By Claire Ferris-Lay
Gulf state set to see increase in Islamic finance services following ruling from central bank
Assets in Oman’s Islamic banks could rise to as much as $6bn over the next few years if the country rolls out a successful sharia-compliant banking system, Ernst & Young’s Islamic Financial Services Group has said.
The introduction of several Islamic institutions to the Gulf state are expected to capture a substantial proportion of the country’s estimated $42bn held in assets.
“The Islamic banking window operation is accepted as a successful model and in many markets such as Saudi Arabia, where Islamic windows account for nearly half of the Sharia assets, and UAE where they have an 11 percent share.
“Given the similarities in the demographic landscape and appetite for these services, we see great potential in the Omani market for Islamic offerings,” Ahmed Al Esry, senior director, Tax, Ernst & Young Oman, said in a statement.
Sharia-compliant assets globally are growing at 15-30 percent annually and in 2010 were thought to have crossed $1 trillion, said Ernst & Young.
Oman used to be the only Gulf state not to have a bank specifically offering Islamic products and services. But in May the Central Bank of Oman said it would allow conventional lenders to run sharia- compliant operations in a bid to keep investment funds within the country.
A number of conventional banks are expected to start offering Islamic banking services in the next couple of years, said Ernst & Young.
The Gulf state’s economy could also benefit from the growing sukuk – or Islamic bonds – markets. “Omani Sukuk instruments could be used for financing infrastructure projects and stimulating corporate activity, which would add to the growth of Oman’s buoyant economy,” said the report.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.