Muscat: Oman’s conventional banks have achieved a robust 8.6 per cent year-on-year growth in credit disbursements, which stood at OMR19.4 billion by the end of June 2016.
Of this, credit to the private sector grew by 9.8 per cent to reach OMR17.1 billion in the first half, according to banking and monetary review released by the Central Bank of Oman (CBO) on Wednesday.
“Despite the challenges facing the economy, the banking sector remained resilient supporting economic diversification initiatives and credit needs,” the CBO report said.
The total assets of conventional banks increased by 6.1 per cent to OMR29.1 billion by end-June 2016 from OMR27.4 billion for the same period a year ago.
The CBO report said that the aggregate deposits held by conventional banks registered a modest fall of 1.6 per cent to OMR18.2 billion in June 2016 from OMR18.5 billion a year ago. “Government deposits with conventional banks declined by 10.5 percent to OMR4.8 billion,” said the CBO report.
However, deposits of public enterprises increased by 4.2 per cent to OMR1.1 billion during the same period. Private sector deposits, which constituted 65.8 per cent of total deposits with conventional banks, increased by 2.1 per cent to OMR12 billion in June 2016 from OMR11.7 billion a year ago.
Also, conventional banks’ overall investments in securities stood at OMR2.6 billion as at the end of June 2016. Investment in government development bonds and government sukuk increased by 37.9 per cent over the year to OMR920.6 million at the end of June 2016. Banks also invested OMR420.5 million in government treasury bills as at the end of June 2016. Conventional banks’ investments in foreign securities stood at OMR667.4 million in June 2016.
Besides, the core capital and reserves of conventional banks stood at OMR3.7 billion as at the end of the June 2016, a rise of 12.2 per cent over the previous year.
Islamic banking entities provided financing to the extent of OMR2.1 billion as at the end of June 2016, compared to OMR1.4 billion a year ago. Total deposits held with Islamic banks and windows also registered a significant increase to OMR1.8 billion in June 2016 from OMR1.1 billion outstanding as at the end of June 2015.
The CBO report noted that with oil prices continuing to remain low, the current account which registered a deficit in 2015 is expected to be in deficit mode in 2016 as well. With inflation based on the average annual CPI remaining low at 0.74 percent during the first half of 2016, the CBO continued with its accommodative monetary policy stance and made revisions to the reserve requirement leaving more money in the hands of banks to facilitate lending requirements.
In respect of domestic interest rate structure of conventional banks, the weighted average interest rate on rial Omani deposits firmed up from 0.885 per cent in June 2015 to 1.182 per cent in June 2016, while the weighted average rial Omani lending rate marginally decreased from 4.859 per cent to 4.854 per cent during the same period. The overnight rial Omani domestic inter-bank lending rate firmed up to 0.412 percent in June 2016 from 0.131 per cent a year ago.