Banking credit rises 3.3pc to RO 26.7bn in 2020

February 11, 2021

Data issued by the Central Bank of Oman (CBO) indicates that the total deposits held with conventional and Islamic banks (also known as Other Depository Corporations or ODCs) reached RO 24.3 billion at the end of December 2020, increasing by 2.9 per cent from the previous years.
Total private sector deposits increased by 10.5 per cent to RO 16.8 billion, the apex bank said in its monthly review for December 2020.
The total outstanding credit extended by ODCs grew by 3.3 per cent to RO 26.7 billion at the end of December 2020, while credit to the private sector showed a relatively moderate growth of 1.1 per cent (Y-o-Y) to reach RO 22.9 billion.
The shares of non-financial corporate sector and the household sector (mainly under personal loans) in the total private sector credit stood at 46.5 per cent and 45.0 per cent, respectively, at end-December 2020.
The share of financial corporations was 5.1 per cent and other sectors received the remaining 3.4 per cent of the total private sector credit as at end-December 2020.
In terms of sector-wise composition of private sector deposits, the households deposits represented the share at 51.0 per cent, followed by non-financial corporations at 32.3 per cent, financial corporations at 14.3 per cent and the other sectors at 2.4 per cent.
The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.2 per cent in total outstanding credit as of end-December 2020. On assets side, conventional banks’ credit to the private sector decreased marginally by 0.6 per cent Y-o-Y to RO 18.8 billion while their overall investments in securities increased by 20.2 per cent to RO 4.3 billion at end-December 2020.
Investment in Government Development Bonds increased by 10.6 per cent over the year to RO 1.8 billion while their investments in foreign securities stood at RO 1.1 billion at the end of December 2020, higher by 1.9 per cent over the position a year ago. Aggregate deposits held with conventional banks increased by 2.4 per cent Y-o-Y to RO 20.5 billion at the end of December 2020. Government deposits with conventional banks decreased by 18.7 per cent to RO 4.4 billion, while deposits of public enterprises decreased by 14.9 per cent to RO 1.1 billion.
Private sector deposits, which accounted for 70.3 per cent of total deposits with conventional banks, increased by 10.8 per cent during January-December 2020 to reach RO 14.4 billion.
Islamic banking entities provided financing of RO 4.3 billion at the end of December 2020, recording a growth of 9.5 per cent a year ago. Total deposits held with Islamic Banks and Windows increased by 5.4 per cent to RO 3.8 billion. The total assets of Islamic Banks and Windows increased by 6.3 per cent on a Y-o-Y basis to RO 5.2 billion and constituted about 14.5 per cent of the banking system’s assets as at end-December 2020.
Among the indicators of monetary aggregates, narrow money (M1) at the end of December 2020 increased by 4.1 per cent Y-o-Y to RO 5.6 billion. Likewise, quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits) registered a significant increase of 10.9 per cent during this period. Broad money supply M2 (M1 plus quasi-money) grew by 8.9 per cent to reach RO 19.3 billion at the end December 2020.
The weighted average interest rate on RO deposits increased marginally from 2.006 per cent at the end of December 2019 to 2.013 per cent at the end of December 2020, while the weighted average RO lending rate increased from 5.461 per cent to 5.510 per cent over the same period.
Meanwhile, the overnight Rial Omani domestic inter-bank lending rate fell significantly to 0.700 per cent in December 2020 from 2.139 per cent a year ago, reflecting transmission of policy rate cuts by the Federal Reserve and by the CBO. The average Repo rate for liquidity injection by the CBO at end-December 2020 stood lower at 0.5 per cent compared with 2.236 per cent a year ago.


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