Moody’s to review National Bank of Oman’s Financial Strength rating
Moody's Investors Service placed on review for possible downgrade the D financial strength rating (FSR) of National Bank of Oman (NBO). This action does not affect NBO's Baa3/Prime-3 ratings for foreign currency deposits.
Moody's action stems from NBO's worsening financial position, particularly its extremely weak asset quality and elevated provisioning requirements. Recent financial results showed that NBO's asset quality deteriorated substantially since the bank's FSR was assigned a negative outlook in 2002.
Moody's remains concerned that the bank continues to lose market share to its domestic competitors, while the high level of non-performing assets on the bank's balance sheet will impose a large burden on NBO's management, as it focuses valuable time and effort on loan recovery efforts rather than franchise enhancement.
Moody's also notes that NBO faces a significant potential loss stemming from a dispute with the Central Bank of Egypt, for which it has not yet made any provisions.
Potentially counterbalancing these concerns, NBO has recently signed a private agreement to augment its capital base by approximately 50 percent, which is expected to take effect in the fourth quarter of 2003. The rating review will focus on all these issues.
Headquartered in Muscat, Oman, NBO had total assets of 919 million Omani rials ($2.39 million) as of December 31, 2002. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
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