Interview with Mr. Kamal Uddin Hassan Abdullah Al Maraza

Interview with Mr. Kamal Uddin Hassan Abdullah Al Maraza, GM & Chief Dhofar Islamic Banking Officer.

• Islamic banking is growing rapidly in the size of assets and deposits

• The sector has an important role in financing projects and achieving the goals of Oman Vision 2040

• The Omani banking sector is keen to keep pace with global trends and adopt sustainable strategies

• World over there is a decline in the use of cash, and customers are embracing the use of digital transactions

• There is increasing demand by investors for specialized products such as Sukuk

• The new identity of “Dhofar Islamic” and how it is reflecting in customer centricity

About a decade ago, the Sultanate of Oman permitted the establishment of banking operations compliant with Sharia principles, marking a significant milestone in the financial landscape. The initial challenges were substantial, ranging from regulatory hurdles to a lack of national expertise and public awareness. Despite these obstacles, the demand for Islamic banking services has grown steadily and today, the Islamic banking sector plays a pivotal role in economic development, financing projects across various sectors, and continuously evolving its services and products to meet the diverse needs of individuals and businesses.

Year after year, the Islamic banking sector in Oman has experienced remarkable growth in assets and deposits, significantly contributing to the financing of projects in key economic sectors, especially those aligned with the goals of Oman Vision 2040. Currently, the country has two dedicated Islamic banks and four Islamic windows.

Kamal al-Din bin Hassan al-Marza’, GM & Chief Dhofar Islamic Banking Officer at Dhofar Islamic reflects on the progress: "After more than 10 years of Islamic banking in Oman, the sector has matured significantly, with an increasing share in the Omani banking industry. This success can be largely attributed to the expertise and visionary leadership within the sector, as well as our ability to innovate and meet the needs of both society and investors."

According to the Central Bank of Oman, by the end of Q1 this year, the assets of Islamic banks and windows increased by 14.8% compared to the same period in 2023, reaching OMR 7.6 billion, representing 17.7% of the total banking sector assets. Financing provided by the sector rose by 12% to OMR 6.3 billion, while deposits grew by 18% to OMR 5.8 billion.

Over the years, Islamic banking in Oman has successfully navigated various challenges, earning increased confidence from the community and investors. As the sector continues to evolve and develop, it aims to enhance its competitive edge, liquidity, and manage high financing costs effectively.

Mr. Al-Marza highlights a growing interest among investors in Sharia-compliant companies, noting a significant demand for recent energy sector subscriptions. He anticipates that several Sharia-compliant companies will soon be available for subscription, attracting a wide range of investors. Key sectors attracting investment within Oman include oil, gas, minerals, real estate, and infrastructure projects. Dhofar Islamic is actively financing many of these initiatives, including continuous development projects in the education sector with a clear emphasis to the growth aligning to Oman Vision 2040.

Commitment to the Green Economy: Keeping up to the pace of the governments focus on the green economy and carbon neutrality, Dhofar Islamic is committed to supporting the nation's ambitions to achieve carbon neutrality by 2050. The bank is developing a comprehensive ESG plan aligning to the global standards and the plan will be implemented in phases.

He confirms that the Omani banking sector has the ability and desire to participate in financing clean energy projects, whether by the banks themselves or by entering into alliances. The banks are currently in the process of collecting information about this sector and studying it, and there are projects that have already begun studying their participation in financing them.

Kamal Al-Din Al-Marza’ explains that Dhofar Islamic achieved strong growth in assets, financing portfolios, customer deposits during the first quarter of this year, reflecting on the robust performance achieved by Islamic banking.

This growth is driven by the increasing demand for Islamic financial services in Oman. The bank continues to invest in innovative products and services, enhance digital banking, and expand its branch network with an objective of getting closer to its customers. The branch network now comprises of 24 branches.

The recent rebranding of Maisarah Islamic Banking to Dhofar Islamic symbolizes new opportunities at both corporate and individual levels. Dhofar Islamic's diverse and modern services cater to housing, goods, and various other needs, making it a strong competitor to conventional banking products. The bank is also committed to supporting small investors through products like Islamic Sukuks, with new offerings in the pipeline.

The new logo represents Dhofar Islamic’s evolution from a single star to a galaxy of enhanced capabilities. Each star in the constellation symbolizes our core values, emphasizing ethical banking, transparency, and customer-centricity. It reflects the Bank’s commitment to customers to offer the best in class products and services

He added that Dhofar Islamic's services and products are distinguished by their diversity and are focused on customer needs. They range from housing, goods, and other Islamic products that are characterized by modernity, which places it as a strong competitor to traditional banking products. Over the years, many services and systems have been developed and the technological structure of the services has been upgraded. We continue to continuously support and develop services to meet the needs of the community. We have found that the demand is increasing from citizens, especially small investors, for Islamic products related to investment, such as Islamic Sukuks. There are new products currently under development, launched during the coming period, targeting small investors focusing on Return on Investment and Shariah compliance.

Dhofar Islamic emphasizes the importance of modern technologies and offers financial and investment consultations, project financing, and individual services through flexible and remote channels. Mobile applications facilitate seamless daily transactions for customers.

Supporting small and medium enterprises (SMEs) and emerging companies is a top priority for Dhofar Islamic. The bank recognizes the critical role of entrepreneurs in fostering innovation and diversification. Providing financing, training, and consulting services, Dhofar Islamic is committed to advancing this sector. The bank also adopts advanced electronic services, facilitating the growth of SMEs.

Kamal Al-Din Al-Marza believes that achieving a shift in the growth of this sector requires not only financing, but also training and consulting services that enable it to continue and expand. Therefore, supporting entrepreneurs requires the solidarity of all institutions to advance this sector, and we are constantly studying the services and aspects of support that help this sector, whether facilitating the opening of accounts or advanced electronic services, Dhofar Islamic gives priority to supporting emerging companies and welcomes receiving and studying innovative ideas.

The CEO confirms Dhofar Islamic's dedication to keeping pace with changes in the financial services sector, including the rise of digital currencies. The bank continuously explores opportunities to leverage these innovations within regulatory frameworks, focusing on expanding and improving digital transactions and electronic payment services, which are becoming increasingly reliable and secure.

In conclusion, Dhofar Islamic remains steadfast in its mission to deliver superior banking services, support economic development, and contribute to Oman’s sustainable future through innovative and customer-centric solutions.