The Oman Economic Review has recently published a report on the Omani Banking Sector1. The report ranks the 5 biggest banks based on three parameters: growth, profitability and sustainability. The largest bank in the country, Bank Muscat, came out clearly at the top, followed by Oman Arab Bank and Bank Dhofar. The small but aggressive National Bank of Oman comes in at #4, while the list is rounded up by Oman International Bank at #5.
The Omani banking sector witnessed solid growth during the boom years 2004-2007. But what had made the sector different is its performance in the face of recession. None of the banks have so far opted for any part of the $2 billion bailout fund set aside by the CBO late last year. Total assets in 2008 grew by 33% and profitability grew by over 10% while all but one, Bank Sohar, reported positive numbers for the first quarter of 2009 as well.
A major cause of this stellar performance has been the role played by the Central Bank of Oman. Historically, the CBO has been very proactive in policymaking and regulation. Indeed, Oman was rated the 6th best regulated credit market3 in the world by The Fraser Institute in 2007. It can be argued that the small size of the sector makes it easier to manage, but that alone does not explain the situation. The actual reasons include extensive reporting requirements, a close working relationship between the CBO and domestic banks and a conservative monetary policy. The sector should return to growth in the next few years.
Sources: 1-Omani Banking Sector, 2-Oman joins bailout bandwagon, 3-Credit Market Rating