Muscat – Oman’s banking sector recorded a modest credit growth of 4.3% last year but deposits sharply jumped by more than 12% year-on-year in 2023, the latest data from the Central Bank of Oman showed.

Total outstanding credit extended by the banking sector (both conventional and Islamic banks) grew 4.3% to RO30.4bn at the end of December 2023 against the same month of the previous year, the CBO said in its monthly statistical bulletin.

Of the total outstanding credit, bank credit to the private sector demonstrated a growth of 4.7% year-on-year to reach RO25.5bn. Household sector received the highest share of the total private sector credit at approximately 45.2% at end-December 2023, followed by non-financial corporations at 45%. The share of financial corporations was 6.0% in private sector credit, while other sectors received the remaining 3.8% of total private sector credit as at end-December 2023.

Conventional banks’ total outstanding credit grew 2.5% year-on-year in December 2023. While conventional banks’ credit to the private sector increased 2.9% to RO20bn, their overall investments in securities increased by 16.6% to RO5bn, the CBO data showed.

Banks’ investment in government development bonds decreased by 12.9% year-on-year to RO1.9bn in December 2023, while their investments in foreign securities dramatically rose by 98% to RO1.7bn over the same period.

Deposits surge

In contrast to a modest credit growth last year, total banking sector deposits in Oman sharply grew by 12.4% to RO29.1bn at the end of December 2023 from RO25.9bn recorded a year ago.

Total private sector deposits rose by 10.6% to RO19.2bn. In terms of sector-wise composition of private sector deposits, the biggest contribution was from household deposits at 49.3%, followed by non-financial corporations at 32.4%, financial corporations at 15.4% and other sectors at 2.9%.

Aggregate deposits held with the conventional banks increased by 12.2% year-on-year to RO23.5bn at end-December 2023.

Government deposits with conventional banks witnessed an increase of 2.5% at RO5bn, and deposits of public enterprises increased by 57.8% to RO2.2bn. On the other hand, private sector deposits, which accounted for 66.2% of total deposits with conventional banks, increased by 9.5% as of December 2023 to reach RO15.6bn.

As per the CBO data, the weighted average interest rate on Omani rial deposits with conventional banks witnessed an increase from 1.993% at end-December 2022 to 2.636% at end-December 2023. The weighted average Omani rial lending rate decreased from 5.379% to 5.513% over the same period.

Meanwhile, the overnight Omani rial domestic inter-bank lending rate rose to 5.417% in December 2023 from 4.271% a year ago. This increase in interest rates, as per the CBO, is an outcome of the increase in the average repo rate for liquidity injection by the CBO to 6.00% from 4.774% a year ago, moving with US Fderal Reserve.

Islamic assets grow 14.7%

Oman’s Islamic banking sector continued to witness a robust growth in 2023, recording double digit growth in both credit and deposits.

Total assets of Islamic banks and windows increased by 14.7% on a year-on-year basis to reach RO7.3bn at the end of December 2023 as compared to RO6.4bn at the end of December 2022. Islamic assets now constitute about 17.5% of the total banking system assets in Oman as of the end-December 2023.

Islamic banking entities provided financing worth RO6bn at the end of December 2023, recording a growth of 11.8% over that a year ago. Total deposits held with Islamic banks and windows increased by 12.8% to RO5.5bn at the end of last year against RO4.9bn recorded in December 2022.

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