Wednesday 18th, November 2015

Of the total assets of the commercial banks operating in the Sultanate, credit disbursement accounted for 65 per cent and increased by 10 per cent to RO 18.2 billion till the end September 2015. While credit to the private sector increased by 10.1 per cent to reach RO 15.9 billion during the same period, the share of the non-financial corporate sector stood at 47 per cent. This was followed by the household sector, mainly under personal loans, at 45.2 per cent, financial corporations at 5.3 per cent and other sectors the remaining 2.5 per cent. According to Central Bank of Oman (CBO), the total assets of conventional commercial banks witnessed an increase by 13.6 per cent to RO 27.9 billion in September this year from RO 24.6 billion a year ago.

At the same time, an analyst at Al Maha Financial Services said that conventional banks in the Sultanate registered a credit growth of 12 per cent on year on year basis. "The credit growth is higher than the deposit growth during the same period", he said. According to calculations by the brokerage firm, the deposits received by the listed banks stood at 9.5 per cent during the period. The six listed conventional banks -- Bank Muscat, National Bank of Oman, BankDhofar, Ahli Bank, Bank Sohar and HSBC Bank Oman form the significant chunk of the country's banking sector. However, the CBO said, the non-oil sector is expected to perform well and preliminary data reveals a 3.7 per cent growth in nominal terms during the first half of 2015.
 
"It is expected that with continued investment in important projects, domestic demand will be sustained and the economic diversification programme will be strengthened", the CBO said. The apex bank said in its September bulletin, "In the current macroeconomic situation, the main challenge that the Sultanate is facing is to avoid any slow-down in the growth process, diversification of the economy along with the need to increase employment opportunities. With the decline in oil prices, there will be contraction in the petroleum sector's nominal GDP". Commercial banks' overall investments in securities declined by 10.9 per cent to RO 2.7 billion as at the end of September 2015 from RO 3 billion a year ago.

The drop resulted mainly in banks' investments in the Central Bank's certificate of deposits which fell from RO 1.4 billion in September 2014 to nil in September 2015. Meanwhile, Islamic banking entities provided financing to the extent of RO 1.5 billion as at the end of September 2015 when compared to RO 0.9 billion a year ago. Total deposits held with Islamic banks and windows also registered a significant increase to RO 1.3 billion in September 2015 from RO 0.4 billion outstanding as at the end of September 2014. The total assets of Islamic banks and Windows combined, amounted to RO 2 billion as at the end of September 2015 which constituted about 6.5 per cent of the banking system assets.

© Oman Daily Observer 2015