Muscat – Bank lending in Oman continued its strong upward trajectory during the first five months of 2026, with total outstanding credit extended by the country’s banking sector increasing by 11.5% year-on-year to RO37.4bn by the end of May, according to the latest data released by the Central Bank of Oman (CBO).

The growth reflects sustained financing activity across the economy, particularly to the private sector, while deposits also expanded at a fast pace, highlighting strong liquidity in the banking system.

Total bank credit extended to the private sector rose by 8.7% year-on-year to RO30.3bn. Non-financial corporations accounted for the largest share of private sector credit at 48.1% at the end of May, followed by the household sector with 43.4%. Financial corporations represented 6.0%, while the remaining 2.5% was distributed among other sectors.

According to the CBO’s monthly statistical bulletin, conventional banks recorded an 11.8% increase in total outstanding credit compared with the same period last year. Credit extended by conventional banks to the private sector grew by 8.2% to RO23.1bn.

Conventional banks also continued to expand their investment portfolios. Their total investment in securities surged by 29.8% year-on-year to RO7.1bn. Investments in government development bonds increased by 26.3% to RO2.4bn, while holdings of foreign securities rose by 36.1% to RO2.6bn.

On the liabilities side, total deposits across Oman’s banking sector increased by 13.1% year-on-year to RO36.5bn at the end of May 2026.

Private sector deposits rose by 10.7% to RO24.2bn. Households remained the largest contributors, accounting for 49.5% of total private sector deposits, followed by non-financial corporations at 33.4%, financial corporations at 15.1%, and other sectors at 2.0%.

Deposits held with conventional banks grew by 13.7% to RO28.6bn. Private sector deposits, which accounted for 66.3% of total deposits with conventional banks, increased by 11% to RO19bn.

Government deposits with conventional banks rose by 9.0% year-on-year to RO6.3bn, while deposits from public enterprises recorded a sharp 42.9% increase to RO2.4bn.

The Islamic banking sector also maintained steady growth. Total assets of Islamic banks and windows increased by 9.2% year-on-year to RO9.8bn by the end of May, representing approximately 19% of the total assets of Oman’s banking system.

Islamic banks and windows provided financing worth RO7.9bn, up 10.5% from a year earlier, while total deposits with Islamic banking entities rose by 11% to RO7.8bn.

Interest rates ease

Interest rates in Oman continued to soften during the first five months of 2026, reflecting the easing monetary policy cycle led by the US Federal Reserve and mirrored by the Central Bank of Oman.

The weighted average interest rate on Omani rial deposits with conventional banks declined from 2.708% at the end of May 2025 to 2.366% by the end of May 2026. Over the same period, the weighted average lending rate fell from 5.551% to 5.327%.

Meanwhile, the overnight Omani rial domestic inter-bank lending rate eased to 3.375% in May 2026, compared with 4.394% a year earlier.

According to the CBO, the decline in market interest rates reflected a reduction in the average repo rate applied for liquidity injections, which was lowered from 5.0% to 4.25% in line with the US Federal Reserve’s monetary policy.