There have been three great inventions since the beginning of time: fire, the wheel and central banking.
– Will Rogers, American entertainer

These are interesting times for the Omani banking industry, which has witnessed a lot of activity in the last few months after a comparative lull of more than a decade. New banks in the fray, more players evincing interest to enter the market – all point to good tidings and a strong economy, to which, without doubt, the performance of a country’s banking industry is linked. The year 2006 has been a landmark year for the industry, not just because the net profits were up by 32 per cent to an all time high of RO162.9mn. As much as it had been a year of new beginnings, it had also been a year of regaining footholds and cautious footsteps.

The Banking Survey 2006 promised to be an interesting one even before the final tallying had begun. The survey traditionally covers all the listed banks and financial institutions. But with so much of activity in the market, we felt it would be apt to have a report that covered all the other players – multinationals, niche and development banks – who play an equally important role.

New entrants in the banking arena and CBO’s tightening of regulatory framework to ensure that the industry continues to remain robust had resulted in some tectonics. Banks themselves preferred to play it safe and didn’t appear ready to party despite good tidings. Thus, even before the numbers were in, it was evident from the market realities that there were going to be a few surprises. Yet, the extent of the churn may surprise even avid market watchers.

Even as BankMuscat reclaimed its No 1 position, OAB, last year’s topper, finished fourth. Bank Dhofar, which came last in the ranking parameter in 2005, turned out to be the dark horse in 2006, turning in a stellar performance that catapulted it to the runner-up position. A new leader has emerged in the ranking of financial companies as well.

And, 2007 promises even more interesting times. Bank Sohar and Bank of Beirut have started operations even as there are others who will soon enter the market. Alliance Housing Bank, which decided to go commercial, and is apparently not against a joint venture or even an outright sale, has added much drama in the market over the last few weeks. The last word is yet to be heard.

Mohana Prabhakar
Managing editor