Taageer Finance Company ratings

Capital Intelligence, the international credit rating agency, today announced that it has affirmed Taageer
Finance Company‘s (TFC) corporate ratings at ‘BB’ Long-term and ‘B’ Short-term with a ‘Stable’
outlook. These internationally comparable ratings are underpinned by the Company’s efficient
management and good financial fundamentals. Its small size, which makes it vulnerable to adverse
changes in business, economic or financial conditions, is a constraint as is its reliance on wholesale
funding and the high level of customer concentration in its corporate deposit base. TFC’s principal
shareholders are wealthy institutions which can support the Company’s future capital requirements.
Official support is uncertain since TFC is not a bank. However, the Omani central bank closely
supervises and regulates the local finance company sector
TFC’s National Ratings are maintained at ‘omBBB’ Long-term ‘omA3’ Short-term and with a Stable
outlook. This is the ranking of TFC’s creditworthiness relative to that of other rated-entities in the country
and to that of the Omani sovereign, which has a national rating of ‘omAAA’.
TFC’s key financial ratios continue to be good although some ratios weakened in 2009 due to the
challenging operating environment in the country over the past one year. Profitability ratios declined in the
first nine months of 2009 over the corresponding period of the previous year. The net interest income
growth rate fell sharply owing to a relatively modest increase in business volumes compared to previous
years and a narrower interest differential. Asset quality ratios also deteriorated in 2009, but the nonperforming
financing (NPF) to gross financing ratio remained at a manageable level and loan-loss
reserves continued to exceed NPFs. TFC strengthened its collections and credit risk management
systems last year and has so far been able to contain the increase in NPF classifications. As a finance
company, TFC continues to rely on wholesale funds, mainly corporate deposits and borrowings from
banks and other institutions. It has arranged adequate funding from local and regional banks.
TFC commenced operations in 2001. Its largest shareholders are The Arab Investment Company, a
Saudi-based company (18%), Al Anwar Holdings (15.1%), the Iran Foreign Investment Company (12%)
and Al Madina Financial and Investment Services (10.9%). TFC operates five branches in Oman and
offers a range of corporate and retail finance products for individuals, SMEs and larger corporates.
With total assets of USD201.3mn at end-September 2009, TFC ranks among the mid-sized finance
companies in the country.