Growth in Oman’s Islamic banking sector is likely to continue into 2021-2022 building on the strong momentum seen in 2020, despite the dual impacts of Covid-19 and lower oil prices, according to IM Insights, citing Fitch.
The penetration of Islamic banking and finance products is expected to keep rising, with Islamic financing in Oman having risen a strong 9.5 per cent in 2020 versus just 2.1 per cent growth in loans from conventional banks.
Demand for Islamic banking and finance products is the main driver, together with support from conventional banks offering Islamic products through ‘Islamic windows’ and favourable sector regulations.
The potential for growth is high, given Oman’s majority-Muslim demographic and low banking penetration.
Of Oman’s adult population, only 56 per cent held a bank account as at 2016; 14 per cent cited religious reasons for not having one, according to the World Bank.
Fitch therefore expects Islamic banking and finance penetration to grow through training and awareness campaigns, innovative products and the use of fintech to target clients.
The market share of Islamic banking and Islamic windows rose to 14.3 per cent at end-2020 (end-2019: 13.6 per cent), with total assets of RO 5.1 billion ($13.5 billion).
This is high, given that Oman was the last Gulf Cooperation Council (GCC) country to introduce Islamic banking in 2013, said Fitch.—Zawya News