Fitch affirms Oman Arab Bank At 'BBB+'/'F2'; Outlook Stable

OAB's Long- and Short-term IDRs reflect the expected high probability of support from the Omani authorities in case of need. This is based on the bank's systemic importance and the Central Bank of Oman's strong history of support. Fitch also views there to be a high probability of support from one of OAB's shareholders, Arab Bank Group (rated 'A-' (A minus)/'F1'/Stable).

The Individual rating reflects OAB's strong corporate franchise, moderate, but consistent profitability and the significant benefits gained from being a member of the Arab Bank group. These are balanced by the bank's relatively small size, large concentrations in loans and deposits and reliance on a relatively small economy.

OAB reported a net profit of OMR8.8m for the six months ended 30 June 2007 on the back of healthy recurring revenues, good cost control and low impairment charges. OAB is traditionally strong in trade finance, corporate banking and project finance and has therefore gained from increased opportunities in Oman to grow its loan book and fee based income. Asset quality is improving and better than most of its peers. The bank is adequately capitalised with a Fitch eligible capital ratio of 14.1% and a Basel II Tier 1 ratio of 13.2% at end-H107.

OAB is a medium-sized, full service commercial bank. Operations are solely within Oman and are conducted through 39 branches. It is 51%-owned by Oman International Development and Investment Company, a local investment company, and 49% by the Arab Bank Group. Management control is in the hands of the Arab Bank Group, which also provides OAB with technical and management services, including the secondment of staff under a management contract. The Arab Bank Group is a Jordan-based bank with operations throughout the Middle East, Western Europe and other international financial centres.