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Moody’s upgrades outlook on six Omani banks to ‘positive’

Muscat – Moody’s Ratings announced on Wednesday that it has affirmed the long-term local and foreign currency deposit ratings of six Omani banks: Bank Muscat, BankDhofar, National Bank of Oman (NBO), Sohar International Bank, Oman Arab Bank (OAB), and Bank Nizwa.

The rating agency has revised the outlook on these banks’ long-term deposit ratings from ‘stable’ to ‘positive’. Additionally, Moody’s affirmed the Baseline Credit Assessments (BCAs) and Adjusted BCAs of all six banks.

Bank Muscat’s long-term local and foreign currency deposit ratings were affirmed at Ba1, with its BCA and Adjusted BCA also maintained at ba1. The bank’s long-term deposit and senior unsecured debt ratings remain aligned with the ratings of the Government of Oman.

Similarly, Moody’s affirmed Sohar International’s long-term local and foreign currency deposit ratings at Ba1, with its BCA and Adjusted BCA at ba3. Sohar International’s long-term deposit ratings are also in line with the Government of Oman’s ratings.

For NBO, Moody’s affirmed its long-term local and foreign currency deposit ratings at Ba1, with the BCA and Adjusted BCA at ba2 and ba3, respectively. BankDhofar’s long-term local and foreign currency deposit ratings were also affirmed at Ba1, with its BCA and Adjusted BCA at ba3.

OAB saw its long-term local and foreign currency deposit ratings affirmed at Ba1, with an Adjusted BCA of ba2. Bank Nizwa’s long-term local and foreign currency deposit ratings were affirmed at Ba1, with its BCA and Adjusted BCA at ba3.

Moody’s recent rating action on these Omani banks follows the revision of the outlook on the Government of Oman’s rating from stable to positive.

‘The change in outlooks on the long-term deposit ratings to positive for the Omani banks reflects the revision in the outlook on the sovereign rating. For some banks, there is also potential for improvement in the operating environment,’ Moody’s stated.

An upgrade in Oman’s sovereign rating could potentially lead to an increase in government support, benefiting the banks’ ratings, the agency noted.

Moody’s also highlighted that the affirmation of the banks’ BCAs is based on their financial fundamentals and performance, which remain consistent with the current rating level, following the sovereign rating affirmation at Ba1.

‘The affirmation of the deposit ratings takes into account the BCAs’ affirmation and our assessment of the government’s willingness to provide support to banks if needed. This support is very high for all banks, driven by their importance to the domestic financial system and the significant government shareholdings and deposits in several banks,’ Moody’s said.

The rating agency further mentioned that the positive outlook on the long-term deposit ratings suggests that a downgrade in the near term is unlikely. However, downward pressure on Omani banks’ ratings could emerge from a deterioration in the sovereign’s credit profile or a significant decline in the banks’ solvency and liquidity.