Central Bank of Oman releases quarterly bulletin report on Islamic banks

Islamic banks in Oman have recorded a robust year-on-year growth in assets of over 14%, surging to OMR4.1 billion (US$10.62 billion) from OMR3.56 billion (US$9.22 billion) a year ago while total financing stood at OMR3.32 billion (US$8.6 billion) at the end of June 2018 compared with OMR2.75 billion (US$7.13 billion) a year ago, registering a growth of more than 20%, according to the quarterly bulletin report released by the Central Bank of Oman. Total deposits showed a growth of 18.42% with OMR3.15 billion (US$8.16 billion) in June this year from OMR2.66 billion (US$6.89 billion) in the same month of the previous year.


Meethaq’s receivables at the end of fi ve years of its formation stood at OMR1.06 billion (US$2.75 billion) in June, registering an increase of 16.1% from the previous year. According to Meethaq, it has extended a diminishing Musharakah facility to Sebacic Oman to set up the world’s largest plant for sebacic acid. It also supported a OMR50 million (US$129.56 million) project fi nancing to A’ Namaa Poultry to set up the biggest poultry project in Oman, fulfilling the scope of the Tanfeedh program. Hydrocarbon Finder E&P (HCF) signed an Islamic project financing facility for the development of oil and gas fields in Block 7 of Oman operated by HCF while Muscat National Development and Investment Co signed term finance agreements with a total value of OMR16 million (US$41.46 million) for an upscale three-star hotel in Muscat and a crew reporting terminal at the airport.


Under its OMR100 million (US$259.11 million) program, Meethaq has the mandate to issue Sukuk in various tranches from time to time to fund its growth plans and expansion of Islamic banking services across the Sultanate.


 Its maiden OMR25 million (US$64.78 million) issuance was oversubscribed and was increased to OMR44.6 million (US$115.56 million). The issue has an indicative profi t rate of 5% per annum with a tenor of fi ve years. Following the announcement of merger talks between Oman Arab Bank and Alizz Islamic Bank, which would create a merged entity with total assets of OMR2.63 billion (US$6.81 billion), National Bank of Oman and Bank Dhofar also announced a potential merger which would create a merged entity four times the size of that of the potential merger between Oman Arab Bank and Alizz Islamic Bank.


The audited financial statements for 2017 revealed an increase of 1.89% in total investments of Takaful companies compared with 2016. Total investments of Takaful companies were OMR35.5 million (US$91.98 million) in 2017 compared with OMR34.84 million (US$90.27 million) in 2016. It is worth noting that Takaful represented about 6.11% of the total investments of insurance companies up to the end of 2017.


Total proceeds from the investments of Takaful companies increased by 21.6% at 4.67% of the total proceeds from the investments of insurance companies. Takaful insurance premiums increased by 9% to OMR45.76 million (US$118.57 million). Takaful comprises 10% of the gross direct premiums in 2017 and 19% of total paid indemnities.


Returns on investment for the year 2017,however, remained low for Takaful companies due to an increase in claims. The Capital Market Authority of Oman is the regulatory body for insurance companies in Oman.


Dhana Pillai is the head of real estate, tax and project finance at Al Hashmi Law Firm (Oman). She can be contacted at dhana.pillai@ohlaw.net.