Na­tional Bank of Oman out­look sta­ble

The Pak Banker - - Front Page -


Global rat­ing agency Fitch has af­firmed Na­tional Bank of Oman's ( NBO) Long-term Is­suer De­fault Rat­ing (IDR) at 'BBB+' with a Sta­ble Out­look and Vi­a­bil­ity Rat­ing (VR) at 'bb+'.

NBO's IDRs, Sup­port Rat­ing and Sup­port Rat­ing Floor re­flect the high prob­a­bil­ity of sup­port from the Omani au­thor­i­ties, in case of need, given the gov­ern­ment's strong sup­port­ive stance to­wards the do­mes­tic sys­tem and the bank's sys­temic im­por­tance.

As the IDRs are at their Sup­port Rat­ing Floor, they would be sen­si­tive to changes in Fitch's per­cep­tion of the will­ing­ness or abil­ity of the state of Oman to sup­port NBO.

Global rat­ing agency Fitch has af­firmed NBO's VR due to its strong fran­chise and im­prov­ing fi­nan­cial met­rics, specif­i­cally re­cent prof­itabil­ity, liq­uid­ity and as­set qual­ity as the bank's new strat­egy is be­ing de­ployed. How­ever, these fac­tors are con­strained by NBO's weaker cap­i­tal buf­fer as it presses ahead with its growth strat­egy. Cap­i­tal is also con­sid­ered tight in the con­text of high bor­rower con­cen­tra­tions, which ex­pose the bank to sig­nif­i­cant event risk.

Net in­come im­proved by 12% yoy in 9M12, re­flect­ing strong net in­ter­est in­come and a sharp fall in im­pair­ment charges. While busi­ness growth is be­ing driven by sta­ble eco­nomic con­di­tions, threats to earn­ings could come from new Cen­tral Bank reg­u­la­tions on re­tail bank­ing, ris­ing com­pe­ti­tion and high oper­at­ing costs due to wage in­fla­tion.

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