Bank Sohar reported 2Q16 net income of OMR4.7mn, 12% higher Q-o-Q, but 24% below our forecast of OMR6.2mn.   Main positive: Deposit growth (+4.7% Q-o-Q)   Main negatives: i) Higher provisioning costs (estimated annualised cost of risk of 85bps for 2Q16); ii) Write-downs on AFS investments (est. OMR0.7mn mark-to-market write-downs); iii) Slower loan growth (+1.8% Q-o-Q)   Our take on the results: Revenues recovered on lower mark-to-market losses on the bank’s investment book, however earnings were dented by a jump in provisioning costs. We estimate that the bank’s annualised cost of risk almost doubled Q-o-Q to 85bps in 2Q16. The bank highlighted that additional provisions were driven largely by the new regulatory requirement on provisioning on restructuring of loans. Loan growth eased off after strong growth in the previous quarter; however, deposit growth was much stronger, and helped ease the loans-to-deposit ratio (LDR) by c300bps to 119%. We expect the bank to focus on deposit growth to further lower the LDR over the coming quarters. (Earnings release, Murad Ansari)   Bank Sohar: OMR0.19 as of 14 July 2016, Rating: Neutral, FV: OMR0.14 per share, MCap: USD756mn, BKSB OM / BKSB.OM