The foreign currency long-term and short-term ratings were affirmed at BBB+/A2, which is similar to the ratings assigned to the Omani sovereign. The financial strength rating was maintained at BBB+. The foreign currency short-term rating was affirmed at A2. The strong ownership, good management, growing market presence and strong business prospects underpin the bank’s ratings.
BankMuscat is the only commercial bank in Oman in which the government of Oman has a direct shareholding (20%). The bank has expanded over the years, both organically and through acquisitions at home and abroad. In Oman, BM’s corporate and project finance activities, and private and investment banking services have grown. The bank operates a network of 92 branches, the largest in the country. It acts as banker to the government and plays a leading role in the country’s privatisation programme. It is Oman’s largest financial institution with total assets of USD5 billion at end 2005, representing a 37% market share.
The bank has a well diversified domestic business base, which generates multiple income streams, a strong retail franchise and a sizeable corporate banking business. BankMuscat is also diversifying away from the Omani market and aims to develop a regional presence. Its asset quality ratios have improved significantly over the last four years. Bad debts are at a low level and are more than adequately covered by provisions. The bank raised new equity last year and is presently well capitalised. Liquidity ratios are still tight when compared with those of peers in other GCC countries. However, the diversified funds base in terms of instruments, tenors and counterparties, and narrowing maturity gaps are mitigating factors here. Customer deposits have grown at a robust pace in recent months, improving the liquidity ratio. Profitability remains strong thanks to strong interest and non-interest earnings. The first quarter results were good.
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