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Rating Action:

Moody's downgrades the long-term ratings of seven Omani banks, changes outlook to negative from ratings under review

25 Jun 2020

Rating actions follow downgrade of the Omani government rating to Ba3 from Ba2

Limassol, June 25, 2020 -- Moody's Investors Service ("Moody's") has today downgraded the long-term local and foreign currency deposit ratings of seven Omani banks: Bank Muscat SAOG (Bank Muscat), HSBC Bank Oman SAOG (HBON), Bank Dhofar SAOG (Bank Dhofar), National Bank of Oman SAOG (NBO), Sohar International Bank SAOG (Sohar International), Oman Arab Bank (SAOC) (OAB) and Bank Nizwa SAOG (Bank Nizwa).

Moody's has changed the outlook to negative from ratings under review on the long-term deposit ratings of all seven banks.

At the same time, Moody's has downgraded the Baseline Credit Assessment (BCA) and Adjusted BCA of two Omani banks: Bank Muscat and HBON. In addition, Moody's has confirmed the BCAs and Adjusted BCAs of five banks: NBO, OAB, Bank Dhofar, Sohar International and Bank Nizwa.

The primary driver for today's rating actions is the Omani government's weakening capacity to support the local banks, as indicated by the downgrade of the Government of Oman issuer rating to Ba3 with a negative outlook from Ba2 with ratings under review.

A secondary driver of today's rating actions for Bank Muscat and HBON is the interlinkages between the sovereign's creditworthiness and the two banks' balance sheets, as the banks' strong standalone BCAs continue to be constrained at the level of the sovereign rating.

A full list of affected ratings is at the bottom of the press release.

RATINGS RATIONALE

-- DOWNGRADES OF DEPOSIT RATINGS REFLECT LOWER GOVERNMENT SUPPORT CAPACITY, AS WELL AS THE CONSTRAINT THAT THE SOVEREING RATING APPLIES ON THE STANDALONE CREDIT PROFILE OF TWO BANKS

The primary driver for today's rating action is the Omani government's weakened fiscal capacity to support the country's banks in case of need, as indicated by the downgrade of the sovereign rating to Ba3 from Ba2.

The downgrade in Oman's sovereign rating reflects Moody's conclusion that in a lower oil price environment, which the rating agency now assumes will persist into the medium term, the government will unlikely be able to significantly offset the oil revenue loss and avoid a large and durable deterioration in its debt and debt affordability metrics or erosion of its fiscal and foreign currency buffers. Please see "Moody's downgrades Oman's rating to Ba3, changes outlook to negative"; (https://www.moodys.com/research/--PR_426102).

Nonetheless, Moody's expects that the government's willingness to provide support to banks in case of need will remain 'high' or 'very high' (depending on the bank), reflecting the dominance of local banks in the domestic financial system and the significant government shareholdings and deposits in several banks.

The secondary driver for the rating action is, for Bank Muscat and HBON, the interlinkages between the sovereign's creditworthiness and the banks' balance sheets, given the banks' significant direct and indirect exposure to the Omani sovereign. These interlinkages ultimately constrain the strong standalone credit profiles (BCAs) of the two banks at the sovereign level.

In terms of governance considerations, Moody's does not have any particular governance concern for Omani banks. The conservative regulatory framework in Oman helps support the banks' governance practices.

Details of how these drivers affect the banks ratings are given in the bank specific sections below.

-- NEGATIVE OUTLOOKS REFLECT THE NEGATIVE OUTLOOK ON THE SOVEREIGN RATING

The change in outlook to negative from ratings under review on the Omani banks' long-term deposit ratings reflects the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity to support the country's banks in case of need.

The negative outlook on the sovereign rating captures material government liquidity and external vulnerability risks related to the government's large financing requirements and diminishing external buffers, which Moody's expects in the next few years. Slow and narrow implementation of fiscal adjustment, a possibility in light of the government's limited track record in this area, could raise liquidity and/or external vulnerability risks further.

-- BANK-BY-BANK SUMMARY OF ACTIONS

- Bank Muscat SAOG (Bank Muscat)

Moody's downgraded Bank Muscat's long-term local currency deposit rating to Ba3 from Ba2, and downgraded its BCA and Adjusted BCA to ba3 from ba2. Bank Muscat's long-term local currency deposit rating continues to be aligned with the rating of the Oman sovereign. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook on the bank's long-term deposit ratings to negative from ratings under review.

The downgrade of Bank Muscat's long-term local currency deposit rating reflects (i) the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating, and (ii) the interlinkages between the sovereign's creditworthiness and the bank's balance sheet, as reflected in the downgrade of the bank's BCA to ba3 from ba2.

The absence of government support uplift for the bank's local currency deposit rating, despite Moody's assessment of a 'very high' likelihood of government support in case of need, reflects the positioning of the bank's BCA at the same level as the sovereign rating.

The downgrade of the bank's BCA reflects the interlinkages between the sovereign's creditworthiness and the bank's balance sheet, given the bank's significant direct and indirect exposure to the Omani sovereign. The bank's strong standalone credit profile (BCA) continues to be constrained at the level of the sovereign rating, which was downgraded to Ba3 from Ba2. The downgrade of the BCA also reflects the rating agency's expectation for moderate asset quality weakening (reflected by a change in the financial profile to ba2 from ba1).

Bank Muscat's financial profile, as assessed by Moody's is now ba2, but the rating agency constrains the bank's BCA at ba3 (in line with the Oman sovereign rating) given the bank's significant direct and indirect exposure to the Omani sovereign (96% of its assets are located in Oman and 97% of its earnings are generated in Oman). The ba2 financial profile reflects Bank Muscat's solid asset quality, high capital (16.0% tangible common equity/risk-weighted assets as of March 2020) as well as its healthy profitability (1.0% net income/tangible assets) underpinned by a dominant domestic franchise (over 36% domestic asset market share). The bank's financial fundamentals also exhibit stable funding driven by its established deposit gathering franchise, along with sound liquidity.

The negative outlook on Bank Muscat's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- HSBC Bank Oman SAOG (HBON)

Moody's downgraded HBON's long-term local currency deposit rating to Ba2 from Ba1, downgraded its Adjusted BCA to ba2 from ba1, and downgraded its BCA to ba3 from ba2. HBON's long-term local currency deposit rating continues to be one notch above the rating of the Oman sovereign, owing to the affiliate support from which HBON benefits. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook on the bank's long-term deposit ratings to negative from ratings under review.

The downgrade of HBON's long-term local currency deposit rating reflects the interlinkages between the sovereign's creditworthiness and the bank's balance sheet, as reflected in the downgrade of the bank's BCA to ba3 from ba2.

The absence of government support uplift for the bank's deposit rating, despite Moody's assessment of a 'high' likelihood of government support in case of need, reflects the positioning of the bank's Adjusted BCA above the sovereign rating.

The downgrade of the BCA reflects the interlinkages between the sovereign's creditworthiness sheet and the bank's balance sheet, given the bank's significant direct and indirect exposure to the Omani sovereign. The bank's strong standalone credit profile (BCA) continues to be constrained at the level of the sovereign rating, which was downgraded to Ba3 from Ba2. The downgrade of the BCA also reflects the rating agency's expectation for moderate asset quality weakening (reflected by a change in the financial profile to ba2 from ba1).

The downgrade of the Adjusted BCA to ba2 from ba1 reflects the downgraded BCA to ba3 from ba2, combined with continued one notch of uplift from affiliate support from HSBC Holdings plc (senior unsecured A2 negative, BCA a2), HBON's ultimate parent. The one-notch of affiliate support uplift reflects HSBC Holdings plc's management control of HBON (51% ownership stake) via HSBC Middle East Holdings BV, combined with the strategic fit and brand name association of HBON with HSBC Holdings plc. The ba2 Adjusted BCA remains at the same level as the bank's Ba2 local currency deposit rating, both positioned one notch above the Ba3 issuer rating of the Oman government.

HBON's financial profile, as assessed by Moody's is now ba2, but the rating agency constrains the bank's BCA at ba3 (in line with the Oman sovereign rating) given the bank's significant direct and indirect exposure to the Omani sovereign (89% of its loans were located in Oman as of December 2019). The ba2 financial profile reflects HBON's high capitalisation (13.5% tangible common equity/risk weighted assets as of March 2020), sound profitability (1.2% net income/tangible banking assets as of December 2019 and -0.7% during Q1 2020 due to conservative reserve build in anticipation of higher credit losses amid the weakening operating environment), low market funding reliance (4.1% market funds/tangible banking assets) and high liquidity (36.5% liquid banking assets/tangible banking assets). Moody's does however expect the bank's asset quality to weaken modestly (2.3% problem loans/gross loans), owing to continued public spending restraint amid low oil prices.

The negative outlook on HBON's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- National Bank of Oman SAOG (NBO)

Moody's downgraded NBO's long-term local currency deposit rating to Ba3 from Ba2, and confirmed its BCA at ba3. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook on the bank's long-term deposit ratings to negative from ratings under review.

The downgrade of NBO's long-term local currency deposit ratings reflects the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating. The downgrade of the bank's long-term foreign currency deposit rating reflects the new relevant foreign currency deposit ceiling following the downgrade in the government's foreign currency issuer rating.

The confirmation of the BCA at ba3 reflects the bank's sound capitalisation (11.5% tangible common equity/risk-weighted assets as of March 2020) and healthy profitability (0.8% net income to tangible assets ratio). NBO also continues to maintain modest liquid resources and a concentrated funding base. The ba3 BCA also captures our expectation of weakening asset quality amid a challenging environment in the UAE and Oman. Nonetheless, we expect NBO's reduction in its lending exposure to the construction sector in Oman and to UAE borrowers (two segments that materially contributed to problem loan formation over recent years) to limit future problem loan formation. The bank's problem loans to gross loans ratio stood at 4.3% at end-March 2020, from 4.5% at end-2019. NBO reduced its loans to the volatile construction sector to 6% of gross loans as of December 2019 from 9% as of December 2016, and decreased its net loans to UAE borrowers to 2% of net loans as of December 2019 from 8% as of December 2016.

The negative outlook on NBO's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- Bank Dhofar SAOG (Bank Dhofar)

Moody's downgraded Bank Dhofar's long-term local currency deposit rating to Ba3 from Ba2, and confirmed its BCA and Adjusted BCA at ba3. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook on the bank's long-term deposit ratings to negative from ratings under review.

The downgrade of Bank Dhofar's long-term local currency deposit ratings reflects the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating. The downgrade of the bank's long-term foreign currency deposit rating reflects the new relevant foreign currency deposit ceiling following the downgrade in the government's foreign currency issuer rating.

The confirmation of the BCA at ba3 reflects the bank's sound capitalisation (11.8% tangible common equity/risk-weighted assets as of March 2020), sound profitability, modest market funding reliance (9.2% market funds/tangible banking assets) and healthy liquidity, reflecting access to large government-related deposits. However, Moody's expects the bank's asset quality to weaken gradually, reflecting its sizeable construction sector exposure (17% of gross loans).

The positioning of the bank's ba3 BCA at the top of the BCA range reflects the potential downward pressure on the bank's BCA that could result from a further weakening in asset quality and profitability.

The negative outlook on Bank Dhofar's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- Oman Arab Bank (SAOC) (OAB)

Moody's downgraded OAB's long-term local currency deposit ratings to Ba3 from Ba2, and confirmed its BCA and Adjusted BCA at ba3. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook to negative from ratings under review on the bank's long-term deposit ratings.

The downgrade of OAB's long-term local currency deposit ratings reflects the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating. The downgrade of the bank's long-term foreign currency deposit rating reflects the new relevant foreign currency deposit ceiling following the downgrade in the government's foreign currency issuer rating.

The confirmation of the BCA at ba3 reflects the bank's sound capitalisation (11.7% tangible common equity/risk-weighted assets), sound profitability, low market funding (2.2% market funds/ tangible banking assets) and modest liquidity (15.3% liquid banking assets/tangible banking assets). The ba3 BCA also captures the weakening of the bank's asset quality owing to delinquencies from some large borrowers in the stressed construction sector. The bank's problem loans increased to 3.3% of gross loans at end-2019 from 2.3% at end-2018, and loan loss reserves/problem loans declined to 70% at end-2019 from 108% at end-2018. However, OAB supplements its cash coverage with additional security in the form of real estate mortgages and government guarantees.

The confirmation of the BCA and adjusted BCA also follows Alizz Islamic Bank's (Alizz, fully-fledged Islamic bank operating in Oman) public announcement dated 17 June 2020 that Alizz and OAB have entered into a combination agreement.

The confirmation of OAB's BCA at ba3 also captures the rating agency's view that the forthcoming merger between OAB and Alizz is broadly credit neutral for OAB reflecting: (1) the combination of OAB's more established loan book with Alizz's recent high growth unseasoned financing book (combined pro-forma problem loans ratio estimated at 2.9% versus 3.3% for OAB standalone as of December 2019); (2) OAB's higher and resilient profitability benefiting from Alizz's growing Islamic domestic franchise (estimated combined pro-forma net income to tangible assets at 0.5% versus 1.1% for OAB standalone as of December 2019); (3) solid capital for both the entities (combined pro-forma tangible common equity to risk weighted assets at around 11% from 11.7% for OAB standalone as of year-end 2019); (4) low reliance on volatile market funding and modest liquidity (combined pro-forma market funds and liquid assets at 1.8% and 15.3% respectively versus 2.2% and 15.3% for OAB standalone as of December 2019) .

Moody's estimates that the combined entity would have total assets (conventional and Islamic) of around $ 8.4 billion, translating to a 9% market share of the Omani banking system, from OAB current 7% market share. The merger would provide OAB with a larger Islamic franchise and market share, allowing it to increase its interest income and enhance its deposit-gathering ability.

The negative outlook on OAB's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- Sohar International Bank SAOG (Sohar International)

Moody's downgraded Sohar International's long-term local currency deposit ratings to Ba3 from Ba2, and confirmed its BCA and Adjusted BCA at ba3. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook to negative from ratings under review on the bank's long-term deposit ratings.

The downgrade of Sohar International's long-term local currency deposit ratings reflects the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating. The downgrade of the bank's long-term foreign currency deposit rating reflects the new relevant foreign currency deposit ceiling following the downgrade in the government's foreign currency issuer rating.

The confirmation of the BCA at ba3 reflects the bank's sound liquidity (16.8% liquid banking assets/tangible banking assets) and gradually improving funding profile. Market funds to tangible banking assets remain high, but declined to 19.9% as of March 2020, from 22.8% at end-2019, 24.8% at end-2018 and 26.3% at end-2017. Net loans to deposits declined to 116% as of March 2020 from 124% at end-2018, and reliance on low-cost demand, savings and margin account deposits increased to 52% as of March from 44% at December 2018. Nonetheless, Moody's expects the bank's asset quality to continue to weaken (5.1% problem loans/gross loans as of March 2020, from 4.2% as of December 2019 and 2.9% as of December 2018), reflecting the effects of the coronavirus pandemic, the bank's sizeable construction exposure (15% of gross loans) and its rapid growth (9.8% during the year 2019). The bank exhibits modest buffers, with profitability at 0.6% net income/tangible banking assets in full-year 2019 (0.3% in Q1 2020), tangible common equity at 10.4% of risk weighted assets and problem loans coverage at 68%.

The positioning of the bank's ba3 BCA at the top of the BCA range reflects the potential downward pressure on the bank's BCA that could result from a further weakening in asset quality, profitability and capitalisation.

The negative outlook on Sohar International's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

- Bank Nizwa SAOG (Bank Nizwa)

Moody's downgraded Bank Nizwa's long-term local currency deposit ratings to Ba3 from Ba2, and confirmed its BCA and Adjusted BCA at b1. Moody's downgraded the bank's long-term foreign currency deposit rating to B1 from Ba3 in line with the new relevant foreign currency deposit ceiling. At the same time, the rating agency has changed the outlook to negative from ratings under review on the bank's long-term deposit ratings.

The downgrade of Bank Nizwa's long-term local currency deposit ratings reflects the Omani government's weakened fiscal capacity to support the bank in case of need, as indicated by the downgrade in the sovereign rating. The downgrade of the bank's long-term foreign currency deposit rating reflects the new relevant foreign currency deposit ceiling following the downgrade in the government's foreign currency issuer rating.

The confirmation of the BCA at b1 reflects the bank's sound capitalisation (13.2% tangible common equity/risk-weighted assets at end December 2019), combined with an improving modest profitability (1.0% net income/tangible banking assets) reflecting the bank's developing franchise. These strengths are moderated by rapid growth at 19% during the full year 2019, concentrated funding profile, limited liquid resources (17.1% liquid assets/tangible banking assets) and an evolving risk management framework.

The negative outlook on Bank Nizwa's long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Upwards pressure on the banks' long-term foreign currency ratings is limited given their positioning at the sovereign ceiling level, as well as the negative outlook. Nonetheless, a higher sovereign rating could lead to upwards pressure on the banks' ratings.

Downward pressure on Omani banks' ratings could develop through a deterioration in the sovereign's credit profile, or a material deterioration in the banks' solvency and liquidity.

RATING OUTLOOKS

The negative outlook on the Omani banks' long-term deposit ratings mirrors the negative outlook on the sovereign rating, which signals potential weakening in the Omani government's credit strength as well as in its capacity and willingness to support the country's banks in case of need.

LIST OF AFFECTED RATINGS

..Issuer: Bank Muscat SAOG

Downgrades, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Downgraded to ba3 from ba2

.... Baseline Credit Assessment, Downgraded to ba3 from ba2

.... Counterparty Risk Assessment, Downgraded to Ba2(cr) from Ba1(cr)

.... Long-term Counterparty Risk Ratings, Downgraded to Ba2 from Ba1

.... Subordinate Medium-Term Note Program, Downgraded to (P)B1 from (P)Ba3

.... Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba3 from (P)Ba2

.... Senior Unsecured, Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

.... Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

.... Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

..Issuer: HSBC Bank Oman SAOG

Downgrades, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Downgraded to ba2 from ba1

.... Baseline Credit Assessment, Downgraded to ba3 from ba2

.... Short-term Counterparty Risk Assessment, Downgraded to NP(cr) from P-3(cr)

.... Long-term Counterparty Risk Assessment, Downgraded to Ba1(cr) from Baa3(cr)

.... Short-term Counterparty Risk Ratings, Downgraded to NP from P-3

.... Long-term Counterparty Risk Ratings, Downgraded to Ba1 from Baa3

.... Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

.... Long-term Bank Deposits (Local Currency), Downgraded to Ba2 from Ba1, Outlook Changed To Negative From Rating Under Review

Affirmations:

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

.... Outlook, Changed To Negative From Ratings Under Review

..Issuer: National Bank of Oman SAOG

Downgrades, Previously Placed On Review For Downgrade:

....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba3 from (P)Ba2

....Senior Unsecured, Downgraded to Ba3from Ba2, Outlook Changed To Negative From Rating Under Review

....Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

....Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

Confirmations, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Confirmed at ba3

.... Baseline Credit Assessment, Confirmed at ba3

.... Long-term Counterparty Risk Assessment, Confirmed at Ba2(cr)

.... Long-term Counterparty Risk Ratings, Confirmed at Ba2

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

..Issuer: Bank Dhofar SAOG

Downgrades, Previously Placed On Review For Downgrade:

....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba3 from (P)Ba2

....Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

....Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

Confirmations, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Confirmed at ba3

.... Baseline Credit Assessment, Confirmed at ba3

.... Long-term Counterparty Risk Assessment, Confirmed at Ba2(cr)

.... Long-term Counterparty Risk Ratings, Confirmed at Ba2

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

..Issuer: Oman Arab Bank (SAOC)

Downgrades, Previously Placed On Review For Downgrade:

....Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

....Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

Confirmations, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Confirmed at ba3

.... Baseline Credit Assessment, Confirmed at ba3

.... Long-term Counterparty Risk Assessment, Confirmed at Ba2(cr)

.... Long-term Counterparty Risk Ratings, Confirmed at Ba2

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

..Issuer: Sohar International Bank SAOG

Confirmations, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Confirmed at ba3

.... Baseline Credit Assessment, Confirmed at ba3

.... Long-term Counterparty Risk Assessment, Confirmed at Ba2(cr)

.... Long-term Counterparty Risk Ratings, Confirmed at Ba2

Downgrades, Previously Placed On Review For Downgrade:

.... Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

.... Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

..Issuer: Bank Nizwa SAOG

Downgrades, Previously Placed On Review For Downgrade:

....Long-term Bank Deposits (Foreign Currency), Downgraded to B1 from Ba3, Outlook Changed To Negative From Rating Under Review

....Long-term Bank Deposits (Local Currency), Downgraded to Ba3 from Ba2, Outlook Changed To Negative From Rating Under Review

.... Long-term Counterparty Risk Assessment, Downgraded to Ba3(cr) from Ba2(cr)

.... Long-term Counterparty Risk Ratings, Downgraded to Ba3 from Ba2

Confirmations, Previously Placed On Review For Downgrade:

.... Adjusted Baseline Credit Assessment, Confirmed at b1

.... Baseline Credit Assessment, Confirmed at b1

Affirmations:

.... Short-term Counterparty Risk Assessment, Affirmed NP(cr)

.... Short-term Counterparty Risk Ratings, Affirmed NP

.... Short-term Bank Deposits, Affirmed NP

Outlook Actions:

....Outlook, Changed To Negative From Ratings Under Review

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Banks Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

The local market analyst for these ratings is Mik Kabeya, +971 (423) 795-90.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Nondas Nicolaides
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Sean Marion
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Cyprus Ltd.
Porto Bello Building
1, Siafi Street, 3042 Limassol
PO Box 53205
Limassol CY 3301
Cyprus
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
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