Oman’s Islamic finance sector is projected to reach $45b this year, rising from $36b at the end of 2025, supported by favourable economic conditions, Fitch said in a report.
The ratings agency noted that the anticipated 25% year-on-year expansion will be fuelled by increasing demand for sukuk as both a financing and policy instrument, along with government support and rising public interest in sharia-compliant financial products.
Sukuk made up around 60% of US dollar-denominated debt issuance in 2025, compared with 94.3% previously, with the remainder issued as conventional bonds.
Despite the growth outlook, structural challenges remain, including the absence of Islamic treasury bills and derivatives, an underdeveloped local-currency sukuk and bond market, and the limited presence of Islamic non-bank financial institutions in Oman.
Operating conditions for both Islamic and conventional banks in Oman continue to be favourable, aided by still-elevated, though easing, oil prices.
Fitch forecasts loan growth of 6% to 7% in 2026, supported by stronger borrowing demand across retail and corporate segments.
The report added that the proposed 5% income tax, set to take effect in 2028, is expected to have only a modest overall impact on banks.
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