The recent decision of the Central Bank of Oman to reduce interest rate ceiling on personal loans to 7 per cent is seen to put pressure on the profit margin of the commercial banks in the Sultanate. The new rates will be applicable for fresh loan disbursements starting April 2012. The last revision in the personal lending interest rate was done in June 2008.
“The decline in lending rates is expected to put pressure on the margins of banks with the re-pricing of loans at lower rates in the coming quarters. Over the medium term, we expect the lending rates to remain soft along with the recent implication of fall in personal loan rates”, say analysts at Gulf Baader Capital Markets in a research report.
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