Oman’s Islamic Finance Industry to Surpass $40 Billion by 2026, says Fitch Ratings
Oman's Islamic finance industry is witnessing robust double-digit growth in 2025, with total assets estimated at $36 billion as of August and projections to surpass $40 billion between the second half of 2025 and 2026, according to a new report from Fitch Ratings.
Despite being the smallest Islamic finance market in the Gulf Cooperation Council (GCC), Oman stands out for its dynamic expansion in both Islamic banking and sukuk issuance. Islamic banking assets alone reached nearly $23.6 billion at the end of July, marking a 16.8% year-on-year increase, significantly outpacing the 5.7% growth rate seen in conventional banking over the same period.
Islamic banks and Islamic windows now account for about 20% of Oman’s total banking system assets, up from 18.1% a year before. Much of this growth has been led by Islamic windows of six conventional banks, which together now hold roughly 63% of Oman’s total Islamic banking assets, while the remainder is concentrated in two full-fledged Islamic banks.
Fitch highlights that the growth is supported by a combination of ongoing regulatory reforms, product innovation, branch and digital network expansion, and rising public awareness. The sukuk market continues to play a pivotal role, now representing about 30% of all Islamic finance assets in Oman. Despite a recent slowdown due to government fiscal tightening, total outstanding Omani sukuk reached $7.25 billion by mid-2025, with all outstanding sukuk rated ‘BB+’ by Fitch and carrying a positive outlook.
Liquidity management in the sector took a leap forward after the Central Bank of Oman introduced new tools allowing it to supply liquidity against Shariah-compliant securities, helping banks better manage their balance sheets. The Central Bank also issued a draft framework for Shariah-compliant finance and leasing operations and launched a digital banking regulatory framework in June 2025, further supporting the sector’s modernization.
However, Fitch notes several structural challenges remain, including limited Islamic hedging products and low foreign investor participation, largely due to the absence of international depository links for riyal-denominated sukuk.
Beyond banking, the takaful (Islamic insurance) segment accounted for an 18% market share and saw premiums rise nearly 20% to $238 million by the close of 2024. Islamic investment funds remain small, with assets under management at around $400 million.
Fitch concludes that the sector remains the smallest in the GCC due to Oman’s late start and smaller economy, but progress under Vision 2040 and regulatory innovation should continue to support strong expansion. The positive oil price environment and forward-looking reforms are likely to maintain favorable conditions for further growth in Omani Islamic finance even as corporate taxation is set to be introduced from 2028.
