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Dr. Jamil El Jaroudi. Prospects and challenges of Islamic Banking Oman Economic Forum 18 March 2014 . Country Banking Sector Performance . 6 %. 14%. Financing after robust growth in 2012 reduced to single digit in 2013

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Dr jamil el jaroudi

Dr. Jamil El Jaroudi

Prospects and challenges of Islamic Banking Oman Economic Forum18 March 2014


Country banking sector performance
Country Banking Sector Performance

6%

14%

  • Financing after robust growth in 2012 reduced to single digit in 2013

  • 2014 outlook remains positive for growth in financing as major projects start

1 – CBO Monthly Publication December 2013 – www.cbo.oman.org


Country banking sector performance1
Country Banking Sector Performance

10%

11%

18%

13%

  • Growth in deposits outpaced growth in credit resulting in increased liquidity

  • Core capital growth continued to be in double digit ensuring sector capital adequacy ratios remained healthy

1 – CBO Monthly Publication December 2013 – www.cbo.oman.org


Country islamic banking sector performance
Country Islamic Banking Sector Performance

  • Growth in financing using Islamic modes has outpaced the growth in deposits.

  • The modest share in the first year of operations is an achievement as innovators have tested the waters. 2014 and 2015 will see acceptance across the masses.

Published financial statements – 2013 - www.msm.gov.om


Country banking sector prospects
Country Banking Sector Prospects

Prospects for Islamic finance are very bright

  • Clear appetite and desire for Shari’a compliant finance

  • Policy development

    • Vision and Leadership shown

    • Pertinent and effective change to Banking Act

    • Comprehensive set of regulations for Islamic banking

    • Country level Shari’a Board at CBO (first in GCC)

  • Positive response from Industry

    • 6 Islamic Banking windows

    • 2 Fully fledged Islamic Banks

    • 2 Takaful companies – one more planned

    • First Shari’a complaint Sukuk issued in 2013

  • Performance of Islamic Banking in 2013

    • Leading Indicators: Customer acquisition, Branch network, Product development

    • Lagging Indicators: financial results of the Islamic banking Industry


Country banking sector prospects cont
Country Banking Sector Prospects cont.

  • Financing is forecasted to grow at a cumulative aggregate growth rate of 7%

  • The sector is forecasted to remain liquid with deposits increasing at a CAGR of 7%

Source: Business Monitor International


Challenges facing islamic banking
Challenges Facing Islamic Banking

  • Instruments for Liquidity Management

  • Harmonization of Shari’a standards and Product development

  • Awareness and Education

  • Geographical coverage

  • Fine-tuning of policies and rules to better align with nature of Islamic banking

  • Advantage for window’s vis-à-vis full-fledged Islamic banks (e.g. Parents’ net-worth)

  • Legal system in terms of defaults and Takaful claims have not been tested


Thank You”


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