(MENAFN - Muscat Daily) Credit disbursement by commercial banks in the sultanate rose 11.2 per cent and interest rates on both local currency lending and deposits softened during the first six months of 2014 according to the Central Bank of Oman (CBO).
Total credit of the country's commercial banks increased to RO16.37bn at the end of June 2014 from RO14.72 a year ago.
In its latest statistical bulletin CBO said that the performance of commercial banks has continued to remain favourable. 'The financial health of banks in terms of asset quality provision coverage capital adequacy and profitability remained strong.'
While commercial banks' credit to the government declined by 28.5 per cent during the period credit to the private sector and public enterprises increased by 11.3 per cent and 9.3 per cent respectively.
Credit to the private sector stood at RO14.21bn accounting for nearly 87 per cent of total bank credit. Of the total credit to the private sector at end June 2014 the share of the non-financial corporate sector stood at 48.3 per cent closely followed by household sector (mainly under personal loans) at 44.7 per cent financial corporations at 4.7 per cent with other sectors accounting for the remaining 2.3 per cent.
CBO said the balance sheet of commercial banks further strengthened due to robust growth in both deposits and credit during the period. 'Islamic banking is opening up new segments and players and is diversifying banking services and augmenting financial inclusion. Promotion of small and medium enterprises (SMEs) by the government and CBO has led to employment generation and the creation of a supply chain for the industrial sector.'
Aggregate deposits with commercial banks registered a significant increase of 16 per cent to RO17.32bn in June 2014 from RO14.93bn a year ago. Private-sector deposits which constitute 63 per cent of total deposits increased by 16.2 per cent to RO10.92bn from RO9.4bn. Government deposits rose 19.7 per cent to RO5.12bn.
The central bank added that both deposit and lending rates softened during the period. CBO added that the weighted average interest rate on rial deposits declined from 1.25 per cent in June 2013 to 1.04 per cent in June 2014 while the weighted average rial lending rate decreased from 5.51 per cent to 5.21 per cent during the same period.