Oman’s Islamic finance industry is slated to hit $45 billion this year, up from $36 billion by the end of 2025, supported by favourable economic conditions, Fitch said in a report.

The 25 percent year-on-year growth will also be driven by growing demand for sukuk as a funding and policy tool, government initiatives and bottom-up public demand for sharia-compliant products, the rating agency said.

Sukuk accounted for about 60% of US dollar debt issuance in 2025, down from 94.3%, with the rest in bonds.

However, structural constraints persist, including a lack of Islamic treasury bills and derivatives, an underdeveloped Omani riyal sukuk and bond market, and the limited presence of Islamic non-bank financial institutions.

Business conditions remain favourable for Omani Islamic and conventional banks, supported by high, but moderating, oil prices.

Fitch expects loan growth of 6-7% in 2026, driven by higher demand in both the retail and corporate sectors.

Moreover, the proposed 5% income tax from 2028 is likely to have a small overall impact on banks, the report said.

(Editing by Seban Scaria seban.scaria@lseg.com)