Islamic banking sector in Oman hits $18.25bn in assets

Oman’s Islamic banking sector has observed a notable increase of 12.6 percent year-on-year in its total assets, reaching a value of 7 billion Omani rials (equivalent to $18.25 billion). The data, released by the country’s central bank, underscores that this figure constitutes approximately 17.2 percent of the entire banking system’s assets within the Gulf Cooperation Council nation by the conclusion of June 2023.

The provided data indicates that Islamic banking entities have extended financing totalling 5.8 billion rials by June 2023, reflecting a substantial growth of 12.8 percent in comparison to the previous year. Concurrently, the cumulative deposits held by Islamic banks and windows exhibited an increase of 10.5 percent, reaching a sum of 5.2 billion rials.

As detailed in the central bank’s report on banking and monetary developments for June 2023, the broader money supply, known as M2, has marginally risen by 2.8 percent, summing up to 21.4 billion rials.

Notably, despite a 4.8 percent decrease in narrow money (M1), the expansion in the M2 supply can be attributed to a notable 5.9 percent upswing in non-cash assets.

Additional insights from the central bank data highlight divergent trends within the components of M1 during the same period. Public holdings of currency saw an increase of 2.5 percent, while demand deposits denominated in Omani rials witnessed a reduction of 6.9 percent.

In economic terminology, M2 refers to the aggregate sum of money, encompassing physical currency, bank deposits, savings accounts, and other forms of readily accessible cash that circulate within an economy.

On the contrary, M1 is a narrower subset of the money supply, including only the most liquid and immediately accessible forms of money: physical currency, coins, and demand deposits in banks, which can be withdrawn instantly.

Both M2 and M1 statistics serve as general indicators of the overall money supply within an economy.

The report further unveils that the overall credit balance granted by conventional commercial banks has demonstrated a year-on-year growth of 5.1 percent. The central bank additionally noted that credit extended to the private sector surged by 5.4 percent, reaching 20.2 billion rials. In contrast, investments made by these banks in securities experienced a decline of 5.9 percent, resulting in a total of 4.6 billion rials at the conclusion of June 2023.

Furthermore, the bank reported a marginal reduction of 5.1 percent in investment in government development bonds, amounting to 2.1 billion rials. In stark contrast, investments in foreign securities soared by an impressive 90.8 percent, reaching a value of 1.3 billion rials by the end of June 2023.