CBO releases its 12th Financial Stability Report

MUSCAT – The Central Bank of Oman (CBO) has released its 12th Financial Stability Report (FSR) for 2024, emphasizing the resilience of the Omani financial system amid heightened global geopolitical tensions and persistently elevated interest rates.

Despite these challenges, the FSR indicates that short-term risks to financial stability in Oman remain subdued, which is also echoed by positive rating actions from all three major rating agencies.

Regarding the banking sector, the report highlights that the banking sector maintained robust capital buffers which, “further instills confidence in its resilience to weather any adverse shocks”. It also notes that with the economic recovery, “banks witnessed improvements in their profitability metrics”. Furthermore, the asset quality of the banking sector remained solid and banks held ample liquidity buffers.

The FSR also presents findings from the latest Systemic Risk Survey and Credit Conditions Survey conducted by the Central Bank of Oman. The Systemic Risk Survey revealed sustained confidence among the market participants in the Omani financial system. The Credit Conditions Survey indicated a notable increase in household loan demand. This trend is anticipated to persist into 2024, driven by economic expansion, heightened consumer confidence, and favorable lending rates.

The Composite Financial Stability Indicator (CFSI) of the Sultanate of Oman has revealed positive trends largely driven by favorable factors, particularly higher oil prices, improved debt sustainability and systemic risk indicators. The report also acknowledges the presence of new challenges to financial stability, particularly in climate change and cybersecurity domains. The report affirms that CBO is actively engaged in formulating policies and frameworks aimed at fostering sustainable financial practices and initiatives to fortify the stability and security of the financial system.

FSRs are an important communication tool by Central Banks across the globe to disseminate information on potential points of distress for financial stability. In Oman, publications of FSR have been made a part of the overall macro-financial surveillance system since 2013.

(ONA)