Omani banks stay strong despite global turmoil

Muscat: Hamoud Bin Sangour Al Zadjali, Executive President of the Central Bank of Oman (CBO), has said that the Omani banking sector's strength and ability to cope with the current global financial crisis has so far not impacted on the banking sector in the country.

In a statement to official Oman News Agency (ONA), he added that the CBO is closely monitoring the global and local financial conditions and will not hesitate to interfere if the need arises. The bank adopts precautionary and conservative policies, he added.

This policy is manifested in not allowing the banks operating in the Sultanate to borrow huge amounts in foreign currency to finance its operations and not allowing capital flows for speculation purposes.

The remarkable improvement in the performance of the banking sector throughout the first 11 months of 2008 compared to the corresponding period last year is good evidence that the banking sector has remained not affected by the global financial crisis, as well as, the developments the sector has witnessed.

On the whole commercial banks operating in the sultanate has witnessed a positive growth.

The total assets grew by 39.2 per cent to reach 13.7 billion Omani riyals (Dh130.15 billion) at the end of November 2008 compared to 9.8 billion riyals at the end of November 2007.

The total credit granted by these banks, which accounts for 67.1 per cent of the total assets, has a growth by 50.9 per cent to reach 9.2 billion riyals at the end of November 2008 compared to 6.1 billion riyals at the end of November 2007.

The credit granted for the private sector - which accounts for 94.6 per cent of the total credit - grew by 52.8 per cent to hit 8.7 billion riyals at the end of November 2008.

The foreign assets of the commercial banks amounted to 2.3 billion riyals at the end of November 2008 compared to 1.9 billion riyals at the end of November 2007.

On the liabilities side, aggregate deposits increased by 38.7 per cent to reach 8.6 million riyals at the end of November 2008 compared to 6.2 billion riyals at the end of November 2007.

Private sector deposits, which accounts for 72.5 per cent of the total deposits has shown a remarkable increase as they increased from 5.1 billion riyals at the end of November 2007 to 6.2 billion riyals at the end of November 2008.

The core capital, reserves and non distributed profits for these banks amounted to 1.5 billion riyals at the end of November 2008, compared to 1.2 billion riyals at the end of November 2007.

Provisional figures for net profits, after taxes and dead debts provisions, has reached about 246.2 million riyals at the end of November 2008 compared to 176.9 million riyals at the end of November 2007, he added.

Al Zadjali said the interest rate is one of the major monetary tools adopted by the central banks as changing it may have a direct impact on the size of credit granted by commercial banks and others to individuals and corporates.

The liberation of credit and debit interest rates is one of the major reforms witnessed by the banking sector in the sultanate.

As for the deposits made by the commercial banks abroad, Al Zadjali pointed out that the Omani commercial banks' deposits abroad have not been affected by the global financial crisis.

The banks are working to redeem them after getting their due payments to utilise them in boosting economic activity in the sultanate, he added.

After the aggravation of the current financial crisis, senior executives of commercial banks met to evaluate the performance of the financial institutions they are dealing with, redeem the special but not term deposits at these institutions, decide their stance of the loans they might have received from such institutions, he added.

The CBO chief also pointed out that the foreign deposits by the Omani commercial banks have several purposes, as some of them have been obtained to get certain facilities, while others were obtained to pay the financial liabilities on behalf of traders and clients to import goods.

While the total deposits by the commercial banks at the foreign institutions as of the end of November 2008 amounts to 1.193 billion riyals, foreign liabilities of these banks amounted to 1.602 billion riyals at the end of November 2008.