Muscat, 13 Sep (ONA) — The total outstanding credit extended by other depository corporations (ODCs) consisting of conventional and Islamic banks in Oman grew by 4.3 percent to RO 27.3 billion at the end of July 2021 while credit to the private sector demonstrated moderate increase of 1.9 percent (Y-o-Y) to reach RO 23.3 billion, according to the date of the Central Bank of Oman (CBO).
The non-financial corporate sector receives the highest share of the total private sector credit, over 46.6 percent, followed by household sector accounted for 45.2 percent, at the end of July 2021. The share of financial corporations was 4.8 percent and other sectors received the remaining 3.5 percent of the total private sector credit as at end- July 2021.
Total deposits held with ODCs registered a Y-o-Y growth of 4.5 percent to reach RO 24.9 billion at the end of July 2021. Total private sector deposits increased by 4.1 percent to RO 17.1 billion.
In terms of sector-wise composition of private sector deposits, the biggest share goes to household deposits at 51.9 percent, followed by non-financial corporations at 32.1 percent, financial corporations at 13.6 percent and the other sectors at 2.4 percent.
The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.8 percent in total outstanding credit as of end-July 2021. Credit to the private sector increased by 0.8 percent to reach RO 19 billion while their overall investments in securities went up by 21.8 percent to RO 4.8 billion at end-July 2021.
Investment in Government Development Bonds increased by 18.7 percent compared to the same period last year to RO 2.2 billion while their investments in foreign securities declined by 28.2 percent to RO 78 million at the end of July 2021.
Aggregate deposits held with the conventional banks increased by 2.4 percent Y-o-Y to RO 20.7 billion at end-July 2021. Government deposits with conventional banks witnessed a decrease of 1.8 percent at RO 4.4 billion, deposits of public enterprises went up by 15.9 percent to RO 1.3 billion. Private sector deposits, which accounted for 70.1 percent of total deposits with conventional banks, increased by 2 percent as of July 2021 to reach RO 14.5 billion.
Islamic banking entities provided financing of RO 4.6 billion at the end of July 2021, recording a growth of 12.3 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 16.4 percent to RO 4.2 billion. The total assets of Islamic Banks and Windows increased by 6.7 percent on a Y-o-Y basis to RO 5.7 billion and constituted about 15.1 percent of the banking system’s assets as at end-July 2021.
Among the indicators of monetary aggregates, broad money supply (M2) at end-July 2021 grew by 4.7 percent to reach RO 20 billion. This increase was the outcome of 4.1 percent expansion in narrow money (M1) and 4.9 percent increase in quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits).
Despite the decline in currency with public by 5.8 percent, the M1 witnessed a marginal increase, resulted from the growth of demand deposits by 7.8 percent, during the same period under discussion.
The weighted average interest rate on RO deposits witnessed a decline from 1.969 percent at end July 2020 to 1.921 percent at end-July 2021. Similarly, the weighted average RO lending rate increased from 5.441 percent to 5.512 percent over the same period.
Meanwhile, the overnight Rial Omani domestic inter-bank lending rate fell significantly to 0.420 percent in July 2021 from 0.977 percent a year ago, reflecting transmission of policy rate cuts by the CBO in line with the rate cuts by the Federal Reserve.
The average Repo rate for liquidity injection by the CBO at end-July 2021 remained at 0.5 percent, the same as last year. This is attributable to the measure undertaken by CBO in March 2020 to support Banks finance and leasing corporations (FLCs) in the context of prevailing economic condition.