National Bank of Oman outlook stable
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.