Strong retail demand and proactive government support is assisting Islamic banks to grow at a faster pace when compared with their conventional peers.
Khalid Howladar, Global Head of Islamic Finance at rating agency stated “Growth in the Islamic banking sector continues to broadly outpace that of conventional banks in most systems in which Islamic banks have been established,” says. “This is driven by strong retail demand and proactive government legislation for the industry.”
Mr Howladar was speaking during the release of a Moody’s report entitled “Islamic Finance; Prospects Remain Strong Despite Subdued Sukuk Issuance”. The report added the sector also has potential for further growth, especially in countries in which the penetration of Islamic banking assets remains relatively low, at between 5%-10% of Islamic financing assets.
Oman was highlighted in the report where over the last three years, Oman’s Islamic banking sector has gone from zero to an aggregate of around 10% of banking system financing assets as of June 2016.
Oman’s Islamic banks and window operations have shown a robust year-on-year growth of 53.09 per cent (or OMR744.3 million) in financing at OMR2,146.2 million by the end of July 2016, against OMR1,401.9 million for the same period of last year, according to a recent report by the Times of Oman.
Efforts by government agencies and central banks, combined with retail customer demand, is driving growth for the entire Islamic Finance industry, a trend Moody’s expects to continue well into the next decade.