Bank Nizwa surged as much as 17 percent as Oman’s first Islamic lender started trading in Muscat on investor speculation demand for Shariah-compliant services will grow.
The shares, which have a nominal value of 0.100 rial, jumped to as high as 0.119 rial before trimming gains to close at 0.115 rial. Oman’s benchmark MSM30 Index declined 0.5 percent, the most in a week.
Until Bank Nizwa’s formation, Oman was the only country in the six-nation Gulf Cooperation Council without dedicated Islamic banks. Bank Nizwa will start operations in the third quarter, according to its website.
“We expect Oman Islamic banking sector growth to follow a similar trend as in the GCC region and grow at a faster pace in the initial years of operations,” said Kanaga Sundar, head of research at Gulf Baader Capital Markets SAOC in Muscat. Growth will be “led by substantial unfulfilled demand for the Shariah products,” he said.
Islamic law bans the payment and receipt of interest as well as investments in businesses such as those involving tobacco, alcohol, pork and gambling.