[ad_1]
Muscat – Omani banks’ credit score fundamentals are recovering as pressures on the working atmosphere have eased and financial exercise is progressively selecting up amid larger oil costs, Fitch Scores mentioned on Tuesday.
In a brand new report on Oman’s banking sector, Fitch Scores mentioned that Omani banks have been pretty resilient to the pandemic shock which precipitated a 3.2 per cent GDP contraction in 2020.
‘Omani banks’ efficiency metrics recovered considerably in 2021 and that is anticipated to proceed in 2022, supported by larger rates of interest. Capital metrics will stay moderately sound, whereas pressures on Omani banks’ funding and liquidity profiles have eased. This has been underpinned by the federal government help measures mixed with the current rebound in oil costs,’ Fitch Scores mentioned.
Just lately, one other world credit score scores company Moody’s additionally revised up its outlook for the Omani banking system to ‘secure’ from ‘unfavorable’ as a result of an enchancment within the banks’ working atmosphere.
‘We now have modified our outlook for the Omani banking system to secure from unfavorable to mirror a restoration within the difficult working circumstances dealing with the banks,’ Moody’s mentioned in a report revealed on April 26.
Fitch Scores upgraded the outlook on all Omani banks’ working atmosphere issue scores to ‘secure’ from ‘unfavorable’ in January to mirror improved working circumstances.
The scores company, nonetheless, famous that Omani banks are extremely uncovered to the sovereign by lending to the federal government and government-related entities (GREs), holdings of Omani authorities securities, in addition to excessive reliance on GRE deposits.
‘Exposures to the sovereign additionally considers banks’ exposures to public sector staff by their retail mortgage books,’ Fitch Scores added.
Commenting on Omani banks’ asset high quality, Fitch Scores mentioned asset high quality will stay a key threat in 2022 with the run-off of cost holidays and a rising rate of interest atmosphere which may undermine debtors’ debt servicing capacities.
‘Asset high quality dangers will stay in 2022 as a result of modest credit score progress and the run off of cost holidays, however this ought to be manageable for the banks, in our view,’ the scores company mentioned.
Stress on asset high quality will come up from Omani banks’ publicity to weak sectors, notably actual property, contracting and hospitality, the scores company famous.
‘Banks stay uncovered to occasion threat as a result of excessive single-obligor and sector concentrations, which is basically unavoidable given the slim nature of the home economic system. Nonetheless, we imagine the (asset high quality) impression on the banks’ monetary profiles shall be contained and manageable at their present ranking ranges,’ Fitch Scores added.
[ad_2]
Source link
