Fitch affirms national ratings for United Finance Company; outlook stable

The ratings reflect UFC's leading position in the Omani finance and leasing sector and consistent financial performance. Constraining factors are UFC's relatively small size, risks inherent in the sector, and reliance on a small and undiversified economy.

Fitch recognises the progress made by UFC in the last three years in terms of robust business expansion and strong financial indicators.

Operating revenues have grown yoy, supported by rising loan volumes, high margins and good cost control. Provision costs, although increased in 2006 due to one large loan in arrears, are now declining with better asset quality.

Fitch, however, cautions that recent fast growth in lending could lead to future delinquencies, and is therefore a moderate concern. Liquidity and capitalisation levels remain satisfactory and key factors supporting the rating. Looking ahead, UFC's prospects appear bright given the continuing boom in Oman's retail and SME sectors and the likelihood that the Omani economy will remain buoyant at least in the short to medium-term.

UFC is the largest of six finance companies operating in Oman with a market share of around 25%. The company offers a wide range of products including loans, hire purchase, leasing, real estate finance and non-conventional finance. UFC is 20%-owned by Oman-based Global Financial Investments and 20% by Global Investment House in Kuwait (Long-term foreign currency IDR 'BBB').