Capital Intelligence Ratings (CI Ratings or CI), the international credit rating agency, has revised the Long- and Short-Term ratings on the Oman National Scale of Alizz Islamic Bank to ‘omA+’ (from ‘omBBB-’) and ‘omA1’ (from ‘omA3’). The Outlook on the ratings is ‘Stable’.
The change in the ratings reflects the recalibration of the National Rating Scale for Oman, as well as the repositioning of entities and issues rated on that scale, following the recent downgrade of Oman’s sovereign ratings.
National Scale Ratings provide a measure of relative creditworthiness within a particular country and are derived in part from international ratings using country-specific maps. The sovereign’s international ratings serve as the reference point for national ratings in Oman and due to the lowering of the sovereign’s ratings some international scale grades now correspond to higher grades on the national scale than they did previously. The upward movement in the national rating should not, therefore, be interpreted as indicating an improvement in fundamental creditworthiness.
The supporting factors for the rating are a strong and experienced management team, the quality of the regulatory supervision of the Central Bank of Oman, good asset quality and a satisfactory capital position. Constraining factors were the tightening liquidity and the continuing losses at both the operating and net levels. These losses had begun to erode the capital base and together with rapid asset growth, reduce what had been a very high capital adequacy ratio (CAR).
Although Alizz still made a loss at both levels for 2017 as a whole, it was in profit for both in Q4 2017 and management expects this to remain the case going forward. A planned OMR30 million Tier I capital debt issue will go ahead shortly. This will both reinforce CAR and add additional liquidity.