The Banking Executive Magazine - December Issue 2022

Fitch Fitch Upgrades TWO OMANI BANKS ON IMPROVED SOVEREIGN SUPPORT ABILITY International ratings agency Fitch Ratings has upgraded Sohar Interna- tional Bank SAOG's (SIB) and Ahli Bank SAOG's (ABO) Long-Term Is- suer Default Ratings (IDRs) to 'BB-' from 'B+'. The Outlooks are Stable, said Fitch while also upgrading the banks' Government Support Ratings (GSRs) to 'bb-' from 'b+'. The Short- Term IDRs have been affirmed at 'B'. The Stable Outlooks on the banks' Long-Term IDRs mirror that on the Omani sovereign rating. The rating actions reflect the Omani authorities' improved ability to provide support to the banking sector, the London based agency noted. Explaining the rationale behind its ratings actions, Fitch stated: “Oman's external balance sheet position has significantly improved and we ex- pect this will be sustained over the rating horizon. In particular, Fitch forecasts government debt/GDP ratio will fall to 46.7 per cent in 2022 and 44.9 per cent in 2023, from around 70 per cent in 2020, on better budget performance and oil-fuelled nominal GDP growth in 2022 (forecast at 24 per cent). Additionally, sovereign net foreign assets are forecast to turn positive by end-2022 at 1 per cent of GDP (2021: -6.3 per cent) before in- creasing to 4.6 per cent of GDP in 2023. The Central Bank of Oman's gross foreign reserves will strengthen in 2022-2023 due to current account surpluses and average more than 4.5 months of current external pay- ments.” At the same time, Fitch Ratings af- firmed the ratings of National Bank of Oman SAOG (NBO), Bank Dhofar SAOG (BD). NBO’s Long-Term Issuer Default Rating (IDR) was affirmed at 'BB-' with a Stable Outlook, while the bank's Viability Rating (VR) was affirmed at 'bb-'. The Bank’s Govern- ment Support Rating (GSR) was up- graded to 'bb-' from 'b+'. The upgrade of NBO's GSR reflects the Omani authorities' improved ability to provide support to the bank. Bank Dhofar’s Long-Term Issuer De- fault Rating (IDR) was also affirmed at 'BB-' with Stable Outlook; its Via- bility Rating (VR) was affirmed at 'bb- ' while its Government Support Rating (GSR) to 'bb-' from 'b+'. ISSUE 168 DECEMBER 2022 the BANKING EXECUTIVE 41