Constraining the FSR is the bank's very tight liquidity metrics customer deposit funding concentrations low non-interest income coupled with margin compression CI said in a statement on Tuesday. It said the challenging operating environment as a result of a fall in oil price is also a rating constraint.

The international ratings agency said given the level of ownership and management control by the strategic shareholder Ahli United Bank (AUB) under the technical and management services agreement (TMSA) the bank's long and short-term foreign currency ratings are affirmed at BBB+ and A2 respectively. The outlook for all the ratings remains 'stable'.

'Ahlibank is a well managed institution following a prudent credit policy and executing a clear business strategy. Risk management and systems benefit from the expertise provided by AUB the largest shareholder under the five-year renewable TMSA between Ahlibank and AUB' CI said.

It said Ahlibank continues to successfully expand and diversify its business franchise in Oman while gaining larger shares of the loan and customer deposit markets.

'Although non-performing loans (NPLs) grew further in the first half of the current year albeit from a low base Ahlibank's loan asset quality remains very sound as demonstrated by an exceptionally low NPL to gross loans ratio and more than full loan-loss reserve coverage' CIsaid.