Moody's Warns of `Funding Squeeze' in #Oman as Bank Deposits Lag - Bloomberg

Moody's Warns of `Funding Squeeze' in Oman as Bank Deposits Lag - Bloomberg:

Growth in Oman’s bank deposits is expected to lag in the next 12 to 18 months as lower oil prices constrain government finances, according to Moody’s Investors Service.

The sultanate, where the public sector makes up more than a third of all deposits -- the highest share in the Gulf -- will probably face a continued “funding squeeze,” the rating company said in a statement on Tuesday. Given the pressure on public finances, “the risk of a slow and progressive erosion” in government deposits is on the rise, it said.

“Project financing, corporate expansion and strong mortgage demand are driving lending growth, but deposits - primarily from the government - will lag,” said Mik Kabeya, an analyst at Moody’s. “The smallest banks will feel the impact most in higher funding costs and reduced profits.”