Global Arab Network | Oman - Banks assets increase by 9% annually

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Oman - Banks assets increase by 9% annually

Global Arab Network - - George Haddad

Thursday, 22 October 2009 15:10

On a year-on-year basis, commercial banks" total assets increased by 9 per cent to RO 13,724.4 million in 2009 from RO 12,588.9 million a year ago. The expansion in assets was driven by 12.9 per cent growth in credit which stood at RO 9,512.5 million as at the end of August 2009 compared to RO 8,422.8 million at the end of August 2008.

Outstanding investments in securities (both domestic and foreign) declined by 28.7 per cent to RO 1,129.1 million from RO 1,583.3 million a year earlier. In particular, outstanding investments in CDs issued by the CBO decreased by 27.4 per cent to RO 674 million at the end of August 2009 from RO 929 million as at the end of August 2008, while commercial banks" outstanding investments in foreign securities decreased from RO 381.6 million to RO 226.9 million during the same period under reference.

Assets held in the form of cash and deposits with the CBO stood higher at RO 1,226.8 million at the end of August 2009 as against RO 675.6 million a year ago. On the liabilities side of the balance sheet, aggregate deposits (RO plus foreign currency) of commercial banks as at the end of August 2009 witnessed a growth of 11.9 per cent over its corresponding period in 2008 to reach RO 8,797.3 million.

Private sector deposits increased by 3.4 per cent to RO 6,428 million, representing 73.1 per cent of total deposits, whereas government deposits rose by 30.9 per cent to RO 1,763.4 million, representing 20 per cent of total deposits, and deposits by public enterprises increased in absolute terms by RO 308.3 million to RO 605.9 million.

Core capital and reserves of commercial banks at the end of August 2009 amounted to RO 1,626.1 million, representing 12 per cent of commercial banks" total assets. Provisional figures on net profits of commercial banks (net of provisions and taxes) amounted to RO 170.4 million for the first eight months of 2009.

As regards domestic monetary conditions, broad money (M2) increased by 7.6 per cent to RO 7,610.3 million in August 2009 over the corresponding period in 2008. Money supply as represented by narrow money (Ml) comprising of currency held by the public and local currency demand deposits registered an increase of 5.9 per cent over the twelve month period ending in August 2009 to reach RO 2,274.1 million.

While currency held by the public marginally declined by 1.6 per cent, RO demand deposits witnessed a year-on-year increase of 8.8 per cent. Quasi money (comprising RO savings and time deposits, certificates of deposit issued by commercial banks, margin deposits and foreign currency designated deposits) increased by 8.4 per cent.

With respect to sources of broad money supply (M2), combined domestic assets of commercial banks and the Central Bank of Oman declined by 3.1 per cent, whereas net foreign assets of the banking system (CBO plus commercial banks) expanded by 9.2 per cent, primarily on account of an 18.1 per cent rise in net foreign assets of CBO.

CBO"s policy interest rate for absorption of surplus liquidity in the form of CBO CDs of 28 days maturity moderated significantly from 0.772 per cent in August 2008 to 0,039 per cent in August 2009, whereas CBO"s policy rate for injection of liquidity — the average rate for repos with CBO — declined to 2 per cent from 3.464 per cent during the same period under reference. Similarly, the overnight RO domestic inter-bank lending rate declined to 0.057 per cent in August 2009 from 0.908 per cent in August 2008.

With respect to the behaviour of commercial banks" domestic interest rate structure, interest rates on RO deposits (demand, savings and time deposits of all sectors) increased from 1.847 per cent in August 2008 to 2.382 per cent in August 2009, while interest rates on RO lending rate increased from 6.542 per cent to 7.419 per cent during the same period.

Global Arab Network

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