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Moody’s affirms ratings of seven Omani banks, upgrades outlook

19 Oct 2021 Moody's Omani banks By GULAM ALI KHAN

Muscat – Moody’s Investors Service has affirmed the long-term local and foreign currency deposit ratings of seven Omani banks: Bank Muscat, HSBC Bank Oman, BankDhofar, National Bank of Oman (NBO), Sohar International Bank, Oman Arab Bank (OAB) and Bank Nizwa.

The global ratings agency has also changed its outlook to ‘stable’ from ‘negative’ on these ratings of all seven banks. At the same time, Moody’s affirmed the baseline credit assessments (BCAs) and adjusted BCAs of the seven Omani banks.

In a statement, Moody’s said these actions reflect its expectation of continued improvements in the operating environment where the Omani banks operate, as highlighted by the affirmation of the government of Oman’s ‘Ba3’ issuer rating and change in the outlook.

Last week Moody’s upgraded the outlook on the government of Oman’s issuer rating to ‘stable’ from ‘negative’ and affirmed its long-term issuer and senior unsecured ratings at ‘Ba3’ for Oman.

A secondary driver of these rating actions for Bank Muscat and HSBC Bank Oman, Moody’s said, is the interlinkages between their creditworthiness and that of the sovereign, as the banks’ standalone BCAs continue to be constrained at the level of the sovereign rating.

Moody’s expects that the Omani government’s willingness to provide support to banks in case of need will remain high or very high, depending on the bank, reflecting the importance of the country’s banks in the domestic financial system and the significant government shareholdings and deposits in several banks.

The change in outlook to stable from negative on the Omani banks’ long-term deposit ratings reflects Moody’s expectation of continued improvements in the operating environment where the banks exercise their business activities, and also mirrors the stable outlook on Oman’s sovereign ratings.

Moody’s affirmed Bank Muscat’s long-term local and foreign currency deposit ratings at Ba3, its BCA and adjusted BCA at ba3. Bank Muscat’s long-term deposit and senior unsecured debt ratings continue to be aligned with the rating of the Oman sovereign.

‘The affirmation of Bank Muscat’s long-term deposit ratings reflects (i) the affirmation of Omani government’s rating, and (ii) the interlinkages between the bank’s and the sovereign’s creditworthiness, as reflected in the affirmation of the bank’s BCA at ba3,’ Moody’s said.

Moody’s affirmed HSBC Bank Oman’s long-term local and foreign currency deposit ratings at Ba2, its adjusted BCA at ba2 and its BCA at ba3. ‘The bank’s long-term deposit ratings continue to be one notch above the rating of the Oman sovereign, owing to the affiliate support from which HSBC Bank Oman benefits from HSBC Holdings, HSBC Bank Oman’s ultimate parent.’

With regards to NBO’s ratings, Moody’s affirmed the bank’s long-term foreign and local currency deposit ratings at Ba3, its BCA and adjusted BCA at ba3. The affirmation of NBO’s long-term deposit ratings reflects the affirmation of Omani government’s rating at Ba3, Moody’s said.

Moody’s affirmed BankDhofar’s long-term local and foreign currency deposit ratings at Ba3, its BCA and adjusted BCA at ba3. The affirmation of BankDhofar ‘s long-term deposit ratings reflects the affirmation of Omani government’s rating at Ba3.

For OAB, Moody’s affirmed the bank’s long-term foreign and local currency deposit ratings at Ba3, its BCA and adjusted BCA at ba3.

The rating agency changed the outlook on the bank’s long-term deposit ratings to stable from negative, which reflects Moody’s expectation of continued improvements in the operating environment and mirrors the stable outlook on the Omani government’s issuer ratings.

Moody’s affirmed Sohar International Bank’s long-term foreign and localcurrency deposit ratings at Ba3, its BCA and adjusted BCA at ba3. ‘The affirmation of the BCA at ba3 reflects Sohar International Bank’s sound liquidity (31.6 per cent liquid banking assets/tangible banking assets) and gradually improving funding profile,’ the ratings agency said.

On the other hand, Moody’s affirmed Bank Nizwa’s long-term foreign and local currency deposit ratings at Ba3, its BCA and adjusted BCA at b1.

‘Bank Nizwa’s long-term deposit ratings, at Ba3, still benefit from one-notch uplift from the bank’s b1 BCA,’ Moody’s said.

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