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Omani banks lend record RO 10.269bn in personal loans in 2020: CBO

Key trends: Credit to some sectors soared at the height of the pandemic in 2020, but declined to others
Personal loans 2022
Personal loans 2022

@conradprabhu -

Personal loans disbursed by commercial banks in the Sultanate of Oman inched upwards to RO 10.269 billion in 2020, surpassing the previous year’s high of RO 10.242 billion even as the wider economy suffered a contraction amid the oil price crash and the pandemic.

Personal loans, typically sought by individual customers, represent the single largest category of lending by commercial banks, accounting for up to 40 per cent of their lending portfolio. Credit extended by banks under ‘personal loans’ cover everything from funding towards real estate transaction and car purchases to educational, wedding, home improvement, travel, medical and other household-related costs.

According to the 2020 Annual Report of the Central Bank of Oman (CBO), published on Wednesday, personal loans accounted for a 38.5 per cent share of total credit of RO 26.676 billion provided by commercial banks during the year. This was followed by the Construction sector (RO 2.735 billion) equating to a 10.3 per cent share, and the Services sector (RO 2.512 billion) entailing a 9.4 per cent share.

Credit to some sectors soared at the height of the pandemic in 2020, but declined to others. “While credit to the government sector (RO 477.8 million) experienced the highest growth of 249.1 per cent in 2020, credit to agriculture and allied activities (RO 73.7 million) increased by 46.8 per cent followed by export trade RO 40.4 million (42.6 per cent) and mining and quarrying RO 1426.4 million (28.1 per cent).

The sectors witnessing a decline in credit during 2020 include non-resident lending RO 157.1 million (-49.2 per cent), import trade RO 855.9 million (-15.3 per cent) and financial institutions RO 1167.4 million (-6.2 per cent),” the CBO report stated.

Overall credit by the bank sector, encompassing conventional and Islamic banks) grew 3.3 per cent in 2020, helping support “economic diversification initiatives and credit needs of the economy”, the apex bank said, noting that measures were outlined to ensure that demand for banks credit is met in a “seamless manner”. As for credit to small and medium enterprises (SMEs), a minimum floor of 5 per cent of the total credit was prescribed, it said.

However, amid the slowdown in economic activities, uptake of credit by the private sector declined 0.7 per cent in 2020 to 84.1 per cent of total credit of conventional banks, down from 86.4 per cent a year earlier.

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