Review of Banking and Monetary Developments –...

The nominal GDP, as per the preliminary data released by National Center for Statistics and Information (NCSI), contracted by 2.0 percent at end of March 2026 over the same period of 2025. This was primarily due to a sharp decline of 11.7 percent in the petroleum sector, while the non-hydrocarbon sector expanded by 5.9 percent. As for real GDP, it recorded an increase of 2.6 percent at end of March 2026. This expansion was driven by 4.6 percent of hydrocarbon sector and 2.4 percent of non-hydrocarbon sector. The average Omani oil price at the end of May 2026 was $76.2 per barrel, 1.3 percent higher than in May 2025. The average daily oil production at 1083.0 thousand barrels as of May 2026 increased by 9.7 percent. The Sultanate's average Consumer Price Index (CPI) showed a Y-o-Y inflation of 2.8 percent as of May 2026.

Other depository corporations (ODCs) consist of conventional and Islamic banks in Oman. Total outstanding credit extended by ODCs grew by 11.5 percent to OMR 37.4 billion at the end of May 2026, with credit to the private sector demonstrating an increase of 8.7 percent (Y-o-Y) to reach OMR 30.3 billion.

Non-financial corporations received the highest share of the total private sector credit at approximately 48.1 percent at May 2026, followed by the household sector at 43.4 percent. The share of financial corporations was 6.0 percent while other sectors received the remaining 2.5 percent of total private sector credit as at May 2026.

Total deposits held with ODCs registered a Y-o-Y significant growth of 13.1 percent to reach OMR 36.5 billion at the end of May 2026. Total private sector deposits increased by 10.7 percent to OMR 24.2 billion. In terms of sector-wise composition of private sector deposits, the biggest contribution is from household deposits at 49.5 percent, followed by non-financial corporations at 33.4 percent, financial corporations at 15.1 percent and other sectors at 2.0 percent.

The combined balance sheet of conventional banks showed a Y-o-Y growth of 11.8 percent in total outstanding credit as of May 2026. Credit to the private sector increased by 8.2 percent to reach OMR 23.1 billion, while total investments in securities increased by 29.8 percent to OMR 7.1 billion at May 2026. Investment in Government Development Bonds increased by 26.3 percent to OMR 2.4 billion, while investments in foreign securities increased by 36.1 percent to OMR 2.6 billion, at the May 2026. On the liabilities side, aggregate deposits held with the conventional banks increased by 13.7 percent Y-o-Y to 28.6 billion at the end of May 2026. Government deposits with conventional banks increased by 9.0 percent at OMR 6.3 billion, and deposits of public enterprises increased by 42.9 percent to OMR 2.4 billion. On the other hand, private sector deposits, which accounted for 66.3 percent of total deposits with conventional banks, increased by 11.0 percent as of May 2026 to reach OMR 19.0 billion.

The total assets of Islamic banks and windows increased by 9.2 percent on a Y-o-Y basis to OMR 9.8 billion and constituted about 19.0 percent of the banking system's assets at May 2026. Islamic banking entities provided financing of OMR 7.9 billion at the end of May 2026, recording a growth of 10.5 percent over that a year ago. Total deposits held with Islamic banks and windows increased by 11.0 percent to OMR 7.8 billion.

Among the indicators of monetary aggregates, broad money supply M2 at May 2026 increased by 12.7 percent to reach OMR 28.6 billion. This is attributed to the increased in narrow money (M1) by 26.9 percent, along with 7.1 percent increase in quasi-money (Rial Omani saving and time deposits, certificates of deposit issued by banks, margin deposits and foreign currency denominated deposits). Looking at components of narrow money (M1) during the same period, currency with the public increased by 12.1 percent, while demand deposit increased by 29.8 percent.​

The weighted average interest rate on deposits with conventional banks witnessed a decrease from 2.708 percent at end-May 2025 to 2.366 percent at end-May 2026, and the weighted average lending rate decreased from 5.551 percent to 5.327 percent over the same period. Meanwhile, the overnight domestic inter-bank lending rate declined to 3.375 percent in May 2026 from 4.394 percent a year ago. This reflected a decline in the average repo rate applied by the CBO for liquidity injections, from 5.000 percent to 4.250 percent, in line with the U.S. Federal Reserve.