Muscat: Fitch Ratings has upgraded Bank Muscat’s long-term issuer Default Ratings (IDRs) to ‘BB’ from ‘BB-‘ and HSBC Bank Oman SAOG’s long-term (IDRs) to ‘BB+’ from ‘BB’. The outlooks are stable for these 2 banks, the rating agency said on Wednesday 24 Aug 2022.
Fitch has also upgraded Bank Muscat’s viability rating (VR) to ‘bb’ from ‘bb-‘ and its government support rating (GSR) to ‘bb-‘ from ‘b+’. HSBC Oman’s shareholder support rating has been upgraded to ‘bb+’ from ‘bb’ and its viability rating affirmed at ‘bb-‘.
The stable outlook on HSBC Oman’s long-term IDRs mirrors that on the Omani sovereign rating, Fitch noted.
Fitch has also affirmed the long-term IDR’s and viability ratings of National Bank of Oman (NBO), BankDhofar, Solar International Bank, and Ahlibank.
‘The affirmation of the viability rating reflects our view that the improved operating environment in Oman does not have a sufficient impact on the banks’ intrinsic credit profile to warrant an upgrade. This considers weaknesses in asset quality and profitability metrics that are still lagging Bank Muscat’s’ Fitch said in a statement.
The six banks’ short-term IDRs have been affirmed at ‘B’ by Fitch.
Fitch said its rating actions on Omani banks follow the upgrade of Omani sovereign to ‘BB’ on 15 August 2022 and its subsequent reassessment of the government support rating (GSR) for domestic systemically important banks (D-SIB) in Oman to ‘b+’ from ‘b’, reflecting a stronger ability of the Omani authorities to support the local banking system.
The fitch has also revised its assessment of the Omani banks’ operating environment score to ‘bb’ from ‘bb-‘, signaling improvements in operating conditions in the context of higher oil prices, which will drive credit demand and ease pressures’ on banks’ financial profiles.
The recent upgrade of Oman’s sovereign rating, Fitch said, reflected significant improvements in the country’s fiscal metrics, lessening of external financing pressures and ongoing efforts to reform public finances.
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