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Tuesday, 11 November 2014

‘Islamic banks showing remarkable growth in Oman’

Islamic banks and windows have reported a remarkable growth at the end of August 2014, when compared to the results of the same period last year, said a top official at Central Bank of Oman (CBO).

"In 2014, the total assets stood at OMR1billion. In 2013, it was 196 million. The market share for Islamic banks and windows now amount to 5 per cent of the banking sector," said Ali Al Raisi, the deputy CEO of CBO.

Islamic banking, which has become increasingly important since 2011 when the CBO announced its decision to license Islamic banking services with the objective of diversifying and widening banking services, now has 10 per cent of the total branch network in the Sultanate. Oman introduced Islamic finance at the end of 2012, becoming the last country in the six-nation Gulf Cooperation Council to do so. Since then, two full-fledged Islamic banks and six Islamic windows at conventional banks have opened their doors. Under a base scenario, the study estimates Oman's Islamic banking operations could reach OMR5billion in assets by 2018, a 7 per cent share of estimated total banking assets at that time.

According to a Thomson Reuter's recent study, Oman's Islamic banking operations could reach OMR5 billion of assets by 2018, a 7 per cent share of estimated total banking assets at that time.

A best-case scenario puts the figure at OMR7.1 billion, a 10 per cent share.

Recently, ratings agency Standard & Poor's said that Islamic banks are set to boost their market share in the Gulf countries to nearly 30 per cent in the next five years.

"We think the market share of Islamic banks in the overall banking system assets in the Gulf Cooperation Council (GCC) countries could gradually inch closer to 30 per cent over the next five to six years, from just under 25 per cent currently," said Timucin Engin, a credit analyst with Standard & Poor's. S&P said it expected total GCC banking assets, both conventional and Islamic, to rise to $2 trillion by the end of 2015, from $1.7 trillion at year-end 2013.

However, solid market positions by conventional banks in the region will prevent the fast-growing Islamic banks from attaining a bigger share, said Engin. The GCC region groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. It has one of the world's largest Islamic banking markets and S&P said government support should help the sector to keep expanding its market share.

The agency said it expected Islamic banks would continue to grow faster than their conventional peers in the next couple of years, particularly in Qatar and Saudi Arabia, where domestic credit is projected to grow the most.

(Times Of Oman / 10 November 2014)
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