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Bank Dhofar's Foreign Currency Long-Term Ratings Upgraded  Join our daily free Newsletter

MENAFN Press - 18/11/2010

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(MENAFN Press) 18 November 2010


Capital Intelligence (CI), the international credit rating agency, today announced that it has raised Bank Dhofars (BD) Foreign Currency Long-term and Short-term ratings to BBB and A2 respectively, from BBB and A3. The rating upgrade reflects CIs increased confidence that government support for the local banking sector will be high in case of need. However, the Support rating is unchanged at 3 since ownership is largely in private hands. The Financial Strength rating is maintained at BBB. BDs H1 2010 results have been good overall, with asset quality, liquidity and profitability ratios recording improvements. The Outlook for all the ratings is therefore Stable. The Banks small size remains a constraining factor in the ratings.

BDs asset growth slowed substantially in 2009, reflecting the difficult economic climate in the country. Despite the deterioration of key financial ratios, the Banks overall performance last year was reasonably good. The Banks leading profitability indicators have declined over the last several years, but the major businesses continue to be profitable. Operating profit rose strongly last year on the back of good growth in net interest income, but a substantial increase in impairment provisions for loans led to a relatively small increase in net profit. BDs non-interest revenues, particularly from off-balance sheet activities, remain lower than those of its peers. This is being addressed through several strategic initiatives such as the establishment of a dedicated trade finance department and the development of the investment banking business.

BDs asset quality ratios weakened last year, but non-performing loans (NPLs) continued to be at a reasonably low level and loan-loss reserves exceeded NPLs, as they have for more than a decade. The capital adequacy ratio was good at end 2009, although not the best in its peer group. Liquidity ratios have worsened in recent years and BDs principal liquidity ratios continue to be tighter than the industry average. The high level of loans and advances on the balance sheet has contributed to the Banks wider than industry average net interest spreads, but this has also led to the tighter liquidity.

The Bank commenced operations in January 1990 and is owned 30% by an investment company- the Dhofar International Development and Investment Holding Company (DIDIC). BD is a full-scale commercial bank offering a wide variety of retail and corporate banking services. Retail banking activities make a significant contribution to the Banks operating profit, but income from corporate banking activities has grown in recent years. The Banks principal business groups are Wholesale Banking, Consumer Banking, Treasury and International Banking, Private Clients and Investment Management.


Primary Analyst
Karti Inamdar
Senior Credit Analyst
Tel: 0091 124 239 2142

Secondary Analyst
Tom Kenzik
Senior Credit Analyst

Rating Committee Chairman
Chris Nicolaou
Senior Credit Analyst

The information source used to prepare the credit ratings is the rated entity. Capital Intelligence had access to the accounts and other relevant internal documents for the purpose of the rating, and considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.

The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in September 1993. The ratings were last updated in August 2009.
The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default can be found at

About Capital Intelligence (Cyprus) Ltd.
Capital Intelligence (CI) has been providing credit analysis and ratings since 1985, and now rates over 400 Banks, Corporates and Financial Instruments (Bonds & Sukuk) in 39 countries. A specialist in emerging markets, CIs geographical coverage includes the Middle East, the wider Mediterranean region, Central and Eastern Europe, South Asia, South-East Asia, the Far East, and North and South


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