Global Arab Network | Oman Banking and Monetary Developments - Signs of Pick Up

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Oman Banking and Monetary Developments - Signs of Pick Up

Global Arab Network - - Rabih Serrai

Friday, 07 May 2010 14:43

During the first quarter of 2010, there were early signs of pick up in the banking deposit growth while the credit growth continued to remain sluggish. Total assets increased by 8.5 percent in March 2010 to RO. 14,869.4 million compared to RO. 13,698.4 million in March 2009.

Cash on hand and deposits of commercial banks with the Central Bank of Oman (CBO) amounted to RO. 1,211.6 million at the end of March 2010 compared to RO. 1,018.3 million in March 2009 suggesting comfortable liquidity condition.

Total outstanding credit increased by 5.7 percent to RO. 9,998.6 million at the end of March 2010 from RO. 9,455.5 million a year ago. Outstanding investments in securities (domestic and foreign) increased to RO. 1,783.8 million in 2010 from RO. 1,377.1 million in March 2009.

Investments of commercial banks in CBO CDs increased from RO. 914 million in March 2009 to RO. 1,339 million in March 2010, whereas outstanding investments in foreign securities declined to RO. 172.2 million from RO. 214.3 million during the same period.

On the liabilities side of the balance sheet, aggregate deposits (Rial Omani plus foreign currency) witnessed a year-on-year growth of 13.2 percent to RO. 9,788.8 million in March 2010 from RO. 8,650 million in March 2009.

Government deposits with commercial banks increased by 25.5 percent to RO. 2,148.8 million, while deposits of public enterprises rose by 39.9 percent to RO. 870.2 million for the same period.

Private sector deposits (accounting for 69.2 percent of total deposits with commercial banks) registered an increase of 7.2 percent to RO. 6,769.8 million by the end of March 2010 from RO. 6,315.4 million a year ago.

For the first quarter of the year, provisional figures for net profits stood at RO. 64.4 million in 2010 compared to RO. 79.9 million in the previous year. Provisions and reserve interest at the end of March 2010 amounted to RO. 298 million compared to RO. 235.3 million in 2009.

Broad money (M2) increased by 9.1 percent to RO. 8,275.4 million in March 2010 compared to RO. 7,587.2 million in March 2009.

Money supply as represented by narrow money (Ml), comprising currency held by the public and local currency demand deposits, expanded by 19.3 percent on a year-on-year basis ending in March 2010 to reach RO. 2,603.1 million. Quasi money (comprising RO savings and time deposits, certificates of deposit issued by commercial banks, margin deposits and foreign currency denominated deposits) increased by 4.9 percent to RO. 5,672.3 million by March 2010 compared to RO. 5,404.9 million a year ago.

As regards the sources of broad money supply (M2), it can be seen that the main thrust was on account of the increase in net foreign assets of the banking system from RO. 4,260.8 million in March 2009 to RO. 5,053 million in March 2010, giving a rise of 18.6 percent. Domestic assets on the other hand mildly contracted by 3.1 percent driven mainly by a decline in claims on the government and an increase in non-monetary liabilities (capital, reserves and provisions) of the banking system.

CBO's policy interest rate for absorption of surplus liquidity in the form of CBO CDs of 28 days maturity moderated from 0.063 percent in March 2009 to 0.04 percent in March 2010.

CBO's policy rate for injection of liquidity - the average rate for repos with CBO - remained unchanged at 2 percent since January 2009. The overnight RO domestic inter-bank lending rate followed the CBO CD rate and declined to 0.046 percent in March 2010 from 0.102 percent in March 2009.

In respect of domestic interest rate structure of commercial banks, the weighted average interest rate on Rial Omani deposits (demand, savings & time deposits of all sectors) decreased from 2.513 percent in March 2009 to 2.096 percent in March 2010, while the weighted average Rial Omani lending rate increased from 7.234 percent to 7.350 percent during the same period suggesting risk-averse behavior of banks. The interest rate spread between Rial Omani lending and Rial Omani deposit rates increased from 4.721 percent at the end of March 2009 to 5.254 percent at the end of March 2010.

Global Arab Network

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network