Bank credit grows 5.9% at RO 23bn

MUSCAT: The banking sector in Oman continued to witness reasonable growth in both credit and deposits despite the overall slowdown in economic activities.

The combined balance sheet of conventional and Islamic banks (other depository corporations) taken together, provides a complete overview of the financial intermediation taking place in the banking system in Oman. The total outstanding credit extended by other depository corporations stood at RO 23 billion as at the end of August 2017, a growth of 5.9 per cent over the level witnessed a year ago.

Credit to the private sector increased by 6.4 per cent to RO 20.8 billion as at the end of August 2017. Of the total credit to the private sector, the household sector (mainly under personal loans) stood at 46.9 per cent closely followed by the non-financial corporate sector at 44.7 per cent while financial corporations and other sectors obtained 5.1 per cent and 3.3 per cent respectively.

Total deposits registered a growth of 4.5 per cent to RO 21.6 billion, with private sector deposits growing by 5.6 per cent to RO 13.8 billion as at the end of August 2017.

Sector-wise, the contribution of households in total private sector deposits was 48.4 per cent, followed by non-financial corporations at 29.1 per cent, financial corporations at 19.7 per cent, and the other sectors at 2.8 per cent.

Review of the activities of conventional banks indicates an annual growth in total outstanding credit of 3.2 per cent as at the end of August 2017, mainly due to credit to the private sector increasing by 4.4 per cent to RO 18.1 billion.

Conventional banks’ overall investments in securities grew by 1.2 per cent to RO 2.9 billion. Investment in Government Treasury Bills stood at RO 437.3 million at the end of August 2017.

Investment in Government securities inclusive of GDBs, Government “Sukuk”, and others increased marginally by 0.7 per cent over the year to RO 1.3 billion.

Aggregate deposits held with conventional banks increased moderately by 0.7 per cent to RO 18.8 billion in August 2017 from RO 18.7 billion a year ago.

Government deposits with conventional banks went up by 4.1 per cent to RO 5.1 billion while deposits of public enterprises decreased by 34.8 per cent to RO 1 billion during the same period.

Private sector deposits, which accounted for 66.1 per cent of total deposits with conventional banks, increased by 3.7 per cent to RO 12.5 billion in August 2017 from RO 12.0 billion a year ago.

The core capital and reserves of conventional banks as at the end of August 2017 stood at RO 4.1 billion.

Islamic banking entities provided financing to the extent of RO 2.9 billion as at the end of August 2017 as compared to RO 2.2 billion a year ago.

Total deposits held with Islamic banks and windows also registered a significant increase to RO 2.8 billion in August 2017 from RO 2.0 billion as at the end of August 2016.

The total assets of Islamic banks and Windows combined, amounted to RO 3.6 billion as at the end of August 2017, constituting about 11.7 per cent of the banking system assets.

— ONA