Muscat – Oman’s banking sector maintained strong momentum in the first half of 2026, with total outstanding credit surging 12.3% year-on-year to RO38.2bn by the end of June, while deposits climbed 13% to RO37.3bn, according to the latest data from the Central Bank of Oman (CBO).

The double-digit growth in both lending and deposits points to continued expansion in banking activity in the sultanate, with private sector businesses and households accounting for the bulk of credit demand.

Private sector drives credit growth

Bank credit extended to the private sector rose 9.9% year-on-year to RO30.8bn at the end of June this year compared to a year earlier.

Non-financial corporations accounted for the largest share of private sector credit, at 48.2%, followed by households with 43.2%. Financial corporations accounted for 6%, while other sectors made up the remaining 2.5%.

Conventional banks recorded 12.8% annual growth in total outstanding credit as of June 2026, according to the CBO’s latest monthly statistical bulletin.

Within conventional banking, credit to the private sector increased 9.9% to RO23.6bn. At the same time, banks continued to increase their investments in securities, which rose 26.2% year-on-year to RO7.2bn.

Investments in government development bonds increased 24.7% to RO2.5bn, while investments in foreign securities rose 27.1% to RO2.6bn.

Deposits maintain strong growth

On the funding side, private sector deposits across Oman’s banking sector increased 11.8% year-on-year to RO24.5bn at the end of June.

Households remained the largest source of private sector deposits, accounting for 48.1%, followed by non-financial corporations at 35.1%. Financial corporations accounted for 15.1%, while other sectors contributed 1.7%.

Deposits with conventional banks grew 14.2% year-on-year to RO29.4bn. Private sector deposits accounted for 65.5% of conventional banks’ total deposits and rose 12.6% to RO19.3bn.

Government deposits with conventional banks increased 7% to RO6.3bn, while deposits of public enterprises surged 72.3% to RO2.6bn.

Islamic financing hits RO8bn

Oman’s Islamic banking industry also continued to expand, although at a slower pace than conventional banking this year.

Islamic banking maintained robust growth, with total assets of Islamic banks and windows increasing 8.7% year-on-year to RO10bn at the end of June.

Financing provided by Islamic banks and windows rose 10.5% year-on-year to RO8bn as of June 2026, while total deposits increased 9.7% to RO7.8bn.

Islamic banking assets accounted for approximately 18.9% of total banking sector assets, highlighting the growing role of Sharia-compliant banking in Oman’s financial system.

Interest rates ease

Meanwhile, interest rates in Oman eased during the year to June, reflecting lower policy rates. The weighted average interest rate on Omani rial deposits with conventional banks declined from 2.560% at the end of June 2025 to 2.245% in June 2026. The weighted average lending rate also fell, from 5.487% to 5.331% over the same period.

The overnight Omani rial domestic interbank lending rate dropped to 3.505% in June 2026, compared with 4.189% a year earlier.

The CBO attributed the decline in interest rates to a reduction in the average repo rate applied for liquidity injections, which fell from 5.000% in June 2025 to 4.250% in June 2026, in line with US Federal Reserve policy rates.