Oman's Islamic finance industry poised for growth

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The Islamic finance industry in the Sultanate of Oman has shown remarkable growth and resilience throughout 2023, setting a solid foundation for further expansion in the year ahead. As outlined in the recent country report by Islamic Finance News 2024 annual guide, key insights provide a preview of what to expect in Oman's financial landscape for the current year.

One of the standout achievements in 2023 was the significant growth of Islamic banking assets, with total assets of Islamic banks and windows reaching RO 7.2 billion ($18.65 billion) by August 2023. This impressive 13.3% year-on-year increase underscores the strength and stability of the Islamic finance sector in Oman, which accounted for nearly 18% of the total banking assets in the country by October 2023. Additionally, financing provided by Islamic banks saw a substantial 12.9% year-on-year growth, reflecting a growing demand for Shariah-compliant financial products and services in the market.

The report said in Q4 2023 saw OQGN launch a groundbreaking IPO in Oman. It was the largest ever in the country, raising RO 288.2 million ($746.39 million) and oversubscribed by 14 times, with orders of RO 4 billion ($10.36 billion). Notably, it was the first Shariah-compliant IPO in the country.

Regulatory initiatives introduced by the Capital Market Authority (CMA) and the Central Bank of Oman (CBO) have played a crucial role in supporting the growth of the Islamic finance industry. The introduction of the crowdfunding regulations has paved the way for the emergence of nine crowdfunding platforms in Oman, signifying a more diverse and inclusive financial ecosystem in the country.

Moreover, the CBO's implementation of the Wakalah money market instrument has enhanced liquidity management for Islamic banks and windows, addressing short-term liquidity needs effectively.

Going forward, Oman is poised to witness continued advancements in its financial sector. Notable transactions on the horizon include the anticipated issuance of the Omantel Sukuk and other Sukuk offerings by Omani corporate entities. The Real Estate Investment Trust (REIT) market is also expected to attract new players and bolster its presence in the Muscat Stock Exchange index, indicating a growing interest in real estate investments in the country.

Furthermore, the regulatory focus on Environmental, Social, and Governance (ESG) standards is set to drive the issuance of sustainable Sukuk, aligning Oman's financial market with global sustainable finance trends. The forthcoming regulations on virtual assets will open up new opportunities in the crypto and virtual asset market, positioning Oman as a progressive player in the digital financial landscape.