Moody’s Investors Service has affirmed the Ba1/Not Prime long-term and short-term local currency deposit ratings of BankDhofar.
Moody’s also affirmed the bank’s long and short-term foreign currency deposit ratings at Ba2/Not Prime, according to a statement released by the ratings agency.
It said BankDhofar’s Ba2 long-term foreign currency deposit rating is constrained by the relevant country ceiling and the outlook on the long-term deposit ratings remains negative.
‘The affirmation of BankDhofar’s Ba1 local currency and Ba2 foreign currency deposit ratings, reflects our expectation of a very high probability of government support in case of need,’ Moody’s said.
At the same time, Moody’s has downgraded the bank’s baseline credit assessment (BCA) and its adjusted BCA to ba3 from ba2.
According to Moody’s, the decision to downgrade BankDhofar’s BCA and adjusted BCA to ba3 from ba2 is driven by the bank’s deteriorating asset quality and higher provisions, which have negatively impacted profitability, in the context of the weakening operating environment in Oman where the bank mostly operates.
Moody’s expects that BankDhofar’s loan performance will weaken further owing to the effect on borrowers of the sluggish economic growth in 2019, combined with the continued public spending restraint.
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