Arab News | Islamic banking assets in Oman climb 10.5% to surpass $26bn

RIYADH: Assets held by Islamic banks and Islamic banking windows in Oman rose 10.5 percent year on year to 10.1 billion Omani rials ($26.2 billion) in July, according to recent data.

Figures released by the Central Bank of Oman showed that Islamic banking entities provided 8 billion rials in financing by the end of July, up 10.9 percent from the same month a year earlier.

This comes as Gulf Cooperation Council Islamic banks are expected to continue expanding faster than conventional banks, backed by strong demand for Shariah-compliant financing and higher public-sector exposure across their retail and corporate portfolios, which supports loan quality, according to Moody’s Ratings.

“Total deposits held with Islamic banks and windows increased by 10.3 percent to 8 billion rials,” the monthly statistical bulletin for July said.

Credit growth stays strong

Other depository corporations, which comprise conventional and Islamic banks, extended total credit that grew 12.2 percent to 38.3 billion rials. Credit to the private sector rose 11.5 percent to 31.1 billion rials.

Non-financial corporations received the largest share of private sector credit at about 48.2 percent, followed by households at 42.7 percent. Financial corporations took 5.9 percent and other sectors 2.6 percent.

Conventional banks’ total credit grew 12.7 percent. Their private sector credit rose 11.9 percent to 23.8 billion rials.

Deposits and money supply

Total deposits with other depository corporations grew 13.2 percent to 37.3 billion rials. Private sector deposits increased 12.7 percent to 24.7 billion rials.

Households contributed 48.5 percent of private sector deposits, followed by non-financial corporations at 35.2 percent and financial corporations at 14.6 percent.

At conventional banks, deposits climbed 14.6 percent to 29.3 billion rials. Broad money supply increased 15.0 percent to 29.3 billion rials, as narrow money rose 28 percent and quasi-money 9.9 percent.

Securities investments jump

Conventional banks’ investments in securities rose 26.2 percent to 7.3 billion rials.

Holdings of government development bonds increased 20.4 percent to 2.5 billion rials, while foreign securities holdings grew 30.8 percent to 2.7 billion rials.

Interest rates ease

The weighted average deposit rate at conventional banks fell to 2.19 percent from 2.57 percent a year earlier.

The average lending rate dropped to 5.31 percent from 5.51 percent.

The overnight interbank lending rate declined to 3.48 percent from 4.14 percent.

The central bank’s average repo rate fell to 4.25 percent from 5 percent, in line with the US Federal Reserve.

Economic backdrop

Nominal gross domestic product contracted 2 percent in the first quarter of 2026, as the petroleum sector fell 11.7 percent, while the non-hydrocarbon sector expanded 5.9 percent. Real gross domestic product grew 2.6 percent.

The average Omani oil price was $83.90 per barrel in July, up 15.7 percent from a year earlier.