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11 March 2020
ISLAMIC BANKING

Moody’s downgrades seven Omani banks

Moody’s recently downgraded Oman’s issuer ratings to Ba2 from Ba1 and changed the outlook to stable

Moody's downgrades reflects the government's weakening capacity to support the local banks/Bloomberg

by Kudakwashe Muzoriwa

Moody's has downgraded the long-term local and foreign currency deposit ratings of Bank Muscat, Bank Dhofar, National Bank of Oman (NBO), Sohar International Bank and Oman Arab Bank (OAB), following a downgrade of the Sultanate’s issuer ratings to Ba2 from Ba1.

The rating agency also downgraded the long-term foreign currency deposit rating of HSBC Bank Oman and Bank Nizwa, reflecting the government's weakening capacity to support the local banks as well as the weakening standalone credit profiles of some banks.

The downgrade on Oman’s issuer ratings reflects the country’s lower fiscal strength, evident in higher government debt and weaker debt affordability.

The Sultanate’s debt is expected to continue increasing in the next two years, despite the rating agency’s expectation that the government will begin implementing a significant medium-term fiscal adjustment programme to slow in the next few months and curb the increase in the debt burden.

Moody’s said that in terms of governance considerations, it does not have any particular concern for Omani banks, adding that the conservative regulatory framework in the Sultanate helps support the lenders’ governance practises.

The rating agency changed the outlook of all seven banks to stable from negative on the long-term deposit ratings.

Despite the implementation of some measures aimed at reducing spending and raising revenue, Oman’s debt and debt affordability metrics will continue to weaken over the next few years, said Moody’s.


RELATED STORIES: Moody’s Oman Arab Bank National Bank of Oman Bank Dhofar Bank Muscat Sohar International Bank HSBC Bank Nizwa

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