By Rachana Khanzode / Reuters
MUSCAT: The introduction of Islamic banking in Oman will lead to loan growth of 15 percent this year, NBK Capital said and upgraded the sultanate’s largest lenders, Bank Muscat SAOG and National Bank of Oman.
Oman reversed its secular approach to finance last year after seeing a steady trickle of investment flow to nearby countries with well-established Islamic banking.
In December, Bank Muscat said it will set up a sharia-compliant banking arm operating. Nearest rival National Bank of Oman said it will launch Islamic banking between the second and third quarters.
NBK Capital said Islamic banking is expected to capture 10 percent to 15 percent of the Omani market share in the next three to five years.
Bank Muscat’s net profit is likely to grow 15 percent and National Bank of Oman’s 16 percent during the year, driven by strong loan growth, the brokerage wrote in a note dated March 22.
NBK raised its rating on Bank Muscat to “buy” from “hold” and National Bank of Oman to “accumulate” from “hold,” but said the two banks may lose market share to the new entrants which have been granted Islamic banking licenses.