Oman’s banking sector demonstrates consistent growth, with recent data revealing a robust expansion in both conventional and Islamic banking activities as of the end of October 2025. This positive trend indicates strengthening economic conditions and increased financial activity within the Sultanate. A key indicator is the growth in Oman bank credit, showcasing a healthy demand for loans and financing. This article will delve into the detailed performance of both conventional and Islamic banks, outlining the key increases and shifts in deposits and investments.
Conventional Banking Performance in Oman – October 2025
The figures from Oman’s central bank indicate a significant rise in lending by conventional commercial banks. Total credit extended increased by 8.6 percent, suggesting a growing confidence among businesses and individuals to borrow for investment and consumption. This increase is fuelled primarily by lending to the private sector, which saw a 4.4 percent rise, reaching OMR21.6 billion.
Investment Trends within Conventional Banks
A closer look at the investment portfolio of these banks reveals strategic allocations. Total investments in securities experienced a 5.9 percent surge, amounting to roughly OMR6.5 billion. Within this, a notable upswing was observed in investment in government development bonds (GDBs), climbing 10.6 percent to OMR2.1 billion.
This indicates a strong appetite for relatively secure, government-backed instruments. However, investments in foreign securities experienced a slight decline, decreasing by 3.9 percent to OMR2.4 billion. This could be attributed to a variety of factors, including shifting global economic conditions or a deliberate rebalancing of portfolios towards domestic opportunities. Understanding these banking investments helps gauge the overall economic strategy.
Deposit Growth in Conventional Banks
On the liabilities side, total deposits held with conventional commercial banks also grew, albeit at a more moderate pace of 1.4 percent, reaching OMR25.7 billion. Notably, government deposits witnessed a substantial increase of 9.8 percent, reaching approximately OMR5.9 billion. This often correlates with government spending and revenue cycles.
Conversely, deposits from public sector institutions experienced a significant reduction – a drop of 44.7 percent to around OMR1.5 billion. This contrasting movement warrants further investigation, potentially highlighting shifts in public sector financial management or alternative investment strategies within these entities. Private sector deposits, representing the largest share, grew by 8.4 percent to OMR17.4 billion and constitute 67.5 percent of total deposits. This solid growth demonstrates the financial health and confidence of the Omani private sector.
The Rise of Islamic Banking in Oman
Islamic finance is gaining increasing prominence within Oman’s financial landscape. The total assets of Islamic banks and windows— financial institutions offering both conventional and Sharia-compliant services—reached approximately OMR9.2 billion at the end of October 2025, representing 19.5 percent of the overall banking sector’s assets. This marks a significant increase of 10.8 percent compared to the same period last year.
This growth is a testament to the increasing demand for Sharia-compliant financial products and services within the country. The expansion of Islamic banking also reflects the government’s commitment to fostering a diverse and inclusive financial sector.
Financing and Deposit Growth in Islamic Banks
The total balance of financing provided by Islamic banking units climbed by 10.4 percent to around OMR7.4 billion. Simultaneously, deposits within Islamic banks and windows experienced a robust increase of 11.9 percent, reaching roughly OMR7.3 billion. This synchronized growth in both financing and deposits highlights the increasing attractiveness and stability of the Islamic banking sector in Oman.
The strong deposit growth is particularly encouraging, indicating a growing base of customers who prefer Sharia-compliant banking options. This underlines the success of Islamic banking in attracting a wider segment of the population and contributing to the overall financial sector growth of the Sultanate. This growth coincides with increased awareness of ethical investing, a principle central to Islamic banking.
Implications and Future Outlook
The latest data unequivocally demonstrates the positive trajectory of Oman’s banking sector. The healthy growth in Oman bank credit for both conventional and Islamic institutions is a strong signal of economic resilience and potential. The increasing investments in government development bonds suggest continued support for national development projects. Furthermore, the consolidation of Islamic banking as a substantial component of the financial ecosystem provides greater diversification and choice for consumers and businesses.
Looking ahead, continued monitoring of these trends will be critical. Analyzing the factors driving the shifts in government and public sector deposits and the reasons behind the decline in foreign securities investments will be crucial for formulating effective economic policies. The sustained growth of the Islamic finance sector presents opportunities for innovation and expansion, potentially leading to a more dynamic and inclusive financial landscape in Oman.
This positive momentum, combined with strategic investments and a growing, confident private sector, positions Oman’s banking sector for continued success in the coming years. Investors and stakeholders alike will benefit from closely tracking these developments to capitalize on the unfolding opportunities within the Omani economy.
Note: This article utilizes the information provided as of October 2025. Actual figures may vary. The use of “approximately” is maintained where the source material used it.
