Fitch upgrades 2 Omani banks and affirms 4 banks
Fitch Ratings has upgraded Bank Muscat SAOG's (BM) Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and HSBC Bank Oman SAOG's (HBON) Long-Term IDRs to 'BB+' from 'BB'. The Outlooks are Stable.
Fitch has also upgraded BM's Viability Rating (VR) to 'bb' from 'bb-' and its Government Support Rating (GSR) to 'bb-' from 'b+'.
HBON's Shareholder Support Rating (SSR) has been upgraded to 'bb+' from 'bb' and its VR affirmed at 'bb-'. The Stable Outlook on HBON's Long-Term IDR mirrors that on the Omani sovereign rating.
Fitch has also affirmed the Long-Term IDRs and VRs of National Bank of Oman SAOG (NBO), Bank Dhofar SAOG (BD), Sohar International Bank SAOG (SIB), and Ahli Bank SAOG (ABO).
The affirmation of the VRs reflects Fitch 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 BM's.
The six banks' Short-Term IDRs have been affirmed at 'B'. A full list of rating actions is at the end of this rating action commentary.
The rating actions follow the upgrade of the Omani sovereign and subsequent reassessment of the 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. Fitch has also revised its assessment of the Omani banks' operating environment score to 'bb' from 'bb-', signalling improvements in operating conditions in the context of higher oil prices, which will drive credit demand and ease pressures on banks' financial profiles.
The upgrade of Oman reflected significant improvements in the country's fiscal metrics, lessening of external financing pressures and ongoing efforts to reform public finances.
