Fitch Upgrades Sohar International & Ahlibank Ratings

Fitch Ratings has upgraded Sohar International Bank’s and Ahlibank’s long-term issuer default ratings (IDRs) to ‘BB-‘ from ‘B+’. The rating agency’s outlooks on both banks are stable. Fitch has also upgraded both banks’ government support ratings (GSRs) to ‘bb-‘ from ‘b+’. The short-term IDRs have also been affirmed at ‘B’.

‘The stable outlooks on the banks’ long-term IDRs mirror that on the Omani sovereign rating. The rating actions reflect the Omani authorities’ improved ability to provide support to the banking sector,’ Fitch said in a statement. According to the ratings agency, Sohar International Bank’s and Ahlibank’s IDRs are driven by potential sovereign support, as expressed by their ‘bb-‘ GSRs.

‘Oman’s external balance sheet position has significantly improved and we expect this will be sustained over the rating horizon,’ Fitch said. Fitch forecasts the government’s debt-to-GDP ratio will fall to 46.7% in 2022 and 44.9% in 2023, from around 70% in 2020, on better budget performance and oil-fuelled nominal GDP growth in 2022.

Fitch believes the Omani authorities’ propensity to support the banking system is high because of high contagion risk in the sector, the role the banking sector plays in financing the economy and the authorities’ drive to preserve financial stability as the country implements its economic development plans.