Islamic banking strengthened its position in Pakistan’s financial sector during the first half of calendar year 2026, gaining a larger share of both banking assets and deposits, according to the State Bank of Pakistan (SBP).
The latest figures were reported in the SBP’s Mid-Year Performance Review of the Banking Sector for H1 2026, which highlights continued expansion in Islamic banking institutions across the country.
Islamic banking institutions recorded 13 percent growth during the first six months of 2026. This was higher than the 11.5 percent growth recorded during the corresponding period of the previous year.
The increase indicates that Islamic banking continued to expand at a faster pace, strengthening its contribution to Pakistan’s overall banking industry.
By the end of June 2026, Islamic banking institutions accounted for 23.7 percent of total assets in Pakistan’s banking sector. Their share stood at 22.9 percent at the end of December 2025.
This means the asset share of Islamic banking institutions increased by 0.8 percentage points during the first half of the year.
The sector also made significant progress in deposits. Islamic banking institutions’ share of total banking deposits climbed to 29.2 percent by June 2026, compared with 27.8 percent in December 2025.
The figures show that Islamic banks and Islamic banking operations are becoming an increasingly important part of Pakistan’s financial system.
The growth in deposits is particularly notable because deposits represent a major source of funding for banks. A rising share suggests that more customers are placing their funds with Islamic banking institutions and Islamic banking windows.
The expansion also reflects the continued development of Shariah-compliant financial services in Pakistan. Islamic banking operates according to principles that prohibit interest and emphasize Shariah-compliant structures for financial transactions and investments.
The latest SBP data provides a snapshot of how the sector performed during the first half of 2026. While conventional banking continues to account for the majority of Pakistan’s banking assets, the figures show Islamic banking gradually increasing its overall share.
The year-on-year growth comparison also highlights the momentum within the sector. Islamic banking institutions grew 13 percent in H1 2026, compared with 11.5 percent during H1 of the previous year.
The increase in market share across both assets and deposits could further strengthen competition within Pakistan’s banking industry. It may also encourage financial institutions to expand their range of Shariah-compliant products and services.
For customers, continued growth in Islamic banking could mean greater access to banking products designed around Islamic finance principles. Banks may also continue investing in digital services, branch networks and new financial products as demand develops.
The latest figures from the State Bank of Pakistan therefore point to another period of expansion for Islamic banking. Its rising share of banking assets and deposits demonstrates the sector’s growing role in Pakistan’s financial landscape.
With Islamic banking institutions now holding 23.7 percent of total banking assets and 29.2 percent of total deposits, the sector has continued to increase its presence in Pakistan’s banking system during the first half of 2026.