Fitch sees resilient credit metrics for Omani banks in 2025

16/04/2025 07:21 AST

Business conditions for Omani banks are expected to remain favourable in 2025, supported by still-elevated oil prices - despite a recent decline - and robust economic growth, Fitch Ratings said in a new report.

Fitch noted that increasing economic diversification in Oman has improved the country's economic prospects and created growth opportunities for the banking sector.

'Real GDP growth is likely to accelerate, driven by both hydrocarbon and non-oil sectors. The positive outlooks on all Omani banks reflect the rating action on the Omani sovereign and our expectation that improving operating conditions could benefit some banks' intrinsic credit profiles,' the agency said.

Fitch expects Omani banks' asset quality to continue to gradually recover in 2025, supported by write-offs and favourable economic conditions.

'This should underpin sector capitalisation. Stage 2 loans are expected to continue declining, and we do not anticipate any material migration to Stage 3, despite ongoing pressures in the real estate, construction and hospitality sectors,' the report said.

The rating agency also expects that lower interest rates will have a limited impact on banks' net interest margins, while loan impairment charges should remain moderate, accompanied by reasonable cost discipline.

'Most Omani banks' capital buffers are supported by sound internal capital generation. Funding and liquidity conditions are stable. We expect oil prices to continue supporting growth in customer deposits, which accounted for 90% of total sector non-equity funding,' Fitch added.

Muscat Daily