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Review of Banking and Monetary Developments – May 20247/26/2024 8:00:00 PMReview of Banking and Monetary Developments – May 2024​The nominal GDP, as per the preliminary data released by National Centre for Statistics and Information (NCSI), showed a decline of 2.8 percent at end of the fourth quarter of 2023 over the same period of 2022.<p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">​The nominal GDP, as per the preliminary data released by National Centre for Statistics and Information (NCSI), showed a decline of 2.8 percent at end of the fourth quarter of 2023 over the same period of 2022. Despite the increase in non-hydrocarbon sector by 1.7 percent, the contraction was driven by decrease in output of the hydrocarbon sector by 11.9 percent. As for the real GDP, it demonstrates an increase of 1.3 percent during the same period under discussion. Similiarly, this expansion was driven by 0.4 percent of hydrocarbon sector and 2.4 percent of non-hydrocarbon sector. The Omani oil average price at end of May 2024 at $80.8 per barrel was lower by 0.3 percent than that in May 2023. The average daily oil production at 996.1 thousand barrels as of  May 2024 decreased by 6.1 percent. The Sultanate's average Consumer Price Index (CPI) showed a Y-o-Y inflation of 0.3 percent as of May 2024. </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 3.2 percent to OMR 31.1 billion at the end of May  2024, with credit to the private sector demonstrating an increase of  3.1 percent (Y-o-Y) to reach OMR 26.1 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 45.4  percent at end-May  2024, followed by Household sector at 45.3 percent. The share of financial corporations was 5.7 percent while other sectors received the remaining 3.6 percent of total private sector credit as at end-May 2024. </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 9.2 percent to reach OMR 30.0 billion at the end of May 2024. Total private sector deposits increased by 14.0 percent to OMR 20.4 billion. In terms of  sector-wise composition of private sector deposits, the biggest contribution is from household deposits at 50.4 percent, followed by non-financial corporations at 29.4 percent, financial corporations at 17.4 percent and other sectors at 2.8percent. </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 1.3 percent in total outstanding credit as of end-May 2024. Credit to the private sector increased by 1.1 percent to reach OMR 20.3 billion while their overall investments in securities increased by 20.8 percent  to OMR 5.6 billion at end-May 2024. Investment in Government Development Bonds  decreased by 9.0 percent to OMR 1.9 billion, while foreign securities inceased dramatically by 80.6 percent to OMR 2.2 billion, at the end of May 2024. On the liabilities side, aggregate deposits held with the conventional banks inceased by 7.1 percent Y-o-Y to OMR 23.9 billion at end-May 2024. Government deposits with conventional banks witnessed a decrease of 3.8 percent at OMR 5.2 billion, and deposits of public enterprises decrease by 1.5 percent to OMR 1.7 billion. On the other hand, private sector deposits, which accounted for 67.8 percent of total deposits with conventional banks, increased by 9.9 percent as of May 2024 to reach OMR 16.2 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 17.4 percent on a Y-o-Y basis to  OMR 7.6 billion and constituted about 18.1 percent of the banking system's assets  at end-May 2024. Islamic banking entities provided financing of OMR 6.4 billion at the end of May 2024, recording a growth of 16.7 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 23.5 percent to OMR 6.0 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-May  2024 increased by 11.5 percent to reach RO 23.7  billion. This is attributed to the increased in narrow money (M1) by 7.3 percent, along with 13.1 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 3.6 percent, while demand deposit increased by 10.4 percent.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">The weighted average interest rate on OMR deposits with conventional banks witnessed an increase from 2.242 percent at end-May   2023 to 2.627 percent at end-May 2024, and the weighted average lending rate increased from 5.443 percent to 5.621 percent over the same period. Meanwhile, the overnight Rial Omani domestic inter-bank lending rate rose to 5.501 percent in May 2024 from 5.295 percent a year ago. This is an outcome of the increase in the average Repo rate for liquidity injection by the CBO to 6.000 percent from 5.726 percent a year ago, moving with US Federal Reserve.  <br></span></p>0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900075E4FF44B3F64489802BE694C5C6FB70300A9BCF8A0432A87429120A5B0A0EDBFF9

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