Muscat – Oman’s banking sector recorded an year-on-year credit growth of 4.8 per cent last year but deposit growth sharply slowed to 1.1 per cent in 2022, the latest data from the Central Bank of Oman showed.

Total outstanding credit extended by the banking sector (both conventional and Islamic banks) grew 4.8 per cent to RO29.2bn at the end of December 2022 against the same month of the previous year, the CBO said in its monthly bulletin.

Of the total outstanding credit, bank credit to the private sector demonstrated a growth of 4.1 per cent year-on-year to reach RO24.4bn. Non-financial corporations received the highest shares of the total private sector credit, at approximately 45.8 per cent at end-December 2022, followed by household sector at 45.1 per cent.

The share of financial corporations was 5.3 per cent in total private sector credit, while other sectors received the remaining 3.7 per cent as of end-December 2022.

Conventional banks’ total outstanding credit grew 3.4 per cent year-on-year in December 2022. While conventional banks’ credit to the private sector increased 1.9 per cent to RO19.5bn, their overall investments in securities declined by 11.5 per cent to RO4.3bn, the CBO data showed.

Banks’ investment in government development bonds marginally decreased by 0.5 per cent year-on-year to RO2.2bn in December 2022, while their investments in foreign securities increased by 1.4 per cent to RO0.9bn over the same period.

Deposit growth slows

On the other hand, total banking sector deposits in Oman grew by a lower rate of 1.1 per cent to RO25.9bn at the end of December 2022 against the same period a year ago.

Total private sector deposits slightly decreased 0.3 per cent to RO17.4bn. In terms of sector-wise composition of private sector deposits, the biggest contribution was from household deposits at 52.2 per cent, followed by non-financial corporations at 28.9 per cent, financial corporations at 16.1 per cent and other sectors at 2.9 per cent.

Aggregate deposits held with the conventional banks decreased 0.9 per cent year-on-year to RO21bn at end-December 2022. Private sector deposits, which accounted for 67.8 per cent of total deposits with conventional banks, decreased by 2.0 per cent as of December 2022 to reach RO14.3bn.

Moreover, government deposits with conventional banks witnessed an increase of 2.8 per cent at RO4.9bn and deposits of public enterprises increased by 2.9 per cent to RO1.4bn.

As per the CBO data, the weighted average interest rate on Omani rial deposits with conventional banks witnessed an increase from 1.976 per cent at end-December 2021 to 1.993 per cent at end-December 2022. The weighted average Omani rial lending rate decreased from 5.570 per cent to 5.379 per cent over the same period.

Meanwhile, the overnight Omani rial domestic inter-bank lending rate jumped to 3.944 per cent in December 2022 from 0.369 per cent a year ago. This is an outcome of the increase in the average repo rate for liquidity injection by the the CBO to 4.774 per cent from 0.5 per cent a year ago, moving with US Federal Reserve rate, the central bank said.

Islamic financing grows 12.2%

Oman’s Islamic banking sector continued to witness a robust growth in 2022, recording double digit growth in both credit and deposits.

Islamic banking entities provided financing worth RO5.4bn at the end of December 2022, recording a growth of 12.2 per cent over that a year ago. Total deposits held with Islamic banks and windows increased by 10.9 per cent to RO4.9bn.

Total assets of Islamic banks and windows increased by 8.7 per cent on a year-on-year basis to reach RO6.4bn at the end of December 2022. Islamic assets now constitute about 16.5 per cent of the total banking system assets in Oman as of the end-December 2022.