Omani banks set to benefit from improved conditions: Fitch

Omani banks set to benefit from improved conditions: Fitch

Omani banks’ reasonable credit fundamentals and improved operating conditions will support lending growth and profitability in 2023, according to global credit rating agency Fitch Ratings.

In a new report released on Thursday, Fitch noted that Omani banks emerged from the Covid-19 pandemic with reasonable credit fundamentals which place the sector in a good position for improving profitability in 2023.

Fitch said that Oman’s high oil revenues will continue to support economic activity and drive business generation for the sultanate’s banks. The rating agency expects a credit growth of 4.0 per cent in 2023, underpinned by high oil prices, healthy economic growth, a low inflationary environment and positive employment prospects.

Fitch revised the outlook on Omani banks’ operating environment factor score to ‘positive’ from ‘stable’ to reflect improved operating conditions, as well as the recent revision of the outlook on the sultanate’s sovereign rating to ‘positive’ from ‘stable’.

‘Omani banks are highly exposed to the sovereign through lending to government and government-related entities (GREs), holdings of Omani government securities, and high reliance on government and GRE deposits. Exposure to the sovereign also considers banks’ exposures to public-sector employees through their retail loan books,’ Fitch said.