Oman’s commercial banks have posted a remarkable surge in profits for the first three quarters of 2023, driven by rising interest rates, accelerated economic growth, and enhanced operational efficiency.
The cumulative profit of RO 177.3 million for Oman’s commercial banks in the first nine months of 2023 represents a significant 44.2% increase from the corresponding period in 2022.
Oman Arab Bank leads the pack with profits of RO 17.9 million, a notable 68.9% increase from its 2022 performance. Ahli Bank follows suit with profits of RO 29.29 million, marking a 17% gain compared to 2022. Sohar International Bank reports a robust profit of RO 45.69 million, signaling an impressive 62.7% growth compared to 2022. BankDhofar showcases profits of RO 31.022 million, depicting an 18.87% increase from 2022. Bank Nizwa registers profits of RO 11.68 million, marking a steady 9% growth compared to 2022. National Bank of Oman posted profits of RO 43.33 million, representing a 22% increase from the prior year.
The upturn in profits can be attributed to several key factors:
Rising Interest Rates: The Central Bank of Oman’s decision to increase interest rates has notably amplified loan yields.
Accelerated Economic Growth: Oman’s economy has experienced significant growth in 2023, resulting in a heightened demand for credit.
Enhanced Operational Efficiency: Omani commercial banks have refined their operational procedures, ultimately reducing costs.
The substantial profits reported by Omani commercial banks bode well for economic expansion. These financial institutions plan to reinvest their profits, which will, in turn, catalyze increased investment and overall growth in the Omani economy.
Recently, Fitch Ratings upgraded the Long-Term Issuer Default Ratings (IDRs) for five prominent Omani banks: Bank Muscat, Bank Dhofar, Sohar International Bank, Ahli Bank, and National Bank of Oman. This positive shift aligns with Oman’s sovereign rating upgrade on September 25, 2023. It reflects Fitch’s belief in an improved likelihood of support from Omani authorities and improved business conditions that will enhance the intrinsic credit profiles of these banks.
These upgrades also hold promise for the Omani economy, as they will bolster investment and foster growth.
Oman Daily Observer
