The Islamic banking sector in Oman reached assets of 9.8 billion Omani rials by the end of May 2026, reflecting a growth of 9.2 percent compared to last year. This sector now holds nearly 19 percent of the total banking assets in Oman.
Growth of Financing and Deposits
The financing provided by Islamic banks and their branches has reached 7.9 billion rials, showing an increase of 10.5 percent. Additionally, deposits have grown by 11 percent to reach 7.8 billion rials. According to Syed A, Global Business Director at Greystone Capital, by the end of June, the total Islamic financing has crossed 8 billion rials.
Challenges and Opportunities Ahead
Syed A pointed out the quality and profitability of this sector, stating that the Islamic banking sector has earned over 23 million rials in profit in the recent quarter, with a non-performing financing ratio of 3.3 percent. He also mentioned challenges such as the need for deeper liquidity in the Islamic money market and the maturity of the domestic Sukuk market, stating that the Central Bank of Oman is seeking solutions to address these issues.
Moreover, the ongoing mergers, including the proposed merger of Bank Nizwa and Alizz Islamic Bank, indicate a move towards stronger and more concentrated entities in this sector.
In response to a question about the difficulties faced by local entrepreneurs and small and medium-sized enterprises (SMEs) in obtaining financing from traditional banks, Syed A noted that statistics indicate that of over 267,000 registered small and medium enterprises in Oman, SME financing constitutes only about 3.7 percent of total bank credit.
Syed A emphasized that this problem arises from the traditional credit structure that relies on collateral, and many small companies are unable to provide sufficient collateral, while Islamic banking can help address these issues with transparent financial structures based on real economic activities.
He added that ultimately, in alignment with Oman Vision 2040, which emphasizes diversification, productive investment, and employment in the private sector, Islamic banking can serve as a fundamental pillar of Oman’s future economy.
