Balance sheets of banks seen to remain robust



Muscat: During 2013, monetary and financial policies had a positive impact on business growth and performance of the banking system in Oman. With participation of commercial and Islamic banks in the development process of the economy, the balance sheets of banks are expected to remain robust and the growth momentum sustained.

During the first half of 2013, overall nominal GDP registered a growth of two per cent while non-oil GDP rose by 8.3 per cent. The positions on the inflation front has been improving with the average CPI for Oman lower at 1.5 per cent during January-September 2013 compared to 2.9 per cent during the corresponding period last year. The fiscal and balance of payments position also remained comfortable.

The current account balance to GDP ratio stood at 10.9 per cent during the first half of 2013.

The combined balance sheet of commercial banks exhibited healthy growth in all major banking aggregates.  Total assets of commercial banks increased by 9.7 per cent to OMR22.3 billion in October 2013 compared to OMR20.3 billion a year ago.

Of the total assets, credit disbursement accounted for 68 per cent and increased by 6.8 per cent over the year to OMR15.14 billion as at the end of October 2013. While credit to the Government declined by 39.3 per cent, credit to the private sector and public enterprises increased by 6.9 per cent and 10.3 per cent, respectively.

Of the total credit to the private sector by end October 2013, the share of the non-financial corporate sector stood at 46.8 per cent, closely followed by the household sector (mainly under personal loans) at 45.8 per cent, financial corporation at 5.0 per cent and other sector the remaining 2.4 per cent.

Commercial banks' overall investments in securities increased by 15.9 per cent to OMR2.5 billion as at the end of October 2013 from OMR2. 1 billion a year ago. Of total investments, CBO CDs stood at OMR1.2 billion while investments in government development bonds (GDBs) stood at OMR517 million as at the end of October 2013.

On the liabilities side of the balance sheet, total deposits held with commercial banks also witnessed a significant rise of 11.1 per cent to OMR15.3 billion in October 2013 from OMR13.8 billion in October 2012. Government deposits with commercial banks increased by 18.7 per cent to OMR4.5 billion, while deposits of public enterprises rose by 8.4 per cent to OMR980.7 million during the same period.

Private sector deposits, which constituted 62.2 per cent of total deposits with commercial banks, increased by 7.2 per cent to OMR9.54 billion in October 2013 from OMR8.9 billion a year ago. 

Sector-wise, the share of households was 48.7 per cent of the total private sector deposit base, followed by non-financial corporations at 26.5 per cent, financial corporation at 23.2 per cent (of which pension funds accounted for almost 20 per cent of private sector deposits) and other sectors at 1.6 per cent.

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