Annual inflation measured by movement in the average consumer price index (CPI) in Oman stood at 0.21 per cent during January-September 2015 against the corresponding period in 2014.
According to the report issued by Central Bank of Oman (CBO) the total assets of conventional commercial banks increased by 13.6 per cent to OMR27.9 billion in September 2015 from OMR24.6 billion a year ago.
Of the total assets, credit disbursement accounted for 65 per cent and increased by 10 per cent as at end of September 2015 to OMR18.2 billion.
Credit to the private sector increased by 10.1 per cent to reach OMR15.9 billion at the end of September 2015. Of the total credit to the private sector at end September 2015, the share of the non-financial corporate sector stood at 47 per cent, closely followed by the household sector (mainly under personal loans) at 45.2 per cent, financial corporations at 5.3 per cent and other sectors the remaining 2.5 per cent.
Commercial banks’ overall investments in securities declined by 10.9 per cent to OMR2.7 billion as at the end of September 2015 from OMR3 billion a year ago.
The drop resulted mainly in bank’s investments in CBO CDs, which fell from OMR1.4 billion in September 2014 to nil in September 2015.
Investment in Government Development Bonds, however, increased by 32.3 per cent over the year to OMR750 million at the end of September 2015.
Banks also invested OMR408.4 million in Government Treasury Bills as at the end of September 2015. Commercial banks’ investments in foreign securities stood at OMR647.9 million in September 2015.
Aggregate deposits held with commercial banks registered an increase of six per cent to OMR18.2 billion in September 2015 from OMR17.1 billion a year ago. Government deposits with commercial banks increased by 1.8 per cent to OMR5.3 billion. Deposits of public enterprises increased by 8.4 per cent to OMR1.1 billion during the same period.
Private sector deposits, which constituted 63.8 per cent of total deposits with commercial banks, increased by eight per cent to OMR11.6 billion in September 2015 from OMR10.7 billion a year ago. Sector-wise, the share of households was 49.6 per cent of the total private sector deposit base, followed by non-financial corporations at 27.7 per cent, financial corporations at 19.8 per cent and other sectors at 2.9 per cent.
Islamic banking entities provided financing to the extent of OMR1.5 billion as at the end of September 2015 when compared to OMR0.9 billion a year ago. Total deposits held with Islamic banks and windows also registered a significant increase to OMR1.3 billion in September 2015 from OMR0.4 billion outstanding as at the end of September 2014. The total assets of Islamic banks and Windows combined, amounted to OMR2 billion as at the end of September 2015, which constituted about 6.5 per cent of the banking system assets.
As at the end of September 2015, narrow money stock (M1) when measured on year-on-year basis, grew by 16.8 per cent to OMR5.3 billion. This rise was a result of increase in currency with the public by 4.4 per cent coupled with increase in demand deposits by 21.5 per cent.
Quasi-money (RO savings and time deposits, certificates of deposit issued by commercial banks, margin deposits and foreign currency denominated deposits) witnessed a growth of 8.2 per cent during the period. Broad money supply M2 (i.e. M1 plus quasi-money) stood at OMR14.7 billion at end of September 2015, up from OMR13.3 billion a year ago, registering an increase of 11.1 per cent during the period.
In respect of domestic interest rate structure of commercial banks, both deposit and lending rates softened during this period. The weighted average interest rate on RO deposits declined from 1.030 per cent in September 2014 to 0.894 per cent in September 2015, while the weighted average RO lending rate decreased from 5.163 per cent to 4.790 per cent during the same period.
The overnight Riyal Omani domestic inter-bank lending rate firmed up to 0.217 per cent in September 2015 from 0.131 per cent a year ago.
In the current macro-economic situation, the main challenge that the Sultanate is facing is to avoid any slowdown in the growth process diversification of the economy along with the need to increase employment opportunities. With the decline in oil prices, there will be contraction in the petroleum sector’s nominal GDP.
However, the non-oil sector is expected to perform well and preliminary data reveals a 3.7 per cent growth in nominal terms during the first half of 2015. It is expected that with continued investment in important projects, domestic demand will be sustained and the economic diversification program will be strengthened.