Muscat: The Central Bank of Oman (CBO) has released its twelfth Financial Stability Report (FSR) for the year 2024, underscoring the resilience of the Omani financial system amidst escalating global geopolitical tensions and persistently high interest rates.
Despite these challenges, the FSR indicates that the short-term risks to financial stability in Oman remain minimal, a sentiment also reflected in the positive rating actions taken by all three major rating agencies.
The banking sector is highlighted in the report, where it is noted that the sector has maintained robust capital buffers, thereby enhancing its resilience to withstand adverse shocks. Additionally, the report observes improvements in profitability metrics for banks as a result of the economic recovery. The asset quality of the banking sector is also deemed solid, with banks possessing sufficient liquidity buffers.
The FSR further presents insights from the most recent Systemic Risk Survey and Credit Conditions Survey conducted by the Central Bank of Oman. The Systemic Risk Survey has revealed sustained confidence among market participants in the Omani financial system. The Credit Conditions Survey indicates a notable increase in demand for household loans, a trend expected to continue into 2024, propelled by economic expansion, heightened consumer confidence, and favorable lending rates.
The Composite Financial Stability Indicator (CFSI) for the Sultanate of Oman has shown positive trends, largely attributed to favorable factors such as higher oil prices, improved debt sustainability, and systemic risk indicators.
The report also addresses emerging challenges to financial stability, particularly in the areas of climate change and cybersecurity. It is affirmed that the CBO is actively engaged in formulating policies and frameworks aimed at promoting sustainable financial practices and initiatives to enhance the stability and security of the financial system.
FSRs serve as a critical communication tool by Central Banks worldwide to inform the public about potential risks to financial stability. In Oman, the publication of FSRs has been integrated into the broader macro-financial surveillance system since 2013.
