Islamic banking continued to gain market share in Pakistan during the first half of calendar year 2026, with Islamic banking institutions increasing their share of total banking assets and deposits, according to the State Bank of Pakistan’s (SBP) Mid-Year Performance Review of the Banking Sector for H1 2026.
Islamic banking institutions grew by 13 percent during the first half of 2026, compared with 11.5 percent growth during the same period last year.
The share of Islamic banking institutions in the banking sector’s total assets increased to 23.7 percent by the end of June 2026, up from 22.9 percent in December 2025. Their share of total deposits also rose to 29.2 percent from 27.8 percent during the same period.
The figures show that Islamic banking is expanding faster than the broader banking sector and steadily increasing its presence in Pakistan’s financial system.
The expansion was driven by the performance of full fledged Islamic banks, as well as growing interest among conventional banks in opening dedicated Islamic windows and branches to attract customers seeking Shariah compliant banking services.
The wider banking sector also recorded growth during the period. Total banking sector deposits increased by 9.3 percent to Rs. 43,332 billion during the first half of 2026, while the sector’s overall balance sheet expanded by 9.1 percent to Rs. 68,997 billion.
The continued rise in Islamic banking’s share of assets and deposits indicates growing competition between Islamic and conventional banking institutions, with more banks seeking to serve customers interested in interest free and Shariah-compliant financial products.
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