Fitch upgrades five Omani banks’ IDRs
Published: 03:10 PM,Oct 10,2023 | EDITED : 07:10 PM,Oct 10,2023
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BUSINESS REPORTER
MUSCAT, OCT 10
International ratings agency Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of Bank Muscat SAOG (BM) to ‘BB+’ from ‘BB’, and the Long-Term IDR of Bank Dhofar SAOG (BD), National Bank of Oman SAOG (NBO), Ahli Bank SAOG (ABO) and Sohar International Bank SAOG (SIB) to ‘BB’ from ‘BB-’.
Fitch has also upgraded the Viability Ratings (VRs) of BM to ‘bb+’ from ‘bb’, the VR of BD and NBO to ‘bb’ from ‘bb-’, and that of SIB to ‘bb-’ from ‘b+’, and affirmed the VR of ABO. Fitch has maintained SIB’s VR on Rating Watch Positive (RWP).
At the same time, the agency upgraded SIB’s Long-Term IDR (xgs) in line with the upgrade of its VR, and affirmed ABO’s Long-Term IDR (xgs) in line with the affirmation of its VR.
The rating actions follow the upgrade of Oman’s sovereign rating on September 25, 2023 and reflect the agency’s view of an improving probability of support for the banks from the Omani authorities as well improved business conditions that will benefit banks’ intrinsic credit profiles.
The IDRs of BM, BD, and NBO are driven by their respective VRs and are also underpinned by potential support from the Omani authorities, as captured by these banks’ Government Support Ratings (GSR), which have been upgraded to ‘bb+’ from ‘bb’ (BM) and ‘bb’ from ‘bb-’ (BD and NBO). The IDRs of ABO and SIB are also driven by potential sovereign support as reflected in their GSRs, which have been upgraded to ‘bb’ from ‘bb-’.
The Stable Outlooks on the Long-Term IDRs of BM, BD, and NBO reflect Fitch’s view on the trends in these banks’ standalone profiles, but also mirror the Stable Outlook on the sovereign, and, in the case of ABO and SIB, it reflects the Stable Outlook on the sovereign, the ratings agency said.
“Fitch believes the Omani authorities have a high propensity to support the banking sector given the high contagion risk and the importance of the banking system in supporting the local economy.
“However, the authorities’ financial flexibility and ability to provide extraordinary support is limited, despite recent improvements in the sovereign balance sheet.
“This leads to a GSR of ‘bb’ for domestic systemically important banks (D-SIB) in Oman, which is at the lower end of the typical range for D-SIB GSRs in jurisdictions where the sovereign is rated ‘BB+’,” it added.
MUSCAT, OCT 10
International ratings agency Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of Bank Muscat SAOG (BM) to ‘BB+’ from ‘BB’, and the Long-Term IDR of Bank Dhofar SAOG (BD), National Bank of Oman SAOG (NBO), Ahli Bank SAOG (ABO) and Sohar International Bank SAOG (SIB) to ‘BB’ from ‘BB-’.
Fitch has also upgraded the Viability Ratings (VRs) of BM to ‘bb+’ from ‘bb’, the VR of BD and NBO to ‘bb’ from ‘bb-’, and that of SIB to ‘bb-’ from ‘b+’, and affirmed the VR of ABO. Fitch has maintained SIB’s VR on Rating Watch Positive (RWP).
At the same time, the agency upgraded SIB’s Long-Term IDR (xgs) in line with the upgrade of its VR, and affirmed ABO’s Long-Term IDR (xgs) in line with the affirmation of its VR.
The rating actions follow the upgrade of Oman’s sovereign rating on September 25, 2023 and reflect the agency’s view of an improving probability of support for the banks from the Omani authorities as well improved business conditions that will benefit banks’ intrinsic credit profiles.
The IDRs of BM, BD, and NBO are driven by their respective VRs and are also underpinned by potential support from the Omani authorities, as captured by these banks’ Government Support Ratings (GSR), which have been upgraded to ‘bb+’ from ‘bb’ (BM) and ‘bb’ from ‘bb-’ (BD and NBO). The IDRs of ABO and SIB are also driven by potential sovereign support as reflected in their GSRs, which have been upgraded to ‘bb’ from ‘bb-’.
The Stable Outlooks on the Long-Term IDRs of BM, BD, and NBO reflect Fitch’s view on the trends in these banks’ standalone profiles, but also mirror the Stable Outlook on the sovereign, and, in the case of ABO and SIB, it reflects the Stable Outlook on the sovereign, the ratings agency said.
“Fitch believes the Omani authorities have a high propensity to support the banking sector given the high contagion risk and the importance of the banking system in supporting the local economy.
“However, the authorities’ financial flexibility and ability to provide extraordinary support is limited, despite recent improvements in the sovereign balance sheet.
“This leads to a GSR of ‘bb’ for domestic systemically important banks (D-SIB) in Oman, which is at the lower end of the typical range for D-SIB GSRs in jurisdictions where the sovereign is rated ‘BB+’,” it added.