Sukuk ratings and challenges faced by Islamic banking sector reviewed

Muscat: Oman Banks Association and Moody's Investors Service jointly organised Islamic Finance Roundtable with cooperation with the Central Bank of Oman, on October 19 in Muscat, bringing together about 60 participants representing financial sector regulators, senior representatives of Islamic and conventional banks as well as other financial sector sides in the Sultanate of Oman.

The experts shared valuable insights into the remarkable growth witnessed in Islamic banking and finance sector in the Sultanate of Oman as well as at the regional and global level. Factors contributing to this growth, such as an increasing demand for Sharia-compliant financial services, sophistication of products and active regulatory support were discussed in depth. The roundtable also touched upon Sukuk ratings, regional experience and challenges faced by Islamic banking sector in the issuance of capital raising Sukuk.

Tahir bin Salim Al Amri, the Executive President of the Central Bank of Oman, delivered the Welcome Remarks, followed by Ali Al Mani, Board Member of Oman Banks Association and Nitish Bhojnagarwala, Senior Vice President of Financial Institutions Group, Moody’s Investors Service.

The first session of the event, featuring Nitish Bhojnagarwala provided valuable insights into the global landscaping for Islamic banking and Sukuk markets, where he highlighted growth trends in Islamic banking across the GCC, Africa, and CIS countries and shared projections for gross financing needs and sukuk issuance in various regions.

In the subsequent panel discussion moderated by Nitish Bhojnagarwala, participants explored the growth and penetration of Islamic banking system in Oman and the region.

Panellists included Dr. Abeer Al Yaqoobi, Acting Manager, Licensing Department, Central Bank of Oman; Francesca Paolino, Analyst, Moody’s Investors Service; Khalid Al Kayed, CEO, Bank Nizwa; and Shamzani Hussain, GM, Meethaq Islamic Banking.

The discussion in the session revolved around the performance of Islamic banks in the regional context, with a particular focus on Oman, insights into consolidation within the regional banking system, peer comparisons between Islamic banks and conventional banks, and the drivers propelling the growth and increased penetration of Islamic banking sector in Oman. Finally, Mohammed Ali Londe, VP –Senior Analyst, Financial Institutions Group, Moody’s Investors Service, discussed Takaful growth trajectory and drivers in Oman, profitability trends and future challenges for takaful operators going forward.

The final session of the Roundtable was moderated by Murtadha Al Lawati, AGM, Oman Housing Bank and panellists included Nitish Bhojnagarwala; Moody’s Investors Service; Salim Al Maharbi, CFO, Bank Nizwa; Suad Al Balushi, AGM Head of Treasury and FI, Oman Housing Bank; and Mohammed Al Balushi, AGM - Head of Treasury and Investment, Ahli Bank. The panellists delved into the significance of Additional Tier 1 and Tier 2 Sukuk issuance for Islamic banks and drew insights from institutions that have successfully executed such issuances. Discussions also revolved around the critical considerations in the rating process for such Sukuk.

The Islamic Finance Roundtable served as a platform for in-depth discussions, knowledge exchange, and networking among industry leaders and experts to deliberate on the substantial growth observed within the Islamic banking and finance sector in Oman and globally. Furthermore, the in-depth discussions on the issuance of capital raising Sukuk by Islamic banks provided additional insights to the discourse. This event has contributed significantly to the development of strategies and ideas for further advancing the Islamic banking sector in Oman, solidifying its prominent role in the broader financial landscape of the Sultanate of Oman.