Muscat – This contraction was driven by a decline in hydrocarbon sector production by 11.9 percent, despite a 1.7 percent increase in the non-oil sector.

Conversely, the real GDP recorded a 1.3 percent increase during the same period. This increase is attributed to the growth in the value-added activities of both oil (0.4 percent) and non-oil (2.4 percent) sectors at current prices.

The average price of Omani oil by the end of July 2024 amounted to about 82.5 US dollars per barrel, which is 2.5 percent higher than its level during the same period in 2023. In terms of production, the average daily oil production reached 994,800 barrels by the end of July 2024, which is equivalent to a decrease of 5.7 percent. In terms of prices, the Consumer Price Index in the Sultanate of Oman indicates an annual inflation of 0.5 percent by the end of July 2024.

“To get a comprehensive view of the financial intermediation activity taking place in the banking sector in the Sultanate of Oman, one should review the consolidated balance sheet data of conventional and Islamic banks, or what are known as other depository companies,” states the press note from the Central Bank of Oman.

In this regard, the data indicates that the total credit balance granted by these companies increased by 3.4 percent to reach RO 31.3 billion by the end of July 2024. As for credit granted to the private sector, it recorded a growth of 3.0 percent to reach RO 26.2 billion by the end of July 2024.
Data on its distribution across various sectors indicate that the individual sector accounted for the largest share, amounting to 45.1 percent by the end of July 2024. It was followed by non-financial companies at 44.9 percent. The remaining share was distributed between the financial companies’ sector at 6.3 percent and other sectors at 3.6 percent.

Total deposits in the banking sector grew by 12.5 percent to reach RO 31 billion by the end of July 2024. Within this total, private sector deposits in the banking system witnessed an increase of 13.9 percent to reach RO 20.7 billion by the end of July 2024.

When looking at the distribution of the total private sector deposit base across various sectors, the figures indicate that the individual sector acquired the largest share, amounting to about 49.9 percent, followed by the non-financial corporate sector and the financial corporate sector with shares of 29.9 percent and 17.7 percent respectively, while the remaining 2.5 percent was distributed among other sectors.

Analysis of the activities of traditional commercial banks during the period (July 2023 – July 2024) indicates continued growth in credit in the Sultanate of Oman, as the total credit balance granted by banks recorded an increase of 1.6 percent, while credit granted to the private sector increased by 0.7 percent to reach RO 20.4 billion by the end of July 2024.

The total investments of conventional commercial banks in securities increased by 35.8 percent to reach about RO 6 billion by the end of July 2024. However, investment in government development bonds decreased by 6.5 percent compared to the same period last year to reach RO 1.9 billion.
As for investments in foreign securities, it increased by 115 percent to reach RO 2.5 billion by the end of July 2024.

On the other side of the budget – liabilities – the total deposits with conventional commercial banks increased by 11.4 percent to reach RO 24.8 billion by the end of July 2024. Within the total deposits, government deposits with commercial banks decreased by 1.7 percent to reach about RO 5.4 billion, while deposits of public sector institutions increased by 23.4 percent to reach about RO 1.9 billion during the same period. Private sector deposits increased by 9.7 percent to reach RO 16.3 billion in July 2024, representing 65.9 percent of total deposits in conventional commercial banks.

In the Islamic banking sector, data indicates that the total assets of Islamic banks and windows combined increased to about RO 7.8 billion, or 18.2 percent of the total assets of the banking sector in the Sultanate of Oman, by the end of July 2024, recording an increase of 10.8 percent compared to the same period last year. The total financing balance granted by the units practicing this activity recorded an increase of 11 percent to reach about RO 6.4 billion. Deposits with Islamic banks and windows also recorded an increase of 17 percent to reach about RO 6.2 billion by the end of July 2024.

As for monetary aggregates, figures recorded at the end of July 2024 indicate that broad money supply (M2) grew by 13.3 percent year-on-year to reach RO 24.2 billion by the end of July 2024. This increase was due to the increase in narrow money (M1) by 16.5 percent and quasi-money by 12.1 percent, which consists of total savings and time deposits in Omani riyals plus certificates of deposit issued by banks in addition to margin accounts and all foreign currency deposits in the banking sector. During the same period, cash held by the public decreased by 5.2 percent, while demand deposits increased by 22.8 percent.

Regarding the interest rate structure of conventional commercial banks, the weighted average interest rate on deposits in Omani riyals increased from 2.295 percent in July 2023 to 2.705 percent in July 2024, while the weighted average interest rate on loans in Omani riyals increased from 5.397 percent to 5.590 percent during the same period. As for the average interest rate in the interbank lending market for one night, it recorded an increase of 5.317 percent in July 2024 compared to 5.540 percent in July 2023. This came as a result of the increase in the weighted average interest rate on repurchase operations to reach 6.000 percent compared to 5.790 percent during the same period last year, in line with the policies of the US Federal Reserve.