Muscat – Total outstanding credit extended by Oman’s banking sector, including both conventional and Islamic banks, grew by 3.8% year-on-year to reach RO31.4bn as of June 2024, according to the statistics released by the Central Bank of Oman (CBO).

Within this total, bank credit to the private sector increased by 3.4% to RO26.3bn. Non-financial corporations received the largest share of private sector credit at 45.2% as of the end of June 2024, followed closely by the household sector at 44.8%. Financial corporations accounted for 6.4%, while other sectors received the remaining 3.6% of private sector credit.

Conventional banks’ total outstanding credit grew by 2.3% year-on-year in June 2024, as per the data given in the CBO’s monthly statistical bulletin.

Credit to the private sector by conventional banks rose by 1.6% to RO20.5bn, while their overall investments in securities increased significantly by 22.4% to RO5.6bn, according to the data.

However, banks’ investment in government development bonds decreased by 8.3% year-on-year to RO1.9bn in June, while their investments in foreign securities surged by 67.9% to RO2.2bn.

On the other hand, total deposits in Oman’s banking sector grew by 11.6% to RO30.7bn as of June 2024, compared to the same period the previous year.

Private sector deposits increased by 14.8% to RO20.7bn. The household sector contributed the most to private sector deposits at 51.8%, followed by non-financial corporations at 29.6%, financial corporations at 15.6%, and other sectors at 2.9%.

Deposits held with conventional banks grew by 10.9% year-on-year to RO24.7bn as of June 2024. Private sector deposits, which made up 66.8% of total deposits with conventional banks, increased by 11.5% to RO16.5bn.

Government deposits with conventional banks slightly decreased by 0.9% to RO5.3bn, while deposits of public enterprises increased by 12.1% to RO1.8bn.

Islamic banking assets reach RO7.8bn

The total assets of Islamic banks and windows in Oman increased by 11.4% year-on-year, reaching RO7.8bn by the end of June 2024. Islamic assets now constitute approximately 18.1% of the total banking system assets in Oman as of the end of June 2024.

Islamic banking entities provided financing amounting to RO6.4bn at the end of June 2024, reflecting a growth of 10.4% compared to the previous year. Total deposits held with Islamic banks and windows increased by 14.7% to RO6bn.

Interest rates rise

Interest rates in Oman saw a slight increase during the first half of this year. According to CBO data, the weighted average interest rate on Omani rial deposits with conventional banks rose from 2.313% at the end of June 2023 to 2.651% by the end of June 2024, while the weighted average lending rate increased from 5.434% to 5.581% over the same period.

Meanwhile, the overnight Omani rial domestic inter-bank lending rate increased to 5.402% in June 2024, up from 5.350% a year earlier.

‘This rise in the domestic inter-bank lending rate is a result of the increase in the average repo rate for liquidity injection by the CBO, which moved to 6.00% from 5.750% a year ago, following the US Federal Reserve rate hikes,’ the CBO stated in its bulletin.

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