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 Muscat at a glance Overview Major Shareholders % as of Dec 2020 Largest Bank in Oman 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 Dubai 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 Saudi Arabia Operating Income 1,186 1,227 1,160 1,132 Kuwait 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.