Muscat: Oman’s Islamic banks have achieved robust growth in finance, which crossed OMR1.6 billion by the end of November 2015.
The Islamic banks and window operations achieved a 65.49 per cent growth in finance, which touched OMR1,644.5 million by end-November 2015, against OMR993.7 million for the same period last year.
“Islamic banks grew very well last year, and the trend is continuing this year as well,” Ali Hamdan Al Raisi, vice president, Central Bank of Oman, told the Times of Oman.
He said there is still space for Islamic banks to grow further, although there are challenges ahead.
“Islamic banks are becoming more solid, compliance and risk management is getting better. Some of these banks are in operation for (almost) three years,” added Al Raisi, on the sidelines of an international seminar on risk management and compliance in Islamic financial institutions last week.
Al Raisi said some of the banks showed a robust 100 per cent growth in their finance last year. “We will not expect a 100 per cent growth (this year), but growth will continue.”
Referring to certain regulatory relaxations given to Islamic banks for investing their excess funds in overseas markets, the CBO official said, “We are not going to relax these for a long period. We will assess the experience, see the conditions and if there is a need to extend these limits, we will review at that time.”
He also said there are different limits and some have been relaxed until the end of this year, while some others will stay relaxed until March. “So, we will review these limitations when that time comes.”
Total customer deposits held by Islamic institutions also shot up by 196 per cent to OMR1,454 million by end-November 2015, from OMR491.2 million for the same period last year, according to the latest monthly bulletin released by the Central Bank of Oman.
Such robust growth in Islamic institutions indicates that Sharia-compliant banks have been able to establish themselves in the market and are able to overcome teething problems.
Two Islamic banks and the window operations of conventional banks have launched innovative products to attract Omani customers, besides opening several branches in different parts of the country.
There has been a considerable increase in the number of branches and assets held by these entities, ever since these banks started operations two years earlier. Islamic banks are opening up new segments and players and thus adding to the competitive environment, not only in terms of efficiency and innovation, but also by providing consumers the benefit of choice between both conventional and Islamic banking products.
An important focus area for Islamic banks now is small and medium enterprises. Sharia-compliant institutions are also focussing on creating awareness about Islamic products among potential customers.
In Oman, two Islamic banks—Bank Nizwa and the Alizz Islamic bank—and window operations of six conventional banks have scores of branches across the country.
The total assets of Islamic banks and windows were pegged at OMR2,174.1 million at the end of November 2015, reflecting an increase of 67.13 per cent over the same period of previous year.