Coronavirus adds to challenges facing Omani banks: Fitch – ZAWYA

Coronavirus adds to challenges facing Omani banks: Fitch – ZAWYA

Coronavirus adds to challenges facing Omani banks: Fitch | ZAWYA MENA Edition HomeBusinessFinancial ServicesArticleCoronavirus adds to challenges facing Omani banks: Fitch The sector's average operating profit/risk-weighted assets ratio fell in 2019 to 1.6%    Image used for illustrative purpose. LONDON “” The spread of coronavirus will add pressure to Omani banks and a domestic operating environment that was already increasingly challenging prior to the outbreak, Fitch Ratings said in a new report. Fitch expects the weakening operating environment to weigh heavily on the banking sector during 2020, particularly on asset quality, earnings and potentially capital.Oman's GDP fell 1.3% in 2019 and growth prospects are even worse for 2020-2021 (2020: -5.6%; 2021: -0.6%). The economic disruption caused by the pandemic, combined with lower oil prices, is likely to accelerate the economic slowdown and result in further downward revisions of growth forecasts and higher risks to bank's asset quality.Loan-book quality had been coming under pressure prior to the health crisis from an increasingly challenging operating environment, notably through lower government spending. The average Stage 3 loans/gross loans ratio was 4% at end-1Q20 and did not yet reflect the impact of the pandemic.LONDON “” The spread of coronavirus will add pressure to Omani