Moody’s Investors Service has changed its outlook for the D financial strength rating assigned to the National Bank of Oman (NBO) from stable to negative. However, its stable outlook for the bank’s foreign currency deposit remains unchanged.
The outlook change was prompted by increasing concerns about the bank's deteriorating financial performance, epitomized by the reported net loss of 6.4 million Omani Rials ($16.64 million) for the year 2001, NBO's first loss since its recapitalization in 1991.
According to figures released by the bank, but not yet approved by the Central Bank of Oman, loan loss provisions of about OMR 30.5 million—almost three times higher than the figure for 2000—have pushed the bank into the red, despite a significant increase of about 16 percent in pre-provision income, reported a recently released Moody’s Rating Action.
Moody’s also highlighted that NBO was one of the main financiers of a large private sector oil service company in the United Arab Emirates (UAE), whose international business faced difficulties in the last quarter of 2001. In addition, the bank has significant connections with a major domestic commodity-trading firm that ran into financial difficulties during 2001. As a result, the bank’s asset quality has deteriorated significantly during recent years, with the level of non-performing loans more than doubling during 2001.
Headquartered in Muscat, the National Bank of Oman (NBO) was set up in 1973 and is today one of the largest banks in the Sultanate with a paid up capital of 45.8 million Omani Rials ($119 million) and a net worth of OR 112 million ($291 million), as of December 2000. NBO has 55 service centers nationwide, five in Egypt and one in Abu Dhabi. By year-end 2001, NBO’s assets totaled OR951 million.
Moody's is a global credit rating, research and analysis firm. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
