The total outstanding credit provided by Oman’s banking sector, encompassing both conventional and Islamic banks, experienced a year-on-year growth of 3.8 percent, reaching OMR31.4 billion ($81.56 billion) as of June 2024, according to data from the Central Bank.
In this total, bank credit to the private sector rose by 3.4 percent to OMR26.3 billion. Non-financial corporations were the primary recipients of private sector credit, accounting for 45.2 percent, followed closely by households at 44.8 percent. Financial corporations made up 6.4 percent, while other sectors received the remaining 3.6 percent of private sector credit.
The total outstanding credit from conventional banks grew by 2.3 percent year-on-year in June 2024, as reported in the CBO’s monthly statistical bulletin.
Credit to the private sector from conventional banks climbed by 1.6 percent to OMR20.5 billion. Additionally, their overall investments in securities saw a notable increase of 22.4 percent, reaching OMR5.6 billion.
Moreover, banks’ investments in government development bonds fell by 8.3 percent year-on-year to OMR1.9 billion in June, while investments in foreign securities surged by 67.9 percent to OMR2.2 billion.
In terms of deposits, Oman’s banking sector witnessed an 11.6 percent increase, reaching OMR30.7 billion as of June 2024 compared to the same period last year.
Private sector deposits
Private sector deposits rose by 14.8 percent to OMR20.7 billion. The household sector was the largest contributor to private sector deposits, making up 51.8 percent, followed by non-financial corporations at 29.6 percent, financial corporations at 15.6 percent, and other sectors at 2.9 percent.
Deposits at conventional banks grew by 10.9 percent year-on-year, reaching OMR24.7 billion as of June 2024. Private sector deposits, which constitute 66.8 percent of total deposits at conventional banks, increased by 11.5 percent to OMR16.5 billion.
Government deposits with conventional banks saw a slight decline of 0.9 percent to OMR5.3 billion, while deposits from public enterprises rose by 12.1 percent to OMR1.8 billion.
Islamic banking assets
The total assets of Islamic banks and windows in Oman increased by 11.4 percent compared to the previous year, totaling OMR7.8 billion by the end of June 2024. Islamic banking assets now represent approximately 18.1 percent of the total assets within Oman’s banking system.
Islamic banking entities provided financing totaling OMR6.4 billion at the end of June 2024, marking a growth of 10.4 percent compared to the previous year. Deposits held with Islamic banks and windows also increased by 14.7 percent, reaching OMR6 billion.
Interest rates rise
Interest rates in Oman experienced a slight uptick during the first half of this year. According to CBO data, the weighted average interest rate on Omani rial deposits at conventional banks rose from 2.313 percent at the end of June 2023 to 2.651 percent by the end of June 2024. Similarly, the weighted average lending rate increased from 5.434 percent to 5.581 percent during the same period.
Furthermore, the overnight Omani rial domestic inter-bank lending rate rose to 5.402 percent in June 2024, up from 5.350 percent a year earlier.
The CBO indicated that the increase in the domestic inter-bank lending rate was attributed to the rise in the average repo rate for liquidity injection by the CBO, which had increased to 6.00 percent from 5.750 percent a year earlier, in response to rate hikes by the U.S. Federal Reserve.
For more news on banking & finance, click here.
