Combined assets of banks climb 49.1pc to RO12.3b |
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MUSCAT -- Combined assets of the commercial banks in the country expanded to RO12.3 billion at the end of July 2008, representing a strong growth of 49.1 per cent on year-on-year basis, the Central Bank of Oman (CBO)Central Bank of Oman (CBO)
said yesterday. "The performance of the banking sector and the overall monetary conditions in Oman in the first seven months of 2008 reflected the needs and ramifications of robust economic growth, driven by high oil prices as well as strong non-oil economic activities," the apex bank said.
The fast expansion in assets was driven by 55.2 per cent growth in credit, as credit accounted for 67.2 per cent of total assets.
Investments in securities (both domestic and foreign), accounting for 10.3 per cent of total assets, increased sharply by 62.9 per cent to RO1.26 billion, primarily on account of higher absorption of surplus liquidity by the CBOCBO
through issuance of CDs, CBOCBO said. Commercial banks' outstanding investment in CBO CDs increased from RO287.6 million as at the end of July 2007 to RO74.15 million at the end of July 2008. Assets held in the form of cash and deposits with the CBOCBO
amounted to RO1,040.5 million, which was about 8.5 per cent of total assets. On the liabilities side, aggregate deposits increased by 35.5 per cent to RO7,487.7 million at the end of July 2008, the bank said.
Government deposits in particular rose by 54.2 per cent to a level of RO1,305.7 million, representing 17.4 per cent of total deposits. Commercial banks' core capital and reserves surged by 73.6 per cent to RO1,544.4 million, which was about 12.5 per cent of total assets.
Provisional figures for net profits (after provisions and taxes) indicate 55.1 per cent increase, from RO104.5 million in the first seven months of 2007 to RO162.1 million in the corresponding period of 2008, CBOCBO
said. "The overall monetary conditions continued to be characterised by high growth in money supply, surplus liquidity, and falling interest rates," CBOCBO
said. Broad money (M2) supply increased by 31.1 per cent, and among the key components of money supply, currency held by the public rose by 19.4 per cent, demand deposits by 47.8 per cent, and quasi money (comprising RO savings and time deposits, certificates of deposits issued by commercial banks, margin deposits and foreign currency designated deposits) by 28 per cent.
Among the key sources of money supply, while domestic assets in the banking system surged by 73.6 per cent, net foreign assets expanded by 10.7 per cent.
Reflecting the sharp decline in the US Fed Funds Target Rate from 5.25 per cent to 2 per cent, and given the fixed peg of the RO to the US$, domestic interest rates in Oman also moderated significantly. While weighted average interest rates on CBO CDs fell tom 3.368 per cent in July 2007 to 0.760 per cent in July 2008, overnight RO inter-bank lending rate also declined form 2.323 per cent to 1.622 per cent during the corresponding period. The extent of moderation in average RO deposit and lending rates, however, remained more modest, from 1.946 per cent to 1.814 per cent (for deposits) and from 7.387 per cent to 6.585 per cent (for loans).
© Times of Oman 2008
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