24pc jump in Islamic banking assets: CBO

MUSCAT, AUG 20 – Total assets of Islamic banks and windows operating in the Sultanate amounted to RO 3.81 billion at the end of last year, representing a hefty 23.8 per cent jump over the previous year’s tally of RO 3.08 billion, underscoring the robust growth of sharia-compliant banking services in Oman. Islamic banking assets accounted for an impressive 12.1 per cent of total banking system assets at the end of 2017. This compares with a 10.3 per cent share in 2016.
“Islamic banking entities are in the process of gaining greater market share in the banking industry in Oman,” said the Central Bank in its 2017 Annual Report issued recently. Assets have nearly tripled over the last four years, from RO 1.37 billion in 2014 to RO 3.81 billion last year.
Total finance provided by Islamic banking entities climbed to RO 3.03 billion at the end of last year, compared to RO 2.42 billion in 2016. Aggregate deposits held with Islamic banks and windows also surged 36.8 per cent to RO 2.97 billion at the end of 2017. Core capital and reserves stood at RO 458 million, an increase of 5.8 per cent over the previous year’s level, the apex bank noted.
Sharia-compliant banking services are now provided by two full-fledged Islamic banks (Bank Nizwa and Al Izz Islamic Bank) and six Islamic Windows of local banks (Meethaq of Bank Muscat; Muzn of National Bank of Oman, Maisarah of Bank Dhofar, Al Yusr of Oman Arab Bank, Al Hilal Islamic of Ahli Bank, and Sohar Islamic of Bank Sohar).
All of these institutions have their own Sharia Supervisory Boards to guide them in sharia-related matters, while a high Sharia Supervisory Board operates within the Central Bank to provide supervisory oversight and also guidance where disagreements arise among the sharia boards of licensed banks.
“To ensure that the products and services offered by Islamic Banking entities (IBEs) are in line with regulatory and sharia requirements, IBEs are required to apprise the CBO before launching new Islamic banking products highlighting the product structure, features and associated risks, conformity with sharia and adherence to the Banking Law,” the apex bank stated in its Annual Report.
“IBEs are required to follow the Financial Accounting Standards issued by the Accounting and Auditing Organization for Islamic Institutions (AAOIFI). Islamic banks can use the relevant International Financial Reporting Standards (IFRS) in the where no AAOIFI standards exist. CBO is currently engaged in the consultative process of setting up liquidity management tools which are sharia-compliant. Short term liquidity management, as of now, is being done through inter-bank transactions, mostly Wakala-based,” it added.

Conrad Prabhu