Omani lender Alizz Islamic Bank, the second full-fledged Islamic bank in the sultanate, plans to begin operations in the third quarter of this year, chief operating officer Jamal Darwiche said.
Oman is the last country in the six-nation Gulf Cooperation Council to introduce Islamic finance; it granted licences to Alizz Islamic Bank and Bank Nizwa late last year and rolled out detailed regulations in December.
“We are currently on track for the launch of our products and services during the third quarter of 2013,” Darwiche told Reuters. “We are taking a careful approach, gaining valuable market insight and further refining our products and service offering.”
Last October, the bank raised OMR40 million ($104 million) by selling 40 per cent of its capital through a month-long initial public offer of shares.
The Islamic lender is targeting a 3.5 per cent share of financing and a 3.6 per cent share of deposits in Oman’s banking sector by 2017, Darwiche said. It aims for annual growth in total assets, financing and deposits of 15-20 per cent, and to build a customer base of between 65,000 and 100,000 accounts over five years.
To achieve this, it plans to build a network of 10 branches and between five and 12 customer service centers in the next five years, Darwiche said. Oman’s commercial banking network had 461 branches registered at the beginning of 2012, according to the latest available official data.
Alizz Islamic Bank counts Abu Dhabi state-fund Aabar Investments as a founding shareholder, as well as Bahrain’s First Energy Bank.
Alizz intends to launch products based on a variety of Islamic finance contracts including mudaraba, ijara, istisna and wakala.
“Our strategy is to develop a large array of simple and easy-to-understand Islamic products that cater to the diverse needs of commercial and retail customers across the sultanate.
“SME (small and medium enterprise) financing will be targeted at a later stage,” Darwiche added.
Rival Bank Nizwa launched operations in January with three branches and plans to open an average of five every year, targeting a total of eight by the end of 2013.
“In five years that should give you a network of 20 to 25 branches,” Jamil Al Jaroudi, chief executive of Bank Nizwa, told Reuters in February. The bank says it aims eventually to take a five per cent share of Oman’s overall banking market.
The country’s Islamic banks will also face competition from conventional lenders which plan to launch Islamic windows themselves, in a sector that now has a total of 18 banks operating.
The sultanate reversed its prohibition on Islamic finance in 2011 after seeing economic and political benefits from the industry in neighboring countries.