Banking & IFS
From The Report: Oman 2018
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Oman’s banking sector appears to have ridden out recent economic headwinds largely unscathed. While concerns over liquidity arose in the wake of the oil price slump due to the government’s status as an important depositor, the situation improved in 2017 as the Omani state borrowed from abroad to avoid withdrawing funds or pushing up funding costs through heavy local borrowing. The sector is top heavy, with the leading bank by assets much bigger than its nearest competitors, which has given rise to talk of consolidation. This has yet to happen, though, with plans for two institutions to join forces recently called off. However, the non-bank lending segment saw a merger in 2017. The burgeoning sharia-compliant banking industry, meanwhile, after encountering some growing pains from the outset, is expanding rapidly and moving towards sustained profitability. This chapter contains an interview with Tahir Salim Al Amri, Executive President, Central Bank of Oman; Abdul Razak Ali Issa, CEO, Bank Muscat; and Khalid Al Kayed, CEO, Bank Nizwa.

Articles from this Chapter

Overview

Foundation to build on: Strong fundamentals are allowing banks to expand services
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Oman’s banking sector appears to have ridden out the recent oil price and economic downturn largely unscathed. While concerns over liquidity arose in the wake of the oil price slump given the government’s status as an important depositor, the situation improved in 2017 as the Omani state borrowed from abroad to avoid withdrawing funds or pushing up funding costs through heavy local borrowing. The sector is top heavy, with the leading bank by assets much bigger than its nearest competitors,…

Interview

Stimulating diversity: Tahir Salim Al Amri, Executive President, Central Bank of Oman (CBO), on meeting the credit needs of the economy
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Interview:Tahir Salim Al Amri What is the CBO doing to enhance liquidity management for the Islamic banking segment? TAHIR SALIM AL AMRI: Liquidity management in the Islamic banking industry has been a big challenge as the non-sharia elements of conventional instruments make them unsuitable for the segment. There has been an increasing number of sukuk (Islamic bonds) issuances from Islamic countries as well as other jurisdictions, reflecting their popularity and ability to meet large financing…

Interview

Next big thing: Abdul Razak Ali Issa, CEO, Bank Muscat, on the impact of recent changes to monetary policy and advances in mobile banking
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Interview:Abdul Razak Ali Issa What policies has the Central Bank of Oman (CBO) pursued to relax reserve requirements and stimulate greater liquidity in the banking system? ABDUL RAZAK ALI ISSA: The banking sector in Oman is governed by policies defined by the CBO. The CBO reduced the reserve requirement in the form of cash balances from 5% to 3%, and allowed banks to hold 2% in the form of government securities. This helped to create extra liquidity in the market. The CBO’s prudential…

Analysis

Branch out: A series of reforms have boosted financial inclusion
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A May 2017 survey published by Oman’s National Centre for Statistics and Information found that 56% of Oman’s residents have accounts or deposits with banks operating in the sultanate, and this figure grows to 68% when only Omani citizens are counted. Omanis benefit from good access to financial infrastructure. The number of bank branches stood at 16.3 per 100,000 people in 2016, above the international average of 12.5% and surpassing many of its peers in the GCC, such as the UAE (12.4),…

Interview

Attractive alternatives: Khalid Al Kayed, CEO, Bank Nizwa, on the rising popularity and dynamism of Islamic banking
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Interview:Khalid Al Kayed How do banks in the sector differ from conventional institutions, and how are they being supported by the Central Bank of Oman (CBO)? AL KAYED: There are many elements that differentiate Islamic banks and conventional banks. First and foremost is the idea that their activities are exclusively based on sharia principles, whereby profit is generated through a profit-and-loss sharing model. Furthermore, Islamic banking tends to create links with the real sectors of…