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Review of Banking and Monetary Developments – September 202211/16/2022 8:00:00 PMReview of Banking and Monetary Developments – September 2022​The nominal GDP, as per the preliminary data released by National Centre<div style="text-align:justify;"></div><p style="text-align:justify;">​<span style="font-size:13pt;">The nominal GDP, as per the preliminary data released by National Centre for Statistics and Information (NCSI), showed an increase of 32.4 percent at end of the first half of 2022 over the same period of 2021. The expansion was driven by increase in output of the hydrocarbon sector by 70.9 percent and non-hydrocarbon sector by 14.9 percent. As for the real GDP, it demonstrates an increase of 3.9 percent during the same period under discussion. Similiarly, this expansion was driven by 9.2 percent of hydrocarbon sector and 2.1 percent of non-hydrocarbon sector. The Omani oil average price during Jan-September  2022 at $95.3 per barrel was higher by 40.4 percent than that in Jan-September  2021. The average daily oil production at 1057.8 thousand barrels during Jan-September  2022 increased by 10.3 percent. The Sultanate's average Consumer Price Index (CPI) showed a Y-o-Y inflation of 3.1 percent during the period Jan-September  2022.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Other depository corporations (ODCs) consist of conventional and Islamic banks in Oman. Total outstanding credit extended by ODCs grew by 3.9  percent  to RO 28.8 billion at the end of September  2022, while credit to the private sector demonstrated an increase of  3.3 percent (Y-o-Y) to reach RO 24.1 billion.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Non-financial corporations received the highest share of the total private sector credit at approximately 46.1 percent at end-Sep 2022, followed by household sector at 45.2 percent. The share of financial corporations was 5.1  percent while other sectors received the remaining 3.6 percent of total private sector credit as at end- September  2022. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Total deposits held with ODCs registered a Y-o-Y significant growth of 5.5 percent to reach RO 26.3  billion at the end of September  2022. Total private sector deposits increased by 0.3 percent to RO 17.3 billion. In terms of  sector-wise composition of private sector deposits, the biggest contribution is from household deposits at 51.2  percent, followed by non-financial corporations at 29.6 percent, financial corporations at 15.6 percent and other sectors at 2.8 percent. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">The combined balance sheet of conventional banks showed a Y-o-Y growth of 2.0  percent in total outstanding credit as of end- September  2022. Credit to the private sector increased by 0.7 to reach RO 19.2 billion while their overall investments in securities witnessed a sharp decline by 7.6 percent  to RO 4.6 billion at end- September  2022. Accordingly, investment in both Government Development Bonds and foreign securities decreased by 0.9  percent to RO 2.2 billion and 22.1  percent to RO 0.655 billion, respectively, at the end of September  2022. On the liabilities side, aggregate deposits held with the conventional banks increased by 3.4 percent Y-o-Y to RO 21.4 billion at end-September  2022. Government deposits with conventional banks witnessed an increase of 13.2 percent at RO 5.0 billion,  and deposits of public enterprises increased by 33.4 percent to RO 1.7 billion. Private sector deposits, which accounted for 66.7 percent of total deposits with conventional banks, decreased by 1.6 percent as of September  2022 to reach RO 14.2 billion. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">The total assets of Islamic Banks and Windows increased by 10.6 percent on a Y-o-Y basis to  RO 6.3 billion and constituted about 16.3 percent of the banking system's assets  at end- September  2022. Islamic banking entities provided financing of  RO 5.2 billion at the end of September  2022, recording a growth of 10.7 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 14.1 percent to RO 4.8 billion. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Among the indicators of monetary aggregates, broad money supply M2 at end- September  2022 increased by 3.7 percent to reach RO 20.6  billion. This is attributed to the increased in narrow money (M1) by 5.0 percent, along with 3.2  percent increase in quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits). Looking at components of narrow money (M1) during the same period, currency with the public fell by 7.0 percent, while demand deposit increased by 8.8 percent .</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">The weighted average interest rate on RO deposits with conventional banks witnessed a marginal decrease from 1.977 percent at end September  2021 to 1.897 percent at end- September  2022, and the weighted average RO lending rate increased from 5.400 percent to 5.447 percent over the same period. Meanwhile, the overnight Rial Omani domestic inter-bank lending rate rose to 2.854 percent in September  2022 from 0.482 percent a year ago. This is an outcome of the increase in the average Repo rate for liquidity injection by the CBO to 3.0 from 0.500 a year ago, moving with US Fderal Reserve. <br></span></p>0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900075E4FF44B3F64489802BE694C5C6FB70300A9BCF8A0432A87429120A5B0A0EDBFF9

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