Muscat: Private sector deposits, which accounted for 65.7 percent of total deposits with conventional banks, increased by 9.7 percent as of March 2024 to reach OMR16 billion.

The combined balance sheet of conventional banks showed a year-on-year growth of 0.8 percent in total outstanding credit as of end-March 2024.

“Credit to the private sector increased by 1.6 percent to reach OMR20.3 billion while their overall investments in securities witnessed a increased by 28.0 percent to OMR5.7 billion at the end-March 2024,”as per the preliminary data released by National Centre for Statistics and Information (NCSI).

Investment in Government Development Bonds (GDBs) decreased by 17.1 percent to OMR1.8 billion, while foreign securities increased dramatically by 139.0 percent to OMR2.3 billion, at the end of March 2024.

On the liabilities side, aggregate deposits held with the conventional banks increased by 10.2 percent year-on-year to OMR24.4 billion at end-March 2024. Government deposits with conventional banks witnessed a decrease of 2.8 percent at OMR 5.2 billion, and deposits of public enterprises increased by 38.1 percent to OMR2.5 billion.

The nominal GDP, as per the preliminary data released by the NCSI, showed a decline of 2.8 percent at the end of the fourth quarter of 2023 over the same period of 2022. Despite the increase in the non-hydrocarbon sector by 1.7 percent, the contraction was driven by a decrease in output of the hydrocarbon sector by 11.9 percent.

As for the real gross domestic product (GDP), it demonstrates an increase of 1.3 percent during the same period under discussion. Similarly, this expansion was driven by 0.4 percent of the hydrocarbon sector and 2.4 percent of the non-hydrocarbon sector. The Omani oil average price at end of March 2024 at $79.7 per barrel was lower by 2.2 percent than that in March 2023. The average daily oil production at 998.7 thousand barrels as of March 2024 decreased by 6.1 percent. The Sultanate's average Consumer Price Index (CPI) showed a year-on-year inflation of 0.03 percent as of March 2024.

Other depository corporations (ODCs) consist of conventional and Islamic banks in Oman. Total outstanding credit extended by ODCs grew by 2.9 percent to OMR30.8 billion at the end of March 2024, with credit to the private sector demonstrating an increase of 3.6 percent year-on-year to reach OMR25.9 billion.

Non-financial corporations received the highest share of the total private sector credit at approximately 45.4 percent at end-March 2024, followed by the household sector at 45.0 percent. The share of financial corporations was 5.8 percent while other sectors received the remaining 3.8 percent of total private sector credit as at end-March 2024.

Total deposits held with ODCs registered a year-on-year significant growth of 11.7 percent to reach OMR 30.3 billion at the end of March 2024. Total private sector deposits increased by 13.7 percent to OMR20.2 billion. In terms of sector-wise composition of private sector deposits, the biggest contribution is from household deposits at 49.8 percent, followed by non-financial corporations at 30.9 percent, financial corporations at 16.5 percent and other sectors at 2.8 percent.

Meanwhile, the total assets of Islamic Banks and Windows increased by 14.8 percent on a year-n-year basis to OMR7.6 billion and constituted about 17.7 percent of the banking system's assets at end-March 2024. Islamic banking entities provided financing of OMR6.3 billion at the end of March 2024, recording a growth of 12 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 18.6 percent to OMR 5.8 billion.

Among the indicators of monetary aggregates, broad money supply M2 at end-March 2024 increased by 15.2 percent to reach OMR24.2 billion. This is attributed to the increase in narrow money (M1) by 9.2 percent, along with 17.5 percent 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 fell by 2.5 percent, while demand deposit increased by 12.4 percent.

The weighted average interest rate on OMR deposits with conventional banks witnessed an increase from 2.124 percent at end-March 2023 to 2.642 percent at end-March 2024, and the weighted average lending rate increased from 5.381 percent to 5.563 percent over the same period.

Meanwhile, the overnight Rial Omani domestic interbank lending rate rose to 5.086 percent in March 2024 from 5.073 percent a year ago. This is an outcome of the increase in the average Repo rate for liquidity injection by the CBO to 6 percent from 5.323 percent a year ago, moving with the US Fderal Reserve.

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