MANAMA: Bahrain-based BMI Bank (BMI), an associate of BankMuscat, the largest financial services provider in Oman, Saturday said that it had set a new benchmark in transparency while dealing with the bank’s $45 million exposure to Saudi-based Saad and Algosaibi groups.
The bank, which reported a BD5.6 million loss for the first half of the year, said that it was perhaps the first bank in the region to come with a clear mandate of provisions after the Saudi group ran into troubles.
“The default of Saudi blue chip businesses has made BMI more cautious and we are now focusing more on the local and BMI’s operations in Seychelles and Qatar,” said Andrew Bainbridge, chief executive officer of BMI.
“Following the default of the Saad and Algosaibi groups, we have decided in principle to minimize the cross-border landings and focus more on of home customer base. The bank is adding 400 new customers every month and it will grow further with the new products and services being launched as part of a strategy,” added Andrew while commenting on the bank’s half yearly performance. “We have exposure of $45 million to this Saudi family business group but the default has raised many questions that how the financial industry extends loans and how these businesses are being run. This group has outstanding loans of $15 billion which is lent by the financial institutions,” he added. “As a result of minimizing our cross border lending, BMI has become one of the highly capitalized banks with capital adequacy ratio strengthened to over 22 percent.
“Our operating profit pre-provisions has grown by over 20 percent to BD2.1 million as compared to the second-half of 2008 and this reflects strong growth and performance of our various operations in Bahrain, Qatar and the Seychelles. We have reduced our cross-border exposure since the first-quarter of 2009 whilst growing within Bahrain.”
“Additionally, our offshore business in the Seychelles (BMI Offshore Bank) and our international operations in Qatar have turned profitable during this quarter.
“However, as a result of our exposure to two major family businesses in the GCC (Gulf Cooperation Council) which we announced in June 2009 and whose defaults have led to uncertainties within the region, we have very prudently raised provisions of BD7.8 million resulting in a loss after provisions of BD6.1 million for the second-quarter of 2009 and BD5.6 million for the first-half of the year.
“Our strong liquidity and top class capital adequacy provide us with added security and ensure we are well positioned to face the future and provide first class support and service to our customers. We are committed to delivering innovative products and services through our retail and commercial banking franchise and will continue to invest in them to better serve the population of the Kingdom.”
