Fitch affirms Oman International Bank at 'BBB+'/'F2'; Outlook Stable

OIB's IDRs reflect the high probability of support available from the Omani authorities, if needed. Fitch's assessment of support is based on OIB's systemic importance and the Central Bank of Oman's past history of support for the sector. The Individual rating reflects OIB's good franchise as well as comfortable profitability and sound capital and liquidity ratios. The rating also considers the bank's reliance on a narrow domestic market and large loan and deposit concentrations.

OIB has recently appointed several senior managers, including a new General Manager. Following a review of its medium-term strategy in early 2008, the bank aims to resume lending more aggressively, particularly in local retail and corporate sectors. This should be achievable, with no significant change in its risk profile, given OIB's market position and stable franchise. It is also in the process of expanding its branch network.

'We would view domestic expansion positively, as the bank's decision to focus primarily on low-risk business led to modest loan and profit growth in the past 18 months compared to the sector' says Mahin Dissanayake, Associate Director in Fitch's Financial Institutions team. 'That said, OIB's margins and profitability ratios have been resilient and compare well with its peer group'. 'Asset quality is improving, and liquidity and capital ratios continue to be strong, indicating that OIB's financial indicators, for now, remain robust,' adds Mr Dissanayake.

OIB is the third-largest bank in Oman with 82 branches and 104 ATMs across Oman. International operations are limited to two branches each in India and in Pakistan. The bank's main shareholder is Dr. Omar Al Zawawi who, together with the diversified business group, Omar Zawawi Establishment, controls a stake of around 40%. OIB is listed on the Muscat Securities Market.