Total banking sector credit climbs to RO 28.2 bn: CBO

MUSCAT: Total outstanding credit of licensed conventional and Islamic banks in the Sultanate of Oman – collectively known as Other Depository Corporations (ODCs) — grew by 3.9 per cent to RO 28.2 billion at the end of April 2022, the Central Bank of Oman (CBO) stated in its monthly report on banking and financial sector developments. Of this total, credit to the private sector demonstrated a slight increase of 1.2 per cent (Y-o-Y) to reach RO 23.6 billion, the report noted.

Non-financial corporations received the highest share of the total private sector credit, at approximately 45.6 per cent at end-April 2022, followed by the household sector (45.3 per cent). The share of financial corporations was 5.4 per cent while other sectors received the remaining 3.7 per cent of total private sector credit as of end-April 2022.

Total deposits held with ODCs registered a Y-o-Y growth of 3.3 per cent to reach RO 25.8 billion at the end of April 2022. Total private sector deposits decreased by 0.2 per cent to RO 17.2 billion. In terms of sector-wise composition of private sector deposits, the biggest contribution is from household deposits at 53 per cent, followed by non-financial corporations (29.2 per cent), financial corporations (14.9 per cent) and other sectors (0.8 per cent).

The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.7 per cent in total outstanding credit as of end-April2022. Credit to the private sector increased by 0.2 per cent to reach RO19.1 billion while their overall investments in securities went up by 10 per cent to RO 5.3 billion at the end of April 2022.

Investments in Government Development Bonds decreased by 2.5 per cent compared to the same period last year to RO 2.1 billion, while their investments in foreign securities declined by 1.5 per cent to RO 0.87 billion at the end of April 2022.

On the liabilities side, aggregate deposits held with the conventional banks increased by 1.7 per cent Y-o-Y to RO 21.2 billion at end-April 2022. Government deposits with conventional banks witnessed an increase of 13.6 per cent at RO 5 billion, and deposits of public enterprises increased by 11.7 per cent to RO 1.4 billion. Private sector deposits, which accounted for 67.6 per cent of total deposits with conventional banks, decreased by2.7 per cent as of April 2022 to reach RO 14.4 billion.

The total assets of Islamic Banks and Windows increased by 11.2 per cent on a Y-o-Y basis to RO 6.1 billion and constituted about 15.6 per cent of the banking system’s assets as at end- April 2022. Islamic banking entities provided financing of RO 5 billion at the end of April 2022, recording a growth of 9.9 per cent over that a year ago. Total deposits held with Islamic banks and windows increased by 11.8 per cent to RO 4.5 billion.

Among the indicators of monetary aggregates, broad money supply M2 at end- April 2022 increased by 1.7 per cent to reach RO20.4 billion. Despite the decline in narrow money (M1) by 1.5 per cent, the increase in M2 is attributed to the 3.0 per cent increase in quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits). Looking at components of narrow money (M1) during the same period, currency with the public increased by 2.6 per cent, while demand deposit fell by 2.8 per cent.

The weighted average interest rate on RO deposits with conventional banks witnessed a marginal decrease from 1.976 per cent at end April 2021 to 1.891 percent at end-April 2022, while the weighted average RO lending rate decreased from 5.498 per cent to 5.469 per cent over the same period. Meanwhile, the overnight Rial Omani domestic inter-bank lending rate rose to 0.630 per cent in April 2022 from 0.394 per cent a year ago. The average Repo rate for liquidity injection by the CBO at end- April 2022 witnessed an increase, for the first time since March 2020, to 0.717 from 0.5.