12/11/2026 06:13 AST
Fitch Ratings has affirmed the credit ratings of Bank Muscat, Sohar International Bank and National Bank of Oman (NBO), maintaining stable outlooks on all three lenders, reflecting its assessment of the resilience of Oman's banking sector and the banks' respective financial profiles.
In separate rating actions issued on Tuesday, Fitch affirmed Bank Muscat's Long-Term Issuer Default Rating (IDR) at 'BBB-' and its Viability Rating (VR) at 'bbb-', both with a stable outlook. The agency also affirmed the ratings of Sohar International Bank and NBO at 'BB+' for their long-term IDRs and 'bb+' for their VRs, with stable outlooks.
Fitch said business conditions remained favourable for Omani banks, supported by high oil prices. It expects the impact of the Iran war on the country's operating environment to remain contained, noting that Oman is the most insulated country in the GCC from the conflict.
The agency also highlighted the government's commitment to economic diversification under Vision 2040, which it expects to continue supporting the banking sector.
Bank Muscat's higher ratings reflect its dominant market position, stable asset quality, stronger profitability than domestic peers, reasonable capital buffers and solid funding and liquidity. The bank accounted for approximately 31% of Oman's banking sector assets, 32% of loans and 30% of deposits at the end of the second quarter of 2026, according to the agency.
Fitch said the bank's strong government links, long-standing customer relationships and the country's largest branch network underpin its leading franchise, providing pricing power and access to high-quality borrowers. Its low-cost funding base also supports a strong net interest margin.
Sohar International's affirmation reflects the strengthening of its business profile following its merger with HSBC Bank Oman in 2023, which expanded its deposit franchise and market presence. It has since become Oman's second-largest bank, with a 19% share of total banking sector assets at the end of the first half of 2026, Fitch said.
However, Fitch highlighted higher risk concentrations in recent years, particularly in real estate and construction, which accounted for 17% of gross loans at the end of the second quarter, the highest proportion among the Fitch-rated Omani banks.
The bank's lending grew by sharp 20% in the first half of 2026, compared with 10% in 2024. Fitch expects Sohar International's loan growth to continue outpacing the sector in 2026, although it noted that rapid asset expansion had put pressure on capitalisation.
For NBO, Fitch's affirmation reflects its established domestic franchise, balanced retail and corporate banking operations, improving profitability, reasonable capitalisation and stable funding and liquidity and improving asset quality. The bank held a 12% share of Oman's banking sector assets at the end of the first half of 2026.
Across all three banks, Fitch's assessments also recognised the potential for support from Omani authorities, reflecting the importance of the banking system to the domestic economy and the risk of contagion within the sector in the event of financial stress.
The agency considers the authorities' propensity to support the banking system to be high, although their financial flexibility and ability to provide such support remain moderate, despite improvements in recent years.
Muscat Daily
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