Muscat: The total outstanding credit extended by other depository corporations (ODCs) grew by 3.8 per cent to OMR27.3 billion at the end of June 2021, while credit to the private sector demonstrated a moderate increase of 0.8 per cent (year-on-year) to reach OMR23.2 billion the Central Bank of Oman (CBO) said in its report.
“The non-financial corporate sector received the highest share of the total private sector credit with over 46.5 per cent, followed by the household sector accounting for 45.3 per cent, at end-June 2021,” the CBO said in its 'Review of Banking and Monetary Developments – June 2021' report.
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 of the end-June 2021, it added.
Total deposits held with ODCs registered a year-on-year (Y-o-Y) growth of 4.2 per cent to reach OMR24.9 billion at the end of June 2021. Total private sector deposits increased by 6.5 per cent to OMR17.4 billion, the CBO report said.
“In terms of the sector-wise composition of private sector deposits, the biggest share went to households deposits at 51.4 per cent, followed by non-financial corporations at 32.1 per cent, financial corporations at 14.1 per cent and the other sectors at 2.4 per cent,” the report added.
The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.1 per cent in total outstanding credit as of the end-June 2021. Credit to the private sector declined by 0.6 to reach OMR19.0 billion while their overall investments in securities went up by 23.5 per cent to OMR4.8 billion at the end-June 2021.
Investment in Government Development Bonds (GDBs) increased by 18.7 per cent compared to the same period last year to OMR2.2 billion while their investments in foreign securities declined by 24.0 per cent to OMR0.85 billion at the end of June 2021.
Aggregate deposits held with the conventional banks increased by 1.8 per cent Y-o-Y to OMR20.8 billion at the end-June 2021. Government deposits with conventional banks witnessed a decrease of 11.2 per cent at OMR4.3 billion, deposits of public enterprises went up by 13.3 per cent to OMR1.2 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 OMR14.7 billion, the report said.
Islamic banking entities provided financing of OMR4.6 billion at the end of June 2021, recording a growth of 12.7 per cent compared to 2020. Total deposits held with Islamic banks and windows increased by 18 per cent to OMR4.2 billion. The total assets of Islamic Banks and Windows increased by 16 per cent on a Y-o-Y basis to OMR5.7 billion and constituted about 15.1 per cent of the banking system’s assets at the end of June 2021.
Among the indicators of monetary aggregates, broad money supply M2 at the end-June 2021 grew by 6.7 per cent to reach OMR20.1 billion. This increase was the outcome of a 4.7 per cent expansion in narrow money (M1) and a 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 the public by 4.5 per cent, the M1 witnessed a marginal increase, resulting from the growth of demand deposits by 8.1 per cent, during the same period under discussion.
The weighted average interest rate on RO deposits witnessed a marginal increase from 1.951 per cent at end of June 2020 to 1.952 per cent at end of June 2021, similarly, the weighted average RO lending rate increased from 5.381 per cent to 5.524 per cent over the same period.
Meanwhile, the overnight Rial Omani domestic interbank lending rate fell significantly to 0.336 per cent in June 2021 from 1.570 per cent a year ago, reflecting transmission of policy rate cuts by the CBO in line with the rate cuts by the Federal Reserve. The average repo rate for liquidity injection by the CBO at the end-June 2021 remains at 0.5 per cent, the same as last year. This is attributable to the measure undertaken by CBO in March 2020 to support banksFLCs in the context of prevailing economic conditions.