Bank Muscat reported 4Q2015 net income of OMR39.2 million, 16% lower Q-o-Q and below our estimates of OMR44.2 million.   Main positives: i) Loan growth (+4% Q-o-Q); ii) Improved net interest spreads   Main negatives: i) Weaker non-interest income (-5% Q-o-Q); ii) Higher provisions; iii) Higher operating costs (8% Q-o-Q)   Our view on the results: A disappointing set of earnings set from Bank Muscat, in our view. Higher opex and provisioning costs offset the slight improvement in net interest spreads. Over the past three years, Bank Muscat has been reporting higher provision in the last quarter of the year, which was the case in 4Q2015 as well. Non-interest income also weakened 8% Q-o-Q, likely on lower fee and investment income. We estimate that net interest spreads sequentially, helped by better management of liquidity. The bank’s loans-to-deposit ratio rose by c300bps to 99.6% as the bank optimised balance sheet liquidity. (Earnings release, Murad Ansari)   Bank Muscat: OMR0.42 as of 13 January 2016, Rating: Buy, FV: OMR0.64 per share, MCap: USD2,545 million, BKMB OM / BMAO.OM