Oman’s average annual inflation based on consumer price index (CPI) during January- March 2017 period stood at 2.33 per cent mainly due to revision in fuel prices, transport costs, education and other user fees, according to the monthly report released by the Central Bank of Oman.
The financial position of the banks in Oman in terms of asset quality, provision coverage, capital adequacy and profitability remained sound. The gross non-performing loans as a proportion of total loans and advances stood at 2.1 per cent at the end of December 2016. The BIS capital adequacy ratio averaged 16.8 per cent at the end of 2016 compared to 16.1 per cent recorded in the previous year.
The combined balance sheet of conventional and Islamic banks (other depository corporations) taken together, provides a complete overview of the financial intermediation taking place in the banking system in Oman. The total outstanding credit extended by other depository corporations stood at OMR22.4 billion as at the end of March 2017, a rise of 6.5 per cent over the level witnessed a year ago. Credit to the private sector increased by 8.5 per cent to OMR20.2 billion as at the end of March 2017. Of the total credit to the private sector, the household sector (mainly under personal loans) stood at 46.1 per cent closely followed by the non-financial corporate sector at 45.6 per cent, financial corporations at 5.2 per cent and other sectors the remaining 3.1 per cent.
Total deposits registered a growth of 7.5 per cent at OMR21.4 billion as at the end of March 2017. Private sector deposits of the banking system registered a growth of 6.6 per cent to OMR13.8 billion as at the end of March 2017.
Sector-wise, the share of households was 48.7 per cent of the total private sector deposit base, followed by non-financial corporations at 29.9 per cent, financial corporations at 18.5 per cent and the other sectors at 2.9 per cent.
Review of the activities of conventional banks denotes an annual growth in total outstanding credit of 3.5 per cent as at the end of March 2017. Credit to the private sector increased by 6.3 per cent to reach OMR17.8 billion as at the end of March 2017. Conventional banks’ overall investments in securities stood at OMR3.1 billion as at the end of March 2017.
Investment in Government Development Bonds and Government Sukuk increased by 20.6 per cent over the year to OMR1 billion at the end of March 2017. Banks also invested OMR482.7 million in Government Treasury Bills as at the end of March 2017. Conventional banks’ investments in foreign securities stood at OMR909.5 million at the end of March 2017. Aggregate deposits held with conventional banks increased by 4.3 per cent to OMR19 billion in March 2017 from OMR18.2 billion a year ago.
Government deposits with conventional banks went up by 9 per cent to OMR5.2 billion. Deposits of public enterprises declined by 16.5 per cent to OMR0.9 billion during the same period. Private sector deposits, which accounted for 66.1 per cent of total deposits with conventional banks, increased by 4.6 per cent to OMR12.6 billion in March 2017 from OMR12 billion a year ago. The core capital and reserves of conventional banks as at the end of March 2017 stood at OMR4 billion.
Islamic banking entities provided financing to the extent of OMR2.6 billion as at the end of March 2017 when compared to OMR1.9 billion a year ago. Total deposits held with Islamic banks and windows also registered a significant increase to OMR2.4 billion in March 2017 from OMR1.7 billion outstanding as at the end of March 2016.
The total assets of Islamic banks and Windows combined, amounted to OMR3.3 billion as at the end of March 2017, which constituted about 10.8 per cent of the banking system assets.
With regard to monetary aggregates as at the end of March 2017, narrow money stock (M1) when measured on year-on-year basis, registered a drop of 5.5 per cent to OMR5.1 billion. However, quasi- money (rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits) witnessed an appreciable growth of 7.6 per cent during the
period. Broad money supply M2 (M1 plus quasi-money) stood at OMR16 billion as at the end of March 2017 giving a rise of 3.1 per cent during the period.
In respect of domestic interest rate structure of conventional banks, the weighted average interest rate on RO deposits increased from 1.016 per cent in March 2016 to 1.595 per cent in March 2017, while the weighted average RO lending rate increased from 4.747 per cent to 5.118 per cent during the same period. The overnight Rial Omani domestic inter-bank lending rate stood at 0.443 per cent in
March 2017. The average Repos rate for liquidity injection by the CBO stood at 1.396 per cent per annum during the month of March 2017.