MUSCAT, (Reuters) – Bank Muscat, Oman’s largest lender by market value, is considering selling more foreign assets to reduce rising operating costs, two bank officials with knowledge of the matter said on Thursday.
“We are considering, after the sale of HDFC Bank, to sell more of our foreign assets to make up for the higher operating costs and impairment credit losses,” said one Bank Muscat official who declined to be identified.
A second bank official confirmed the plan but also declined to be identified.
Last year, Bank Muscat sold its 40 percent stake in India’s second-largest lender HDFC Bank.
The bank has a 49 percent stake in BMI Bank in Bahrain and a 35 percent position in Pakistan’s SilkBank, according to its website. It also owns a 43 percent stake in India’s Mengal Keshav Holdings, as well as 97 percent in Muscat Securities House in Saudi Arabia.
Bank Muscat was not immediately available for official comment.
Bank Muscat’s net profit dropped by 50 percent to 24.5 million rials in the first quarter. The bank’s results for the year-ago quarter included a 35.3 million rials gain on the sale of the HDFC Bank stake.
“Increase in operating expense is attributed to expansions of deliverable channels, investment in technology and increase in manpower cost,” Chairman Abdulmalik Al-Khalili had said in the bank’s 2010 first quarter report.
Operating expenses rose 15.5 percent in the first three months of 2010 to 24.6 million rials.
On Wednesday, HSBC cut its rating on Bank Muscat to “neutral” from “overweight” citing valuation.
Shares in the bank closed 0.3 percent higher on the Muscat bourse on Thursday.