Fitch Ratings has downgraded Oman International Bank's Individual rating to C/D from C. The bank's long-term, short-term and support ratings have been affirmed at BBB-, F3 and 2 respectively, and the rating outlook is stable.
The downgrade reflects Fitch's concern over the bank's falling market share of loans and deposits during the last three years, together with increasing loan loss provisions, declining asset quality ratios and its negative impact on profitability. These points, combined with high turnover of staff in key management positions, have eroded the bank's competitive position in an over banked local market.
Though there is some evidence of improving performance in 2002 most of it is underpinned by recoveries and the benefit from lower interest rates. It is also Fitch's opinion that the new management team now in place will find it extremely challenging to reverse the decline in market shares and consequently profitability given the uncertain economic conditions in the region and the limited growth potential within the country.
The combination of factors has resulted in the bank's performance continuing to lag behind that of its local peers. Oman International Bank was established in 1984 as the first wholly owned Omani Bank. It is majority owned by the Al-Zawawi family, a leading local family with diverse commercial interests, and operates through a domestic network of 82 branches.
The bank’s international operations are restricted to India and Pakistan. The bank's activities are focussed on personal and commercial banking, including consumer finance, trade finance, project finance, investment management and private banking.
Fitch's Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
