Oman's financial system has managed to perform well against global uncertainties by maintaining its resilience and ability to withstand economic shocks. According to a recent report from the Central Bank of Oman, this success has been achieved due to strong principles in the banking sector, prudent fiscal policies, and improved macroeconomic conditions.
Strong Performance of the Banking Sector
The report indicates that Oman's banking sector is in a good position in terms of investment, profitability, liquidity, and asset quality. The capital adequacy ratio of banks has reached 18.8 percent, and the liquidity coverage ratio has reached 195 percent. Additionally, non-performing loans constitute about 4.4 percent of total loans.
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The banking sector has shown resilience against tough economic conditions, recording a return of 1.5 percent on assets and 10.1 percent on equity. Stress tests have also confirmed the banks' ability to absorb economic shocks, indicating that these institutions are well-capable of maintaining their capital and liquidity above legal requirements.
Improvement in Macroeconomic Conditions
The report emphasizes the ongoing improvement in Oman's economic and financial environment, supported by prudent financial management, a stronger external position, and enhanced financial stability. These developments have led to upgrades in the country's credit ratings by international agencies and strengthened confidence in the national economy.
The composite financial stability index of Oman continues to remain at positive levels, reflecting improved economic conditions, strong banking sector performance, and reduced systemic risks. A survey on systemic risks also indicates continued market participants' confidence in the stability of the financial system, despite increasing awareness of global and domestic challenges.
Islamic banking assets have increased by 9.9 percent, accounting for 19.6 percent of total banking sector assets, indicating the ongoing expansion of this sector. Credit conditions remain favorable for economic activities, and demand for loans from businesses and individuals continues robustly.
In this context, the assets of non-banking financial institutions have grown by 9 percent, although this sector is still relatively small and its potential systemic impact on the broader financial system is limited. The report also highlights the importance of resilience against cyber threats as a key regulatory priority.
The Central Bank of Oman emphasizes its commitment to maintaining financial stability through proactive macroeconomic policies, stronger risk monitoring mechanisms, and forward-looking regulatory frameworks. This report provides a comprehensive assessment of Oman's financial system and examines emerging risks and developments in this sector.
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