Growth in total lending of Oman's six listed commercial banks declined to 7.5 per cent in the first half of 2013 as retail loans slowed down significantly due to regulatory restrictions. 
Year-on-year credit growth was as high as 19.4 per cent in the first half of 2012, which market experts expect to stay in the single digits this year.
The six lenders' combined loan book stood at RO12.75bn as on June 30, 2013, compared with RO11.85bn as on June 30, 2012.
"Credit growth in 2013 is not expected to be as good as it was in 2012. Overall credit flow is good, but credit growth is decelerating," said Suresh Kumar, head of research at Al Maha Financial Services.
"We are upbeat on industrial-sector growth. Increase in profitability and expansion in bank lending to the sector are expected to be reasonably good," added Kumar.
The gross corporate loans, of listed banks, increased 10.6 per cent to RO7.85bn in the first half of 2013 from RO7.1bn a year ago, while combined gross personal loans grew at a lower rate of 3.26 per cent to RO5.28bn from RO5.11bn, according to the financial statements of the banks.
Joice Mathew, head of research at United Securities, said, "At the macro-level, we see credit growth taking a breather after continuous growth during the last couple of years.  But a micro-level analysis shows that the deceleration in credit growth was in fact the result of a decline in HSBC Bank Oman's loan book."
Mathew said the CBO restrictions on personal loans continue to hinder growth of banks' retail portfolio.
"This, coupled with the absence of increased appetite for big-ticket borrowing in the first half of the year, is causing a deceleration in credit growth at the higher base," he said.
"With salary hikes for Omanis in place, the retail side of loan portfolios is expected to show marginal improvement. We expect corporate borrowers to come back later in the year as execution of projects gathers momentum," added Mathew.
Arafat al Asad, VP of asset management at National Securities, said the growth in corporate loans is still 'reasonably good' and would continue to be encouraging this year as the economy grows.
He said, "The deceleration in credit growth is mainly because of regulatory changes on personal loans; otherwise the demand for loans is good. Corporate loans will improve in the second half as more tenders are likely to be announced and expenditure by industrial firms is likely to grow. As corporate loans grow banks will be able to expand their retail-loan portfolio as well."
"We are expecting between eight-nine per cent credit growth for the full year 2013," Asad added.