Capital Intelligence upgrades National Bank of Oman rating
Published: 29 August 2006
Limassol, 29 August 2006
Capital Intelligence, the international emerging markets rating agency, announced it had increased the foreign currency long-term rating of the National Bank of Oman to BBB from BB+, and the financial strength rating to BBB- from BB. The upgrade reflects the continuing improvements in the bank’s overall financials which appear to be sustainable over the long-term. The outlook for the financial strength rating is ‘Positive’.
The support rating has been raised to 2 from 3 since the likelihood of support from the major shareholders and the government is believed to be high, CI said in its news release.
NBO, with total assets of USD2.3 billion at end-June 2006, is Oman’s second largest bank. Since July 2005 NBO has been owned 34.9% by the Commercial Bank of Qatar (CBQ). The bank is also managed by CBQ under a contract. NBO operates 50 domestic and 6 overseas branches (in Egypt and the UAE). It is a full service commercial bank providing a range of retail and corporate services.
NBO is now in the growth phase of its turnaround, Capital Intelligence said. The bank’s good performance in 2005 and its strong first half 2006 financials suggest that its turnaround strategies and CBQ’s involvement in its management are beginning to yield good results.
Capital Intelligence said, "The credit portfolio has been substantially cleaned up. Bad debts have declined in absolute terms owing to strong recoveries and write-offs, and are now well provided for.
"Although the NPLs to gross loans ratio is higher than those of other Omani banks, this is expected to fall with the anticipated growth in lending over the coming years. Liquidity is satisfactorily managed, and customer deposit growth has been fairly robust. NBO is solidly capitalised and the present capital is sufficient to support its medium-term plans," said the Cyprus-based service.
While recoveries of previously provided bad debts contributed to the bank’s good results in 2005, core earnings have also grown at a healthy pace. NBO is also expected to benefit from synergies with CBQ, said Capital Intelligence.
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