Moody’s down­grades de­posit rat­ings of six Omani banks

Muscat Daily - - BUSINESS -

Moody’s In­vestors Ser­vice has down­graded the long-term lo­cal and for­eign cur­rency de­posit rat­ings of six banks it rates in Oman: Bank Mus­cat (to Baa2 from Baa1), HSBC Bank Oman (to Baa2 from Baa1), BankDho­far (to Baa3 from Baa2), Na­tional Bank of Oman (to Baa3 from Baa2), Oman Arab Bank (to Baa3 from Baa2) and Bank Nizwa (to Ba1 from Baa3).

Moody’s also changed the out­look to ‘neg­a­tive’ from ‘sta­ble’ on the rat­ings of five banks and main­tained the ‘neg­a­tive’ out­look on the rat­ings of one bank (BankDho­far), ac­cord­ing to a state­ment is­sued by the rat­ings agency on Tues­day.

It said the rat­ing ac­tion fol­lows Moody’s down­grade of Oman gov­ern­ment’s is­suer rat­ing to Baa2 from Baa1 and the change of its out­look to neg­a­tive from sta­ble on Fri­day.

‘The driver un­der­pin­ning the down­grade of six Omani banks’ de­posit rat­ings is the weak­en­ing fis­cal ca­pac­ity of the gov­ern­ment to pro­vide sup­port to banks, as sig­nalled by the down­grade of its is­suer rat­ing to Baa2/neg­a­tive from Baa1/sta­ble’, the rat­ings agency said.

Moody’s said its de­ci­sion to as­sign a neg­a­tive out­look to Omani banks’ long-term de­posit rat­ings re­flects the po­ten­tial fur­ther weak­en­ing in the Omani gov­ern­ment’s sup­port ca­pac­ity, as re­flected by the neg­a­tive out­look on the gov­ern­ment’s is­suer rat­ing.

‘In ad­di­tion, the neg­a­tive out­look also re­flects the pos­si­bil­ity that a weak­en­ing op­er­at­ing en­vi­ron­ment could put down­ward pres­sure on the banks’ stand­alone cred­it­wor­thi­ness. This could re­sult from lower than ex­pected eco­nomic growth, or weaker than ex­pected credit and fund­ing con­di­tions, which would pres­sure banks’ sol­vency and liq­uid­ity pro­files’.

At the same time, Moody’s has af­firmed the base­line credit as­sess­ments (BCAs) and ad­justed BCAs of the six banks. Moody’s de­ci­sion to af­firm the BCAs of the six banks re­flects the re­silience in their fi­nan­cial per­for­mance, un­der­pinned by con­tin­ued solid as­set qual­ity, healthy cap­i­tal buf­fers and rel­a­tively low mar­ket fund­ing reliance.

‘De­spite the pos­si­ble chal­lenges re­sult­ing from a weaker op­er­at­ing en­vi­ron­ment, we ex­pect the cred­it­wor­thi­ness of Omani banks to re­main re­silient’, Moody’s said.

Moody’s also af­firmed the Ba3 cor­po­rate fam­ily rat­ing and the B1 is­suer rat­ing of Al Omaniya Fi­nan­cial Ser­vices and main­tained its out­look neg­a­tive. Moody’s said the neg­a­tive out­look on Al Omaniya’s rat­ings con­tin­ues to re­flect the po­ten­tial neg­a­tive im­pact from tighter liq­uid­ity con­di­tions and softer eco­nomic growth on the com­pany’s liq­uid­ity and sol­vency pro­file.

Newspapers in English

Newspapers from Oman

© PressReader. All rights reserved.