(MENAFN- Muscat Daily) Standard Chartered Bank operates three branches in Oman. In an exclusive interview with Muscat Daily, Christos Papadopoulos, Standard Chartered regional CEO for the Middle East, North Africa and Pakistan and chairman of Standard Chartered Saadiq, the Islamic banking segment of the bank, talked about the bank's business and growth prospects in the region, the Islamic banking industry, and the bank's strategy for Oman. Excerpts:
What are the major drivers of growth for Standard Chartered Bank's business in the Middle East, particularly in the GCC?
The Middle East region, and particularly the GCC countries, are witnessing large-scale infrastructure development. This has been the main driver of growth in these markets in recent years. The governments' spending on big-ticket projects are supporting overall economic activities in these countries. These projects are providing jobs and opportunities for small and medium enterprises (SMEs) in a significant way, and are boosting growth in retail and project financing activities. We can see growing opportunities for us in construction, downstream projects and the retail banking space.
Our business in the Middle East is doing very well in terms of growth. However, there are different challenges in different markets and competition in the banking sector is high in the region. But we are very optimistic about the growth prospects in the region.
How do you see the growth of Islamic finance in the region and where does Standard Chartered stand in terms of Islamic banking?
Standard Chartered, as an international bank, is very committed to Islamic banking and finance. We are among the few international banks that have an Islamic banking brand and the only bank that covers a whole spectrum of Islamic banking products and solutions.
We always strive to deliver the fastest Islamic banking solutions. We are into the Islamic financial markets and capital markets and our Islamic finance business is growing faster than conventional banking.
We see great growth potential in Islamic banking in the region. Standard Chartered is focused on expanding and enhancing the digital space to further drive its Islamic business and offer solutions to clients.
Oman's Islamic finance market is less than two years old. What is your outlook for the Islamic banking industry in Oman?
Oman and its Central Bank have chosen the Islamic finance model and products very carefully - which was appropriate for the country. Our experience in other regional markets shows that Islamic banking grows faster than conventional banking and I believe the same is going to happen in Oman as well.
Our market studies suggest that there is a large segment of the population that does not prefer conventional banking if Sharia'a-compliant options are available. This is the main reason that the Islamic banking industry is growing fast.
At your bank's Oman operations, which banking segments do you think are more promising for growth?
We are increasing our focus on corporates and SMEs. We are also planning to improve our proposition in our credit cards business and wealth management business.
Corporate banking is the largest segment of Standard Chartered in Oman and it is going to be a key area for us. In recent years, we have looked into every suitable opportunity available for corporate and project financing in the sultanate. I believe the next three-to-five years are going to be very exciting for this segment, as there are US$40-50bn worth of projects at various stages of planning and completion in the country. Our corporate finance team based in Dubai is looking at every opportunity in Oman and we are participating aggressively.
With the new regulations issued by CBO regarding the funding of SMEs, we have enhanced our focus on the SME segment and positioning to meet the target set by CBO for SME funding.
Do you have any plans to expand your branch network and launch new offerings in Oman in the near future?
Currently, we are not looking to open more branches. We are planning to expand our coverage by exploring more digital solutions. Oman has a fast growing young population that is technology-savvy, with a high penetration of internet and mobile users. Our major focus is on online services and digital distribution channels.
Our business growth is dependent on economic growth and government spending, which looks good in Oman. Given the size of the Oman market, our growth is much higher and we hope to grow our business aggressively in the next few years.
Standard Chartered is one of the leading arrangers of syndicated loans in the region. Would you like to comment on your participation in syndicated loans for projects in Oman?
The business is good so far. The pipeline of infrastructure projects in the region is massive and identical in all the Gulf countries as far as bank financing is concerned. However, there is not enough banking capacity to absorb this massive amount required in project financing. So developing other channels of funding has become important.
For instance, we have a developing bond and sukuk market and other arrangements through the fund management industry. There is a need to explore different debt instruments to fulfil the requirements being generated by the projects. I believe, in the next one year, you will see more sukuk structures being used by banks and other institutions to raise capital.
In Oman, we are participating in a number of syndicated financing deals. Our greater focus is on projects related to government entities. We are also getting into aircraft financing, shipping finance and several projects in the country.
What is your outlook for Oman's economic growth in the coming years?
The government has been very sensible in its planning of projects and its focus on growth in various sectors, such as tourism, production capabilities, and downstream industries. The diversification of the economy away from oil and gas is being done in an efficient manner and will, over the next five to ten years, strategically position Oman as a hub for transportation, logistics, shipping and downstream activities.
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