Omani banks’ credit fundamentals have shown resilience to shock caused by the pandemic, and the recovery is expected to continue in 2022, according to a recent note by Fitch Ratings. This should be influenced by higher interest rates, supportive government measures and the recent rebound in oil prices. Despite the gross domestic product contraction of 3.2 percent in 2020, the banks’ performance metrics recovered substantially in 2021. The rating agency has revised the outlook of Omani banks from negative to stable in January 2022 to reflect improved operating conditions, and the revised outlook of the sovereign rating from negative to stable in December 2021. Omani banks are highly exposed to the sovereign risk through lending to the government and holdings of Omani government securities. Fitch Rating reported that asset quality will remain a risk in 2022 due to banks’ exposure to vulnerable sectors particularly real estate, contracting and hospitality, and to the rising interest rates which could impact borrowing. However, the impact will be manageable at the current rating levels according to the agency.