Chairman's Report - 2009 On behalf of the Board of Directors of Ahli Bank S.A.O.G, it gives me great pleasure to present the 2009 annual report and financial statements of Ahli Bank. In a very challenging year, the bank has through prudence, foresight and proactive financial management, shown remarkable progress following 2008, the year of transition to a full commercial banking model.

Macroeconomic Overview: Oman has been very successful in its efforts to diversify its economic activities to create employment opportunities and limit its dependence on oil and natural gas. Like many other countries of the region, the Omani economy has been impacted by the international financial crisis, albeit to a lesser extent. This is, to a large extent, attributable to the prudent policies of the government, under the wise leadership of His Majesty Sultan Qaboos Bin Said. The Omani Banking sector likewise continues to experience a challenging business environment. As an active participant, Ahli Bank has continued on its growth trajectory in a steady manner and has had a very satisfactory business and performance oriented Financial Year 2009. Despite the challenges, the Bank has been able to demonstrate its ability to manage and effectively respond to the requirements of business giving it further confidence to grow on a sustainable basis in future.

Ahli Bank has evolved year over year in an effective manner and the same is reflected in its strong performance in Fiscal 2009. Ahli Bank’s business and financial model promotes leveraging established relationships, developing new ones with a sustainable revenue generation capacity and at the same time ensuring very high Credit Quality and Service Standards.

The Bank’s customer deposits have grown year over year by 46% in line with our strategy to build a stable low cost deposit base. Asset growth, under the new business model, has been managed with a prudent risk management approach undertaken in view of the prevailing global financial crisis and its implication. The loan book continues to be of a very high quality as reflected in our NPL ratio of 0.32% in 2009 (2008: 0.19%).

Net Operating Income has increased year over year by over 26% to OMR 17.90 Million and Operating Expenses (excluding loan impairment charge/recoveries) were controlled at OMR 7.92 Million resulting in a lower cost to income ratio of 44.3 %( 2008:54.0%). Overall, the Net Profit after Tax rose by 44% to OMR 8.54 Million (2008: OMR 5.93 Million).

Capital & Reserves

The Bank seeks to continually enhance shareholder value through proactive and prudent capital management framework to optimize the use of capital by ensuring the most favorable allocation of capital through an appropriate mix of products and services. The Tier I Capital as at year end 2009 amounted to OMR 83.50 Million up from OMR 81.21 Million in 2008 and the Capital Adequacy ratio is at 17.62%(2008:23.36%), well above the mandatory 10% minimum requirement of Central Bank of Oman.

Outlook:

The Omani economy is expected to remain in positive territory in 2010 with the government’s commitment through budgetary allocations for various industrial, infrastructure project & human capital expenditures. At Ahli Bank we see potential banking opportunities arising for which, a clear and wide-ranging strategy is being developed with our team of highcalibre professionals to leverage on these emerging opportunities with the singular purpose of maximising shareholder value. Our expectation therefore would be to grow in a prudent way and emerge as a strong participant in the banking sector in Oman.

Dividend:

The Bank’s Earning Per Share (EPS) for 2009 has risen to Baizas 12.6 from Baizas 8.7 during 2008. Keeping in view the current market condition and the early stage of our development, it is prudent to conserve Bank’s internally generated resources and as a consequence, the Board of Directors recommends 7% cash dividend and 5% bonus shares. The Bank’s commitment towards its shareholders and the confidence it has in its ability to grow and enhance shareholders’ value remains strong.

Thanks

We remain eternally grateful to His Majesty Sultan Qaboos Bin Said and his Government for creating the environment that allows the bank to participate effectively through his visionary leadership of Oman over the past four decades, whose fortieth anniversary is being commemorated during 2010. The Board of Directors places on record its gratitude to the Central Bank of Oman, Capital Market Authority and other regulatory authorities for their strong support and guidance.

Without the continued support of our shareholders, the Bank could not progress as successfully as it has over the years. My sincere thanks to them and to our most valued customers who place their trust in our management of their financial affairs. We will continue to provide the very best in banking services, broadening both our services and distribution channels.

It is with a great deal of positive anticipation; I look forward to the year ahead. I am confident that the skills and expertise of Ahli Bank’s experienced and dedicated staff will, once again, endeavor to deliver a robust performance during 2010. This current growth and unparalleled success is a direct outcome of the efforts of all Ahli Bankers, and I thank them for their hard work, solidarity, cooperation and support.

I am confident of Ahli Bank emerging even stronger in the future and becoming the “Preferred Bank” of Oman for all types of banking products and services.