Muscat – Fitch Ratings on Monday affirmed Bank Muscat’s Long-Term Issuer Default Rating (IDR) at ‘BB+’ with a stable outlook. The agency also affirmed the bank’s Viability Rating (VR) at ‘bb+’.

Bank Muscat’s IDRs are driven by its VR and underpinned by potential support from the Omani authorities, Fitch said in a statement. The agency added, ‘Bank Muscat’s VR is capped by the Omani sovereign rating, given its large exposure to the sovereign, including to the government and public sector on both sides of its balance sheet, as well as its domestically focused business model.’

According to Fitch, Bank Muscat’s Viability Rating reflects the bank’s flagship status in Oman, which provides it with access to high-quality borrowers and significant funding from the government and related entities. The rating also considers Bank Muscat’s stable asset quality, above-peer profitability, large capital buffers, solid funding, and good liquidity.

Fitch noted that business conditions are favorable for Omani banks, supported by high oil prices, which the rating agency expects to average $80 per barrel in 2024, above Oman’s fiscal break-even price.

Fitch said that Bank Muscat’s dominant market position gives it some pricing power, and a low-cost funding base supports its net interest margin. It added that the bank’s strong market position also provides access to lower-risk borrowers, enabling cautious growth in recent years.

The rating agency pointed out that Bank Muscat’s asset quality has remained stable, with a Stage 3 loan ratio of 3.8% at the end of Q3 2024 and at the end of 2023, the lowest among domestic peers. It also noted that the bank’s profitability continues to outperform its peers, with operating profit at 2.4% of risk-weighted assets in the first nine months of 2024, supported by a wider net interest margin and stronger revenue diversification.

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