Subject:Investor Presentation Department: June 2017 Agenda I. bank muscat introduction 4 II. Operating Environment 7 III. bank muscat Business Overview 12 IV. Financial Performance 20 V. Annexure 25 Note: The financial information is updated as of 30 June 2017, unless stated otherwise. I. bank muscat introduction bank muscat at a Glance Overview Ownership #1 Bank in Oman with a significant active customer base in excess of 2 million clients and a workforce of 3,743 employees as of 30th June 2017 Established in 1982, headquartered in Muscat with 154 branches across Oman, 2 branches overseas, and 3 representative offices . Fully diversified commercial bank offering corporate and retail banking services . Primarily domestic dominated operations with over 95% of operating income generatedinOman . Meethaq – pioneer of Islamic Banking services in Oman, officially launched in January 2013 with full fledged product and services offering Long term Bank Rating: Moody’s Baa1(stable), S&P BB+ (Negative) Listed on the Muscat Securities Market (with a market cap of USD 2,646 million as of 30th June 2017), London Stock Exchange & Bahrain Stock Exchange bank Muscat Growth Key Financials Footsteps of a Leader Throughout Decades In US$ M illions, unless otherwise stated Jun‐17 2016 2015 2014 Merger between Bank Total Assets 28,512 28,104 32,581 25,268 of Muscat Gross Loans 21,880 21,483 19,810 18,298 & Bank Al Ahli Acquisition of the Merger of BMI Bank Muscat Capital LLC Meethaq Al Omani Bahraini operations of with Al Salam Bank, Deposits 19 , 4 18 19 , 3 6 9 17 , 5 0 2 16 , 4 8 1 launched launched Listed on the MSM in ABN AMRO Bahrain 1993 Operating Income 535 1,081 1058 995 Net Income 219 459 455 424 1982 199319962000 2002 2004 2007 2009 2010 2012 2013 2014 Tier 1 14 . 5 8 % 14 . 7 5 % 13 . 5 0 % 13 . 0 0 % Total CAR 17.66% 16.90% 16.10% 15.90% 108.23% 106.69% 99.40% 96.90% Establishment Dubai Rep Merger with Acquisition of 1st Branch in 1st Branch in Singapore Loans to Deposit Ratio of Bank of Office Commercial 49% stake in BMI Saudi Arabia Kuwait Rep Office NPL Ratio 3.00% 2.91% 2.80% 2.80% Muscat Bank of Oman Bank Cost/Income 43.26% 40.40% 41.90% 41.20% IFC becomes a ROA 1. 5 8 % 1. 6 4 % 1. 6 0 % 1. 8 0 % 5% shareholder ROE 10 . 9 5 % 12 . 5 0 % 13 . 0 0 % 12 . 9 0 % 4 Source: bank muscat audited financial statements and interim financials bank muscat – Key Highlights Dominant Franchise in Oman Largest Bank in Oman by total assets of 35.35%, as of 31st nd Strong Financial Metrics May 2017, 3 times larger than the 2 largest Omani Bank Highest Government Ownership Market Capitalisation of USD 2,646 million as at 30th June Most profitable bank in Oman 2017. Highest Government Ownership among Omani Banks Strong and sustainable profitability Largest branch network with 154 domestic branches . Royal Court Affairs: 23.63% metrics: The only bank in Oman to be designated a “D‐SIB” . Operating profit 2012‐2016 CAGR Direct and indirect Government of 6.5% ownership of around 35% through . Net profit 2012‐2016 CAGR of 6.2% various entities Solid Capital Position Stable Operating Environment Strong capitalization levels offering Solid macroeconomic conditions room for substantial growth Stable banking sector th CAR of 17.66% as of 30 June 2017 . Prudential regulatory environment Stable Asset Quality Management Conservative lending approach Stable and experienced management with Strong risk architecture and policies proven track record of successful organic and inorganic growth Adequate asset quality metrics Good corporate governance 5 Source: bank muscat audited financial statements and interim financials II. Operating Environment Sultanate of Oman – Overview Overview 2nd Largest country in the GCC with an area covering approx. 309.5 thousand km2, Kuwait strategically located, sharing borders with Saudi Arabia and UAE Bahrain Stable Political System, excellent diplomatic relations in the region Qatar UAE Oman explicitly aims to create a neo‐liberal free market economy, where the Saudi private sector is the driver of the economy as opposed to the state Arabia Population of 4.57mn ‐ predominantly represented by Omani Nationals who Oman account for 55% of the total population The economy will continue to grow at high rates driven by several factors, such as: (1) 2016 2017 . The increase in hydrocarbon production Key Indicators . The Government’s balanced support for the economy with disciplined fiscal policy Sovereign Ratings Moody's\S&P Baa1/BBB‐ Baa1/BB+ measures Budget Surplus\Deficit ‐5.3 Bn ‐2.0 Bn . Strengthening and growing local demand; increasing services and activities Surplus\Deficit % of total revenue ‐61.6% Est ‐34.4% Net Publi c Debt (% GDP) 29.0% Est 41.0% contribution to GDP “Vision 2020” – focuses on diversification, industrialization and privatization, with (1) Source: Central Bank of Oman website, Rating Reports: Moody’s and S&P as of May 2017 the objective of reducing economic reliance on oil revenues and the hydrocarbon sector contribution to GDP GDP Growth GDP Composition US$ Million Other services, 12.89% 2014 2015 2016 Petroleum 100,000 6.7% 10.0% Real Estate Activities, 26.86% 8.9% Services, 5.20% 80,000 ‐2.9% 0.0% 60,000 48,470 Wholesale & ‐3.8% ‐10.0% 49,792 50,083 retail trade, 40,000 0.6% 7.34% ‐20.0% 20,000 37,532 ‐23.7% 23,784 18,151 Agri & Fishing, ‐ ‐30.0% 1.94% 2014 2015 2016 Non Oil GDP in Current Prices (US$Mn) Public admin. & Manufacturing & Defence, 14.58% Mining, 8.83% Oil GDP in Current Prices (US$Mn) % Change Financial Int., Const., Elec. & % Change 5.99% Transport & Water supply, Comm., 5.48% 10.89% As of December 31st 2016 As of December 31st 20166 7 Source: National Center for Statistics and Information, figure as of Q2 2017 Oman Banking Sector – Overview Overview Loans and Deposit Growth US$ billion The Omani banking sector comprises of 7 local banks, 2 specialized banks, 9 Gross Loan: +10.9% foreign commercial banks and two full fledged Islamic Banks Deposits: +10.0% . The top 3 banks after Bank Muscat contribute around 37.06% of total sector assets. bank muscat represents 35.35% of total banking sector assets as of May 2017 Conservative and Prudent Regulator . A number of regulations and caps in place to support the growth, stability and sustainability of the Omani banking sector Adequate asset quality with relatively low impaired assets and sound capitalization Implementing Basel 3 regulation with effect from Jan 2014 Oman in the GCC banking sector context(1) Asset Quality(2) Assets as a % of GDP 800 250% 697 700 650 595 192% 200% 600 186% 180% 178% 500 150% 400 375 341 114% 300 92% 100% 177 208 200 116 80 70 50% 100 58 33 0 0% UAE Saudi Arabia Qatar Kuwait Bahrain Oman Total Assets in $ Bn GDP in $ Bn Assets as a % of GDP Source(1) GDP data is estimated for FY 2017 (Source: World Bank) Source: National Central Banks 2) Central Banks, EIU and Bloomberg data as of May 2017 for Oman, Qatar, Kuwait, & UAE, KSA as of June 2017 & Bahrain as of Mar 2017 8 Notes: (1) Central Bank websites based on the latest available figures for the GCC banking sectors. US$/ AED: 3.67, US$/ SAR: 3.75, US$/ QAR: 3.64, KD/ US$: 0.304, US$/ BD: 0.37 and OMR/ US$: 0.385 bank muscat – Unrivalled Leading Market Position in Oman Total Assets Gross Loans US$ million US$ million Deposits Net Profit US$ million US$ million 9 Source: Banks’ financial Statements. Based on June 2017. Notes: OMR/ US$: 0.385 bank muscat – Dominant Domestic Franchise in the Region Market Share ‐ Assets Market Share – Deposits Assets as % of Total Sector Assets Deposits as % of Total Sector Deposits Asset Quality Adequate Capitalization 15.6% 20.7% 17.8% 18.2% 17.66% 17.5% 16.1% 18.1% 84.3% 371.4% 123.3% 400.0% 2.4% 350.0% 1.2% 2.2% 1.1% 3.08% 2.1% 51.0% 300.0% 0.0% 1.5% 250.0% 15.6% 131.4% 111.6% 6.1% 17.0% 150.0% 200.0% 5.6% 110.2% 18.3% 16.6% 150.0% 16.0% 14.58% 15.4% 14.6% 3.0% 3.1% 100.0% 1.9% 1.6% 1.2% 1.3% 50.0% 0.0% CBQ QNB NCB BM NBAD NBK BBK ENBD QNB ENBD NBAD NCB BM NBK CBQ BBK NPL/GL LLR/NPL Tier 1 Tier 2 Total Capital Adequacy Ratio Key: Qatar National Bank “QNB”, bank muscat “BM”, National Bank of Kuwait “NBK”, National Commercial Bank “NCB”, Emirates NBD “ENBD”, National Bank of Abu Dhabi “NBAD”, Bank of Bahrain and Kuwait “BBK” 10 Source: GCC Central Banks. Banks’ financial Statements. (1) Information for all banks as of June 2017. III. bank muscat Business Overview bank muscat Strategy –Key Pillars Capitalize on growth opportunities in Oman . Infrastructure development projects and Government focus on economic diversification and developing tourism . Omanis entering the workforce; over 45% of the population is less than 19 years old Leverage large network of branches and other delivery channels Consolidate Leading . Platform to focus on the growth potential Position in Oman . Cross sell opportunities among business lines and customer segments . Continue to focus on customer acquisitions and retention Focus on fee based income . Scale up fee driven businesses both in the wholesale banking (transaction banking, investment banking, treasury) and personal banking (credit card, bancassurance, private banking) Further enhance financial strength .