Muscat – Oman’s second largest lender BankDhofar has proposed to explore the possibility of a merger with smaller rival Ahlibank.
The board of directors of BankDhofar has submitted a non-binding offer to the board of directors of Ahlibank to explore the possibility of a merger deal between two banks, according to a disclosure filed by BankDhofar to the Muscat Stock Exchange.
‘Any transaction, should it proceed, is subject to obtaining approvals from the relevant regulators and respective boards of directors and shareholders of BankDhofar and Ahlibank. Further announcement will be made if and when appropriate,’ BankDhofar said.
In a separate filing to the Omani bourse. Ahlibank confirmed the receipt of non-binding offer from BankDhofar for the possible merger.
The bank said, ‘Ahlibank is in receipt of a non-binding offer from BankDhofar expressing its desire to explore a possibility of merger between Ahlibank and BankDhofar. The board of directors of Ahlibank will study the offer and any material developments in this regard will be announced in due course.’
BankDhofar’s total assets stood at RO4.317bn as of December 31, 2022. The bank reported a net profit of RO34.17mn for the financial year 2022, recording a growth of 36 per cent compared to RO25.12mn net profit in the previous year.
Ahlibank’s total assets reached at RO3.075bn as of December 31, 2022. The bank’s net profit for the full year 2022 grew 19.9 per cent to RO33.1mn compared to RO27.6mn in the previous year, demonstrating the bank’s sustained growth strategy.
If materialised, the merger of BankDhofar and Ahlibank would create a larger lender with total assets of approximately RO7.4bn.
Global credit rating agency Moody’s recently said that the GCC region’s banking sector will witness a rise in merger and acquisition activity enabling future synergies.
‘Consolidation among the GCC banks brings scale to support the diversification of Gulf economies away from oil, and benefits in revenue and cost synergies,’ Moody’s said. The rating agency noted that the merged banks will gain pricing power, enhancing their deposit-gathering ability and pushing up net interest income.
Moody’s added that the merger and acquisition growth will help offset the banks’ rising operating expenses, and boost cost-efficiency further.