Half-yearly profits up 44% to $104m, number one status in its domestic market and plans for regional expansion, these are golden times for Bank Muscat.

Oman’s largest lender by market value, posted its second consecutive record profit in the second quarter spurred by higher lending, and fees and commissions from brokerage and other activities. Reuters reports it plans to raise share capital for the first time in almost two years to help finance expansion, either through selling shares to existing stock holders or via Global Depositary Receipts.

The business’ success is built on a solid domestic performance. It has Oman’s largest consumer banking operation, and has been the first to market with a range of investment banking products, including a debt product, an index tracker, a guaranteed product and a private equity fund. It ticks the boxes with Corporate Banking and Asset Management.

The Oman economy is buoyant. GDP was up 15.6% through 2006, total banking assets and liabilities rose 33.4%, credit to the private sector was up 25%. Tourism is revived, Oman Air has a solid future strategy and real estate developments are ticking along. This is a good time for Bank Muscat to make hay.

The challenge now will be to replicate this success on a bigger stage. The bank says it wants to increase foreign operations’ share of profit to 25% in five years from 7% in 2006, led by India, Saudi Arabia and Bahrain, said the bank’s chief executive, AbdulRazak Ali Issa.

The recent merger of Emirates Bank and National Bank of Dubai shows, if you want to grow, there is little sense in being a small fish in a big pond. For Bank Muscat, success at home may soon not be enough.