Total lending by Oman's commercial banks grew 8.7 per cent in the first quarter of this year to RO14.28bn as compared to RO13.14bn a year ago, statistics released by the Central Bank of Oman (CBO) showed.
Year-on-year credit growth was nearly 20 per cent in the first quarter of 2012, which slowed to a single-digit gain in the first quarter of 2013. On a sequential basis, total credit declined marginally to RO14.28bn at the end of March 2013 from RO14.32bn at the end of December 2012.
Lo'ai Badie Bataineh, DGM of investment and development at Oman Arab Bank, said corporate lending slowed in the first quarter due to the weak tendering activity compared to the same period last year, while growth in personal loans declined due to last yearÕs regulatory changes in the segment.
He said, "Last year, the value of contracts was much bigger and they were awarded faster than this year. As a result, banks did not land more business in the first quarter, as in the previous two years. Also, many companies and projects waited for Islamic banking operations to seek funding, but, unfortunately, it has remained slow.
"Going forward, I believe credit growth will accelerate in the second and third quarters as the award of contracts accelerates. The growth in corporate loans has not been as much as it was last year, and you cannot grow your credit offtake unless you grow on corporate loans, due to the prescribed ceiling on personal loans," Bataineh added.
Total credit to the private sector increased 9.7 per cent to RO12.39bn in the first quarter from RO11.3bn a year ago, while total credit to public enterprises rose 7.7 per cent to RO1.69bn from RO1.57bn.
C B Ganesh, deputy chief executive officer of commercial banking and treasury at Ahlibank, said, "There has been a clear slowdown in the personal-loan segment. And to some extent, we are seeing many regional banks getting very active in the Oman market and trying to grab business from corporates in the country which does not get reflected in commercial banks' credit growth."
He said with the focus on SMEs by government and CBO, loans will pick up in the coming quarters. "We feel that SME lending will pick up in light of new CBO regulations, and corporate and commercial segments will show reasonable growth in the coming quarters," added Ganesh.
Another banker, who did not want to be named, said, "Year-on-year credit growth has been impacted by the slowdown in personal loans, driven by regulatory changes last year. But if you look at it on a sequential basis the growth is more or less flat with a downward bias. I still feel there are opportunities in the market and most of the pipelines of banks are strong. I think this momentum will sustain going forward."