Islamic Banking in Oman – Today & The Way Forward

40 Pages Posted: 14 Mar 2015

See all articles by Muhammad Arsalan Aqeeq

Muhammad Arsalan Aqeeq

University of Newcastle (Australia); Durham University - Durham Islamic Finance Program; Institute of Business Management (IoBM) - College of Business and Management (CBM)

Date Written: July 1, 2014

Abstract

In the first section, the paper describes the overall economic scene and its growth dynamics. The following section, presents an illustration to define the structure of Omani Banking Industry with a thorough segment wise breakup of asset and liabilities, advance to deposit ratio, leverage, capital adequacy, spreads and efficiencies. In its effort to relate the expectations and realities, a cross-section interpretive analysis of the future projections by Moody’s, Ernst & Young and Arqaam Capital is carried out, to develop their grounding in the present facts. In a later section titled ‘The Sixty-Forty Strategy’, an insightful discussion on strategic implications and recommendation, based on the circuitous and interdependent relationship of deposit and asset mix, Capital Adequacy and the overall efficiency of a bank is also presented. The benchmarks of the existing conventional banking industry, would enable Islamic Banks to sway their strategic goals, while they follow their respective organic growth. As an indicative yardstick, it can serve as an overarching frame to avoid any major deviations in shape costly deposit mix or lower-than-the-optimum credit portfolio.

The value of the paper is driven by the comprehensive and exhaustive presentation of Financial information, product analysis, profit rates, balance sheet and revenue structures, followed by intuitive analysis to elaborate the strategic and operational dimension of all the eight IBI’s operating in Oman. A detailed ‘compare and contrast’ commentary, on the deposit and financing side products being offered, their underlying shariah contracts is being presented. In all its rigor, the paper not only explores the progress of overall Islamic Banking industry, but also highlights the performance and distinctive features of Individual IBI. “Islamic Banking Regulatory Framework” (IBRF) issued by the Central Bank, is maintained as a pivotal reference through out the paper, to examine the operations and offerings of the IBIs and underscore the key driver of performance, innovations and probable limitations.

In the conclusive section of “Strategic Dimensions”, the paper seeks to outline strategic insights (and perhaps future directions) based on competitive positioning, success drivers, product innovations, operational limitations for the manager of Omani IBIs. In its intuitive pursuit, the study also portends practical intricacies in Shariah Compliance, Deposit Pool Management and asset liability management, that IBIs in Oman would come across. The strategic dimensions presented are backed by cases, constructs, propositions and artifacts driven from domestic banking industry or Islamic Banking experience in other jurisdiction. The paper in its pragmatic approach, quotes and elaborate the anomalous growth and the daring business model of Meethaq, the principled stance of the regulator, the product innovation of Maisarah, the opportunity in the SME segment, Shariah Compliant structures to exploit trade intensive and specially non-oil trade in Oman’s economy. Shortly, the reader would surely find this paper useful in developing a perspective of Islamic Banking Industry in its independent capacity, as well as a subset of the broader Financial Intermediation scene in Oman.

Keywords: Islamic Banking, Islamic Finance, Banking, Sukuk

Suggested Citation

Aqeeq, Muhammad Arsalan, Islamic Banking in Oman – Today & The Way Forward (July 1, 2014). Available at SSRN: https://ssrn.com/abstract=2577369 or http://dx.doi.org/10.2139/ssrn.2577369

Muhammad Arsalan Aqeeq (Contact Author)

University of Newcastle (Australia) ( email )

University Drive
Callaghan, NSW 2308
Australia

HOME PAGE: http://https://www.linkedin.com/in/arsalanaqeeq/

Durham University - Durham Islamic Finance Program ( email )

Durham, DH1 3HP
United Kingdom

Institute of Business Management (IoBM) - College of Business and Management (CBM) ( email )

Karachi
Pakistan

HOME PAGE: http://https://www.linkedin.com/in/arsalanaqeeq/

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