Moody's Investors Service announced changing its outlook from stable to negative on the A1 senior unsecured debt and deposit ratings of Oman’s Bank Muscat, the A2 deposit ratings of Oman Arab Bank and the A3 deposit ratings of Bank Dhofar, National Bank of Oman Limited and HSBC Bank Oman.

“The negative outlook on the banks' deposit ratings is driven by the rating agency's assessment that the government's capacity to support the banks is weakening, as implied by the recent change in outlook on the government bond rating to negative from stable,” Moody’s revealed in a statement on its official website.

The decision to affirm the banks' ratings reflects Moody’s view that the Omani banks' creditworthiness will remain broadly resilient, in spite of “economic headwinds stemming from lower oil prices”, added to Moody's view of a very high probability that the government would extend support to the banking sector, in case of need.

The Sultanate of Oman has several strong factors that support its credit rating including a possibility that its gross domestic product (GDP) will continue growing, despite expectations that it will drop by 2.6% till 2018 against 4.7% between 2004 and 2013. This will be due to the decline in oil prices, a report by Moody’s noted last week.