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Dubai’s Mashreq enters Oman’s growing banking sector

Mashreq Group CEO Ahmed Abdelaal. The bank said it will provide a "comprehensive suite" of services in Oman Wam
Mashreq Group CEO Ahmed Abdelaal. The bank said it will provide a "comprehensive suite" of services in Oman
  • Mashreq assets worth $69bn
  • Oman ‘essential’ to growth plan
  • Non-retail focus initially

Mashreq, the UAE’s fifth largest bank by assets, has launched operations in Oman in what it says is a strategic move to support the sultanate’s economic diversification plans.

Oman’s banking industry has more than doubled in size since 2013 but may lack the scale to meet state financing needs, experts told AGBI last October, with lenders already stretched in terms of their loan-to-deposit ratios.

These dynamics seem to have convinced Mashreq, which had assets of AED254 billion ($69 billion) as of September 30, to enter Oman.

The lender will focus on the Gulf state’s corporate and public sectors, rather than retail customers, it said in a statement.

“The bank aims to unlock value in critical sectors like tourism, logistics, manufacturing and renewable energy, in line with Oman’s economic objectives,” the statement said.

Mashreq, which is based in Dubai, will provide “a comprehensive suite” of banking services, including treasury, global transaction banking and sustainable finance.

The UAE is Oman’s top importer and the No 2 destination for Omani exports, AGBI research shows.

“Oman’s strategic location and its dynamic economic landscape make it essential to Mashreq’s international growth ambitions,” Mashreq CEO Ahmed Abdelaal said in the statement.

“Our commitment is to high-growth markets, leveraging trade, investment and corporate banking opportunities.”

Credit ratings agencies have upgraded Oman several times in the past few years after it succeeded in reducing the borrowings of government-related entities (GREs).

Oman has a rating of BBB- with S&P. A rating of BBB and above is classified as “investment grade”, a status the country had as recently as 2016.

Oman's sovereign ratings

Oman has six domestic commercial banks and one domestic Islamic bank, while seven other foreign commercial banks are licensed to operate in the sultanate. These include First Abu Dhabi, Qatar National Bank, Standard Chartered and two Iranian banks, the central bank website shows.

Domestic commercial banks have combined assets of about $115 billion, according to the most recent central bank report. Bank Muscat holds 32 percent of these, AGBI calculates based on S&P Global data, while Sohar International Bank (17 percent) and National Bank of Oman (12 percent) also have sizeable market shares.

Bank Muscat made a net profit of OMR170.8 million ($444 million) in the nine months to September 30, 2024, up 7.5 percent versus the prior-year period as its net interest income, Islamic financing income and fees and commissions all grew. The lender has yet to publish its fourth-quarter results.

Oman’s real GDP is likely to expand 3.1 percent in 2025 and 4.4 percent in 2026, the International Monetary Fund forecasts.

The country’s sovereign wealth fund in December said that along with benign inflation levels, lower interest rates will “stimulate investments, bolster private consumption and attract higher FDI inflows”.