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Review of Banking and Monetary Developments – May 20217/10/2021 8:00:00 PMReview of Banking and Monetary Developments – May 2021Data issued by the Central Bank of Oman indicated that the total deposits held with ODCs registered a Y-o-Y growth of 4.2 percent to reach RO 25.1 billion at the end of May 2021.<p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">Data issued by the Central Bank of Oman indicated that the total <span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">deposits held with ODCs registered a Y-o-Y growth of 4.2  percent to reach RO 25.1 billion at the end of May 2021. Total private sector deposits increased by 7.4   percent to RO 17.3 billion.</span></span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">The nominal GDP, as per the preliminary data released by National Centre for Statistics and Information (NCSI), showed a decline of 2.5 percent during the first quarter of 2021 over the same period of 2020. The contraction was driven by decline in output of the hydrocarbon sector by 20.6 percent while non-hydrocarbon sector increased by 5.7 percent. The Omani oil average price during May 2021 at $54.8 per barrel was lower by 3 percent than that in May 2020.The average daily oil production at 953.4 thousand barrels during May 2021 declined by 3.7 percent. The Sultanate's average Consumer Price Index (CPI) showed a y-o-y deflation of 0.02 percent during the period Jan-May 2021.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">The other depository corporations (ODCs) consist of conventional and Islamic banks in Oman. The total outstanding credit extended by ODCs grew by 2.1 percent  to RO 27.1  billion at the end of May 2021, while credit to the private sector demonstrated moderate decline of 0.1 percent (Y-o-Y) to reach RO 23.1 billion, for the first time since the beginning of the year. The non-financial corporate sector receives the highest share of the total private sector credit, over 46.5 percent, followed by housold sector accounted for 45.3, at end-May 2021. The share of financial corporations was 4.8 percent and other sectors received the remaining 3.4 percent of the total private sector credit as at end- May 2021. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">In terms of  sector-wise composition of private sector deposits, the biggest share goes to households deposits at 51.0 percent, followed by non-financial corporations at 32.0 percent, financial corporations at 14.6 percent and the other sectors at 2.4 percent.  </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">The combined balance sheet of conventional banks showed a Y-o-Y growth of 0.4  percent in total outstanding credit as of end- May 2021. Credit to the private sector declined by 1.9 to reach RO 18.8 billion while their overall investments in securities went up by 35 percent  to RO 4.7 billion at end- May 2021. Investment in Government Development Bonds increased by 18.7 percent compared to the same period last year to RO 2.2 billion while their  investments in foreign securities declined by 4.9  percent to RO 0.83 billion at the end of May 2021. Aggregate deposits held with the conventional banks increased by 2.3 percent Y-o-Y to RO 21.0 billion at end-May 2021. Government deposits with conventional banks witnessed a decrease of 11.1  percent at RO 4.3 billion,  deposits of public enterprises went up by 1.6 percent to RO 1.4 billion. Private sector deposits, which accounted for 70.4 percent of total deposits with conventional banks, increased by 6.3 percent as of May 2021 to reach RO 14.8 billion. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">Islamic banking entities provided financing of  RO 4.5 billion at the end of May 2021, recording a growth of  11.3 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 21.6 percent to RO 4.1 billion. The total assets of Islamic Banks and Windows increased by 13.1 percent on a Y-o-Y basis to  RO 5.6 billion and constituted about 15.7 percent of the banking system's assets as at end- May 2021.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">Among the indicators of monetary aggregates, broad money supply M2 at end- May 2021 grew by 6.5 percent to reach RO 20.3  billion. This increase was the outcome of 1.2 percent expansion in narrow money (M1) and 8.8  percent 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 public by 5.4 percent, the  M1 witnessed a marginal increase, resulted from the growth of demand deposits by 3.5 percent, during the same period under discussion. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-2">The weighted average interest rate on RO deposits witnessed a marginal increase from 1.934  percent at end May 2020 to 1.983 percent at end- May 2021, similarly the weighted average RO lending rate increased from 5.389 percent to 5.504 percent over the same period. Meanwhile, the overnight Rial Omani domestic inter-bank lending rate fell significantly to 0.405 percent in May 2021 from 1.552 percent 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 end- May 2021 remain at 0.5 percent, the same as last year.   This is attributable to the measure undertaken by CBO in March 2020 to support Banks\FLCs in the context of prevailing economic condition.</span></p>0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900075E4FF44B3F64489802BE694C5C6FB70300A9BCF8A0432A87429120A5B0A0EDBFF9

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