Banking sector credit climbs 3.8% during H1 2021

MUSCAT: Total outstanding credit extended by conventional and Islamic banks in the Sultanate (also known as Other Depository Corporations – ODCs) grew by 3.8 per cent to RO 27.3 billion at the end of June 2021, while credit to the private sector demonstrated moderate increase of 0.8 per cent (Y-o-Y) to reach RO 23.2 billion, according to the Central Bank of Oman (CBO).

The non-financial corporate sector received the highest share of the total private sector credit (46.5 per cent), followed by the household sector (45.3 per cent). The share of financial corporations was 4.8 per cent and other sectors received the remaining 3.4 per cent of the total private sector credit as at end-June 2021.

Total deposits held with ODCs registered a Y-o-Y growth of 4.2 per cent to reach RO 24.9 billion at the end of June 2021.

Total private sector deposits increased by 6.5 per cent to reach RO 17.4 billion. In terms of sector-wise composition of private sector deposits, the biggest share was from household deposits at 51.4 per cent, followed by non-financial corporations (32.1 per cent), financial corporations (14.1 per cent) and other sectors (2.4 per cent).

The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.1 per cent in total outstanding credit as of end-June 2021. Credit to the private sector declined by 0.6 to reach RO 19.0 billion while their overall investments in securities went up by 23.5 per cent to RO 4.8 billion. Investment in Government Development Bonds increased by 18.7 per cent compared to the same period last year to RO 2.2 billion while their investments in foreign securities declined by 24.0 per cent to RO 0.85 billion at the end of June 2021.

Aggregate deposits held with the conventional banks increased by 1.8 per cent Y-o-Y to RO 20.8 billion at end-June 2021.

Government deposits with conventional banks witnessed a decrease of 11.2 per cent at RO 4.3 billion, while deposits of public enterprises went up by 13.3 per cent to RO 1.2 billion. Private sector deposits, which accounted for 71 per cent of total deposits with conventional banks, increased by 4.9 per cent as of June 2021 to reach RO 14.7 billion.

Islamic banking entities provided financing of RO 4.6 billion at the end of June 2021, recording a growth of 12.7 per cent over that a year ago.

Total deposits held with Islamic banks and windows increased by 18 per cent to RO 4.2 billion. The total assets of Islamic Banks and Windows increased by 16 per cent on a Y-o-Y basis to RO 5.7 billion and constituted about 15.1 per cent of the banking system’s assets as of end-June 2021.

Among the indicators of monetary aggregates, broad money supply M2 at end-June 2021 grew by 6.7 per cent to reach RO 20.1 billion.

This increase was the outcome of 4.7 per cent expansion in narrow money (M1) and 7.6 per cent increase in quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits).

Despite the decline in currency with public by 4.5 per cent, the M1 witnessed a marginal increase, resulted from the growth of demand deposits by 8.1 per cent, during the same period under discussion.