s Base Prospectus Bank Muscat - Unrivalled leading Market Position in Oman

Total Assets (USD mn) Gross Loans (USD mn)

Bank Muscat 24,243 Bank Muscat 32,347

Bank Dhofar 8,857 Bank Dhofar 11,057

National Bank of Oman 7,906 National Bank of Oman 9,435

Oman Arab Bank 7,116 Sohar International 9,379

Sohar International 6,837 Oman Arab Bank 8,572

Ahli Bank 5,916 Ahli Bank 7,019

HSBC Bank Oman 3,713 HSBC Bank Oman 6,118

Deposits (USD mn) Net Profit (USD mn)

Bank Muscat 21,759 Bank Muscat 424

Bank Dhofar 7,432 Bank Dhofar 79

Oman Arab Bank 7,157 Ahli Bank 62

National Bank of Oman 6,564 Sohar International 52

Sohar International 5,798 National Bank of Oman 47

Ahli Bank 4,999 Oman Arab Bank 36

HSBC Bank Oman 4,950 HSBC Bank Oman (21)

11

Source: Financial results as of Dec-20, Note: OMR/USD exchange rate equal to 2.597 Bank Muscat - Unrivalled leading Market Position in Oman

Market Share – Total Assets1 and Deposits2 Asset quality3 – Coverage ratio and NPL Ratio

138.8% 6.0% 35.1% 6.0% 114.0% 4.5% 5.6% 4.5% 5.0% 33.9% 90.4% 4.0% 93.9% 84.9% 3.6% 75.6% 3.5% 3.0% 11.9% 69.0% 10.1% 10.1% 9.2% 2.9% 2.0% 7.5% 6.6% 11.8% 10.4% 11.3% 9.2% 7.9% 7.8% 1.0%

Bank Muscat Bank Dhofar National Bank Sohar Int. Oman Arab Ahli Bank HSBC Oman 0.0% of Oman Bank Oman Bank Muscat Bank Dhofar National Bank Sohar Int. Oman Arab Ahli Bank HSBC Oman of Oman Bank Oman

Tot. Assets Market Share Deposits Market Share Coverage ratio NPL Ratio (RHS) Profitability – RoAE4 Capitalization

20.8% 17.6% 16.4% 19.1% 15.1% 15.7% 20.9% CAR%

1.0% 1.4% 1.3% 1.4% 1.0% 0.9% 8.3% 0.9% 5.5% 3.8% 2.1% 2.2% 1.4% 19.7% 19.5% 17.7% 16.2% 15.4% 14.8% (2.4%) 14.2%

Bank Muscat Bank Dhofar National Bank Sohar Int. Oman Arab Ahli Bank HSBC Oman of Oman Bank Oman Bank Muscat Bank Dhofar National Bank Sohar Int. Oman Arab Ahli Bank HSBC Oman of Oman Bank Oman Tier 1 Tier 2 12

Source: Financial results as of Dec-20, Central Bank of Oman Statistical Bulletin. Notes: 1 Ranked by total assets market share which is calculated as bank total assets / total conventional and Islamic banking assets as per CBO; 2 Calculated as bank total deposits / total conventional and Islamic deposits, 3 NPL Ratio calculated as Gross NPL / Gross Loans and Coverage Ratio as (Loan Loss Provisions + Non-funded provisions) / Gross NPL, 4 Return on average equity calculated as Net profit attributable to Equity holders after deduction of Tier 1 capital cost for FY20 Bank Muscat - Dominant domestic franchise in the region1

Domestic Market Share – Assets Capitalization

20.8% 19.2% 19.1% 18.5% 18.4% 17.8% 16.5% CAR%

1.0% 1.0% 2.4% 1.0% 1.1% 2.1% 1.1%

64.0% 19.7% 18.2% 18.1% 17.4% 16.0% 15.7% 15.4% 41.8% 35.1% 28.5% 21.7% 20.2% 9.6% BM NCB QNB ENBD NBK CBQ FAB QNB NBK BM FAB ENBD NCB CBQ (Ba3/B+/BB-) (A1/BBB+/A-) (Aa3/A/A+) (A3/-/A+) (A1/A/AA-) (A3/BBB+/A) (Aa3/AA-/-) (Aa3/A/A+) (A1/A/AA-) (Ba3/B+/BB-) (Aa3/AA-/-) (A3/-/A+) (A1/BBB+/A-) (A3/BBB+/A) Tier 1 Tier 2

Net interest margin over avg. assets2 Return on avg. assets2

3.02% 2.07% 2.60% 2.32% 2.13% 2.06% 1.67% 1.32% 1.22% 1.21% 1.41% 1.01% 0.86% 0.84%

NCB BM ENBD QNB CBQ NBK FAB NCB BM QNB FAB ENBD CBQ NBK (A1/BBB+/A-) (Ba3/B+/BB-) (A3/-/A+) (Aa3/A/A+) (A3/BBB+/A) (A1/A/AA-) (Aa3/AA-/-) (A1/BBB+/A-) (Ba3/B+/BB-) (Aa3/A/A+) (Aa3/AA-/-) (A3/-/A+) (A3/BBB+/A) (A1/A/AA-)

13

Source: Financial results as of Dec-20, Central Bank of Oman Statistical Bulletin. Notes: 1 Data as of December2020, 2 Net interest margin over average assets and Return on average assets for FY20. III. Business Overview

14 Banks Vision & Strategic Pillars

» Leading provider with largest branch network & innovative product and service offering Bank Muscat » High quality service and customer centric approach through “To Serve you better, everyday” philosophy Brand value » Technology driven with multiple digital channels for sales and services » Dominant position size & proven resilience Customer » Strong financial position, business capabilities and shareholding Centricity » Strong capital and liquidity positions Strong Financial » Lending power / single borrower size Position » Strong profitability coupled with conservative credit provisioning policies Efficiency& » Market share leadership in loans and deposit Productivity

Leverage on » Pioneering investments in technology supporting growth plans Technology And » Multiple digital banking channels for sales and services Infrastructure » Technology driven banking to enhance customer experience and improve internal efficiency Bank Muscat Investments » Innovative products and services offering

Experienced » Stable and experienced management with proven track record of successful organic and inorganic growth Management & Agility & Young Workforce » Talented and young workforce Innovation

Focus on Islamic » Meethaq – Islamic banking platform Banking . Be the market leader in Islamic Banking Business Market Developments in . Endeavor to offer full fledged products and services Leadership Oman . Expansion of branch and channel network

» Ensure sustainable best practices in core business activities: Creating . Contribution to economic performance Sustainable . Development from within Value . Empowering the community . Banking while adhering to the Bank’s corporate values

15 To serve you better, everyday Leading in everything we do by offering simplified & integrated banking solutions. Current Situation and Strategy

Health Risk

» The Bank has been managing the current situation with a well planned approach.

» Focus has been to support customers with number of measures while providing safe and secure working environment to our employees

Liquidity Risk

» Very strong liquidity position to ensure long-term sustainability

» Continue to focus on stable deposit growth

Security Capital Position

» Continue to have strong capital adequacy ratio

» Capital mix is driven by strong core equity ratio

Credit Risk

» Continue to follow a conservative and prudent credit policy

» Prudent provision policy and good level of provision coverage

16 “Safety, Security and Sustainability” Bank Muscat Business Lines

Business Lines Breakdown Loan, Advances & Deposits Breakdown

Key Highlights Asset Contribution Profit Contribution Construction, 3.40% Real Estate, 3.10%

FIs, 4.40% Personal Loans, » Leading corporate Banking franchise 24.50% Mining & Quarrying, offering the full array of corporate » USD 11.50 bn » USD 155.6 mn 7.40% Corporate banking services • 35.6% of total • 36.7% of total Banking Manufacturing, » ~ 7,200 corporate customers in Oman assets profit 7.60% » Strong expertise in project finance Others*, 7.70% » Leading Retail Bank platform in Oman » USD 9.12 bn » USD 142.74 mn Housing Loans, Personal » Over 2 million retail customers in Oman 16.70% Utilities, 7.90% Banking » Largest distribution network (150 • 28.2% of total • 33.6% of total Advances Loans & assets profit Transport, 8.20% conventional branches) Services, 9.10%

» Comprise of treasury, corporate finance, » USD 6.86 bn » USD 123.6 mn Wholesale asset management and financial Banking • 21.2% of total • 29.1% of total Private Commercial , institutions assets profit 21.40% Individual & Others , 50.10%

» RO 120 mn (c.USD 311 mn) capital assigned to this business » USD 3.80 bn Meethaq – » USD 24.94 mn Islamic » Officially launched in January 2013, • 11.8% of total • 5.9% of total profit

Banking currently operating through 23 full assets Deposits Deposits fledged Islamic branches Ministries & Other » Presence in Saudi Arabia & Kuwait » USD 1.05 bn » USD (22.6 mn) Gov. Orginisation, International 28.50% through a branch, and 3 Rep offices Operations • 3.2% of total • (5.3%) of total across Asia assets profit 17

*Others include: Import trade (2.9%), Wholesale & Retail Trade (1.8%), Government (1.20%), Export Trade (0.3%), Agriculture/Allied Activity and Others (1.3%) Corporate Banking

Overview Opportunities Strategy

» Leading Corporate Banking Franchise » Large number of infrastructure/ Industrial projects in » Leverage on leading position and expertise . Extensive and expanding range of products and the pipeline . Reinforce presence in Oman across all segments in services » Privatisation and diversification drive by Government the value chain . Strong project finance capabilities » Increasing business flows between Oman and regional . Benefit from large infrastructure and industrial » Large corporate client portfolio with c.7,200 customers countries projects in Oman and lead bank for top tier Omani corporate entities » Focus fee income generating business » High level of sophistication differentiated through . Transaction banking business to enhance fee technology led investments income » Commitment to maintain strong control over asset . Explore cross sell opportunities among business quality lines » Utilize presence in regional markets . Grow GCC trade flows share

Corporate Loans - Peer comparison (2020) Asset Growth Operating Income

USD bn USD mn USD mn 14.28 373 377 11,596 11,501 357 343

11,232

5.59 4.28 4.41 4.41 3.97 10,846 2.55

BankMuscat Bank NBO Sohar HSBC Ahli OAB 2017 2018 2019 2020 2017 2018 2019 2020 Dhofar Int'l Oman Bank 18

Source: Bank Muscat audited financial statements as of Dec 2020. Personal Banking

Overview Opportunities Strategy

» Leading Personal Banking Franchise in Oman » Government spending resulting in job creation » Leveraging on leading presence in the retail segment . Over 1.90 million customers » Increase in salaries through various government . Increase penetration and cross sell . Front-runner across retail banking segments initiatives . Explore new business and product lines including cards, Bancassurance and remittances » Favorable demographics » Technology-led product development and » Largest delivery channel network in Oman (173 . Over 35% of the population less than 19 years old service offerings branches, 476 ATMs, 129 CDMs, 166 FFMs and the best online platform in Oman) » Housing finance » Enhance process efficiency and customer » Substantial low-cost retail deposit base convenience » Merchant acquiring market share of over 70% by » Focus on development and utilization of volume as of Dec 2020 and leading e-commerce e-delivery channels business in Oman

Retail Loans - Peer comparison (2020) Asset Growth Operating Income

USD bn USD mn USD mn 9.97 9,127 8,940 539 8,553 8,148 521

509

3.63 3.27 2.71 2.43 489 1.95 1.17

Bank Muscat Bank NBO Ahli OAB Sohar HSBC 2017 2018 2019 2020 2017 2018 2019 2020 Dhofar Bank Int'l Oman 19

Source: Bank Muscat audited financial statements as of Dec 2020. Wholesale Banking

Overview Opportunities Strategy

» Treasury: funding, asset and liability management » Significant cross-sell opportunities to other wholesale » Strengthen Bank Muscat’s leading position in requirements, offer structured solutions to corporate banking clients specialised areas clients » Leverage transaction experience in attracting new » Utilize the presence in regional markets to expand » Corporate Finance: Leader in corporate advisory: corporate finance mandates business series of successful transactions and track record » Leverage regional expansion to introduce new » Leverage specialised product expertise in other outside Oman products markets » Financial Institutions: Trade, Debt Solutions and » Strong growth potential in the high net worth market » Leverage on expertise built to further grow the market correspondent banking services segment share and increase the market potential » Asset Management: Largest Omani mutual fund manager with potential for growth & expanding outside Oman. Investment solutions for high net worth individuals

Securities Portfolio Asset Growth Operating Income

USD mn 2.21% USD mn 56.45% 34.54% 6,678 6,657 6,859 193 198 172 5,169 162

6.80%

Aaa to Aa3 A1 to A3 Baa1+ to Ba3 Unrated 2017 2018 2019 2020 2017 2018 2019 2020 20

Source: Bank Muscat audited financial statements as of Dec 2020. Meethaq – Islamic Banking

Overview Opportunities Strategy

» One of the most successful Islamic banking operations » Growth momentum continued since the launch » Full fledged product and service offerings in Oman since 2013 indicating potential in the market » Increase Meethaq exclusive branch network to an » 23 dedicated branches throughout the Sultanate » Shari’a governance structure ensures transparent optimum level banking » Innovation in product offering and services to create a » Customer Centric approach and transparency niche » Large network at disposal to leverage business » Technology driven customer service delivery within the » Established Sharia Board comprising of experienced » Awareness drives on Shari’a compliant banking to Shari’a compliance ambit and reputable Sharia scholars increase customer base

Financing Portfolio Operating Income

USD mn USD mn

3,283 3,096 2,940 81.09 78.89 77.74 2,566 70.04

2017 2018 2019 2020 2017 2018 2019 2020

21

Source: Bank Muscat audited financial statements as of Dec 2020 International Operations

Country Entity Overview & Strategy

» Focus on bulk deposits from large corporate and HNI clientele Bank Muscat » Enhance scale through continued focus on corporate, trade and treasury businesses Branch » Selective approach to asset growth – medium-size ticket, contract-backed funded & unfunded business. » Cost containment and increase shared resources with Head Office

» Focus on brokerage, asset / wealth management and corporate finance advisory services » Scale up business volume while containing costs » Focus on institutions and select HNW customers in KSA (for brokerage and wealth management) » Leverage expertise built in Oman in Corporate Finance/Advisory Kingdom of Saudi Arabia SICO Acquisition » As of 28th April 2020, the Board of Directors of Bank Muscat agreed to explore the acquisition offer received from SICO BSC for a Muscat Capital majority stake in Muscat Capital Company. Muscat Capital Company has a book value of approximately SAR 80mn as on 30th June Company 2020 (equivalent to approximately OMR 8.2mn) » As of December 2020, Bank Muscat disclosed that the necessary due diligence and valuation exercise was completed, the negotiations on the terms of the transaction were concluded and Board of Directors approvals were obtained by both parties. Bank Muscat and SICO agreed to go forward with the transaction by signing the necessary agreements » Pursuant to the terms of the transaction, SICO shall acquire approximately 72.71% stake in Muscat Capital through transfer of all its treasury shares to Bank Muscat. This would result in Bank Muscat owning approximately 9% shareholding in SICO upon completion of the transaction. The closing of the transaction is subject to receipt of requisite regulatory approvals in Sultanate of Oman, Kingdom of Bahrain and Kingdom of Saudi Arabia

» Focus on corporate, trade and treasury businesses » Focus on corporate customers for corporate, trade and treasury products, as well as contract financing for Govt. and related entities. Bank Muscat State of Cautious approach to credit growth Kuwait Branch Kuwait » Scale up business volumes with a focus on quality lending » Leverage off low operating cost base

22 IV. Financial Performance

23 Financial Highlights – Full Year 2020

Bank Muscat weathered the global and regional challenges in 2020 and achieved a Net Profit of USD 424.31mn in 2020 (c.12.0% decline vs. 2019)

Operating Profit reached USD 718.67mn in 2020 (c. 1% increase vs. 2019), demonstrating Bank Muscat’s strong revenue generation capabilities despite the global challenges witnessed in 2020

Other Income achieved in 2020 was USD 349.11mn (c. 13.4% lower vs. 2019), mainly due to subdued business conditions due to COVID-19 related lockdowns in Q2, Q3 and Q4 2020 as well as waiver of certain fees as per regulatory measures

Operating Expenses were USD 467.15mn in 2020 (c. 8.2% lower compared to 2019). The drop is primarily due to prudent and proactive cost management measures taken by Bank Muscat

Net Loans increased by USD 154mn or 0.7% to USD 23,214mn compared to USD 23,059mn in 2019. Customer Deposits Including Islamic customer deposits increased by USD 867mn or 4.2% to USD 21,759mn reflecting trust of customers in Bank Muscat

Net Interest Income and Income from Islamic financing reached USD 836.7mn in 2020 (c. 1.6% higher vs. 2019)

Net Impairment on financial assets was USD 210.49mn (c. USD64.70mn higher vs. 2019). The increase is mainly due to precautionary and collective provisions made in the first half of 2020 on a forward-looking basis given as a result of the impact of COVID-19 and drop in oil prices

24 Operating Performance & Profitability

Overview Net Interest Spread

4.61% » Resilient operating performance 4.41% 4.35% 4.18% . Stable top line income growth over the years » Stable cost to income ratio with marginal growth in costs: 2.57% 2.53% 2.54% . Solid profitability 2.51% . Stable Return on Assets 2.10% » Strong core revenue generation with net interest income and commission & fees 1.88% 1.81% 1.61% over 90% of total operating income . Increasing focus on top line commission & fee income generation 2017 2018 2019 2020 » Stable Net Interest Margin over the last few years Yield % Cost % Spread %

Operating Income & Cost to Income Profitability

71% 25% 68% 67% 467 65% 459 482

20% 424 42.2% 42.6% 41.5% 39.4% 15% 11.44% 10.88% 10.73% 9.08%

10% 21% 22% 22% 20% 14% 10% 11% 5% 10% 1.61% 1.53% 1.51% 1.32%

0% 2017 2018 2019 2020 2017 2018 2019 2020

Net Interest Income Net Commission & fees Other Income Cost to income ratio Net Profit (USD mn) RoAE RoAA 25

Source: Bank Muscat audited financial statements as of Dec 2020 Asset Quality

Overview Loan Growth

» Stable loan book growth 24,073 23,875 24,243 24,000 22,484 15.00%

. Conservative lending approach 22,000

20,000 . Focus on high quality assets with access to top tier borrowers 10.00% 7.1% 18,000 » Strong project finance capabilities 4.7% 16,000 3.62% 5.00% 3.09% 3.25%

14,000 » Diversified loan portfolio across sectors 3.00% 12,000 1.5% 0.00%

» Conservative provisioning of impaired assets: 10,000 -0.8%

8,000 -5.00% . Provisioning in compliance with IFRS 9 2017 2018 2019 2020 Gross loans (US$ mn) NPL% Loan Growth %

Asset Quality1 Impaired Assets & Provisioning

138.8% 1.8% 2.2% 2.6% 128.8% 126.3% 127.2% 18.5% 27.1% 21.9%

1,215 877 987 78.9% 71.1% 75.9% 851 959 774 745 660

2018 2019 2020 2017 2018 2019 2020 Stage 1 Stage 2 Stage 3 26 Credit Provision (USD mn) NPL (USD m) LLR/NPL Source: Bank Muscat audited financial statements as of Dec 2020 1NPLs and impairments as at 31 December 2020 reflect the application of CBO measures which allow for loan payment deferrals and restructuring without requiring changes in risk classification or NPL reporting. Funding & Liquidity

Overview Funding Mix » Stable funding structure with a diversified funding base 5% 4% 4% 4% » Largest deposit base in Oman with significant granularity . Retail deposits comprise 46% of total deposits 17% 16% 17% 17% 8% » Top 20 depositors represent 24% of total deposits and comprise of top tier 8% 10% 8% Omani institutions (December 2020) » Strong capitalization levels . Highest CAR in Omani peers and one of strongest in GCC peers 69% 72% 69% 71% » Robust capital position . Total CAR at 20.77% & Tier 1 at 19.74% (December 2020)

. Minimum regulatory requirement of 13.25 % and 11.25% respectively 2017 2018 2019 2020 » CASA contributing to nearly 65% of total deposits (December 2020). Bank Deposits Borrowings Equity Others Muscat also has the highest market shares in saving deposits Liquid Asset Capital Adequacy Ratio

20.77% 22.91% 22.62% 22.62% 19.22% 19.72% 20.88% 18.45% 1.03% 0.94% 1.24% 1.58% 2,589 3,023 2,080 4,124

1,237 18.78% 19.74% 1,538 2,260 16.87% 17.98% 1,491 3,394 2,428 2,031 1,704

2017 2018 2019 2020 2017 2018 2019 2020 Cash & equivalent (USD mn) Bank Placements (USD mn) Tier 1 Ratio Tier 2 Ratio CAR Ratio T Bills & GDBs (USD mn) Liquid Assets to Total assets (%) 27

Source: Bank Muscat audited financial statements as of Dec 2020 V. Annexures

28 Balance Sheet

Amounts in USD mn 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 Cash and bal. with Central Bank 1,706 2,031 3,394 2,428 Due from banks 1,491 2,260 1,236 1,538 Loans and Advances 20,019 20,031 20,334 19,113 Islamic financing receivables 3,195 3,029 2,884 2,520 Non trading investments 4,767 3,753 3,298 2,668 Tangible fixed assets 185 205 181 187 Other assets (incl. invt in associates) 984 616 590 505 Total assets 32,347 31,925 31,917 28,959

Bank deposits/FRNs /Bonds 2,436 4,281 3,588 3,478 Customer deposits (incl. CDs) 20,132 18,210 19,491 16,778 Islamic Customer's Deposit 2,866 2,683 2,490 2,493 Other liabilities 1,571 1,478 1,239 1,087 Subordinated debt 34 68 102 315 Convertible bonds 0 0 0 84 Total liabilities 27,039 26,720 26,909 24,236

Share capital and premium 2,225 2,184 2,146 2,027 Total reserves 1,359 1,316 1,276 1,222 Cumulative changes in fair value (10) (1) (13) 44 Retained profits 1,396 1,369 1,261 1,092 Shareholders' equity 4,971 4,868 4,669 4,385 Perpetual Tier I Capital 338 338 338 338 Total liabilities + shareholders' equity 32,347 31,925 31,917 28,959

Key ratios Loans and advances/customer deposits 106.7% 110.4% 105.6% 112.3% Shareholders' equity/total assets 15.37% 15.25% 14.63% 15.14% Subordinated debt/(debt + equity) 0.64% 1.28% 2.00% 6.26% BIS total capital ratio 20.77% 19.72% 19.22% 18.45% 29 Profit & Loss Statement

Amounts in USD mn 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17 764 756 719 667 Net interest income Net income from Islamic financing 72 68 72 64

349 403 370 402 Other operating income 1,186 1,227 1,160 1,132 Operating income (467) (509) (494) (478) Operating costs 719 718 666 654

(210) (145) (112) (112) Net impairment losses on financial assets - - - 6 Gain/(loss) from associates 508 572 554 548 Profit before Tax (84) (90) (88) (89) Taxation 424 482 467 459 Net Profit

Key ratios 39.4% 41.5% 42.6% 42.2% Cost/income ratio 1.32% 1.5% 1.53% 1.61% Return on average assets 9.08% 10.7% 10.88% 11.44% Return on average equity 0.120 0.16 0.16 0.17 Basic EPS (USD) 1.023 1.127 1.065 1.023 Share price (USD) 30