21/08/2014 01:40 AST
Commercial banks operating in the Sultanate witnessed robust growth in the first half of this year in terms of assets quality, provision coverage, capital adequacy and profitability.
“The balance sheet of commercial banks further strengthened due to the robust growth in both deposits and credit”, the Central Bank of Oman said, referring to the health of banks in its first half report for 2014.
The total assets of commercial banks increased by 12.4 per cent to RO 24.6 billion in June 2014 from RO 21.9 billion a year ago. Credit disbursement accounted for 66.5 per cent and increased by 11.2 per cent as at end June 2014 to RO 16.4 billion.
On the performance of Islamic banking, the apex bank said, “the sector is opening up new segments and players and is diversifying banking services and augmenting financial inclusion”.
On the macroeconomic front, the Sultanate’s Gross Domestic Product at current prices grew by 4.6 per cent during the first quarter of 2014.
Annual inflation rate measured by movement in the average CPI for the Sultanate stood at 1.1 per cent during January-June 2014.
While credit to the government declined by 28.5 per cent, the same to the private sector and public enterprises increased by 11.3 per cent and 9.3 per cent, respectively.
Of the total credit to the private sector by end June 2014, the share of the non-financial corporate sector stood at 48.3 per cent, closely followed by the household sector, mainly under personal loans at 44.7 per cent, financial corporations at 4.7 per cent and other sectors the remaining 2.3 per cent.
Commercial banks’ overall investments in securities increased by 32.0 per cent to RO 4.0 billion as at the end of June 2014 from RO 3.0 billion a year ago.
Aggregate deposits held with commercial banks registered a significant increase of 16.0 per cent to RO 17.3 billion in June 2014 from RO 14.9 billion a year ago.
Private sector deposits, which constituted 63 per cent of total deposits with commercial banks, increased by 16.2 per cent to RO 10.9 billion in June 2014 from RO 9.4 billion a year ago.
Government deposits with commercial banks increased by 19.7 per cent to RO 5.1 billion, while deposits of public enterprises increased by 8.4 per cent to RO 1.0 billion during the same period.
Sector-wise, the share of households was 48.4 per cent of the total private sector deposit base, followed by non-financial corporations at 29.5 per cent, financial corporations at 20.4 per cent and other sectors at 1.7 per cent.
“Monetary management during the year so far continued to be confronted with abundance of bank liquidity”, the Central Bank said in the report.
At the end of June 2014, narrow money stock (M1) when measured on year-on-year basis, grew sharply by 30.9 per cent driven mainly by the increase in currency with the public by 16.8 per cent as well as increase in demand deposits by 36.2 per cent. Quasi-money witnessed a growth of 8.5 per cent during the period.
The share of quasi-money to the total money stock declined to 63.9 per cent in June 2014 as compared to 68.1 per cent a year ago. Broad money supply M2 (ie M1 plus quasi-money) stood at RO 13,046.6 million at end of June 2014, up from RO 11,281.0 million a year ago, registering an increase of 15.7 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 report said.
CBO’s policy interest rate for absorption of surplus liquidity in the form of CBO CDs of 28 days maturity marginally declined to 0.123 per cent in June 2014 from 0.130 per cent in June 2013.
The ceiling interest rate on personal and housing loans was reduced by one percentage point to 6 per cent with effect from October 2, 2013.
Oman Daily Observer
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