Pakistan’s Islamic banking assets may reach Rs19 trillion by end-2026

Pakistan’s Islamic banking industry is expected to continue its rapid expansion, with total assets projected to reach Rs18-19 trillion by December 2026 amid rising demand for Shariah-compliant financial services and increasing market penetration across the country.

Officials from Meezan Bank shared the projections during a media briefing held to discuss the growth outlook, market trends and regulatory direction of Islamic banking in Pakistan.

Ahmed Ali Siddiqui, Group Head Consumer Finance, along with Farhan Ul Haq Usmani, Head Shariah Audit, and Muhammad Raza, Group Head General Services and Customer Support Group, said Islamic banking deposits were projected to increase to Rs13.5-14.5 trillion by December 2026 compared to Rs11.04 trillion by December 2025.

According to industry estimates, the share of Islamic banking in total banking assets is expected to increase to 25-27% by the end of 2026 from 23% in December 2025.

Its share in total banking deposits is also projected to rise to around 32% from 27.8% during the same period.

The Islamic financing portfolio is expected to grow to Rs7.0-7.8 trillion by December 2026 compared to Rs5.65 trillion in December 2025, reflecting increasing demand for Shariah-compliant financing across consumer, agriculture, SME, corporate and government-linked segments.

Speakers at the briefing said the industry’s growth was being supported by expanding branch networks, digital banking adoption, regulatory support from the State Bank of Pakistan, wider institutional adoption and growing public confidence in Islamic financial products.

The Islamic banking branch network is projected to expand to 7,300-7,800 branches by December 2026 compared to more than 6,700 branches by December 2025.

Officials said digital banking channels were also expected to play an increasingly important role in expanding access to Islamic financial services and improving financial inclusion.

The briefing noted that Pakistan’s transition target towards Islamic banking by 2027-28 was accelerating sector-wide transformation, encouraging both full-fledged Islamic banks and conventional banks operating Islamic windows to expand their offerings.

Speakers also highlighted the role of sovereign Islamic financing requirements and Sukuk issuances in deepening Pakistan’s Islamic finance ecosystem.

According to the projections, Islamic banking could account for nearly one-third of total banking deposits by the end of 2026 while further expanding its presence in digital banking, SME finance, agriculture finance and consumer financing.

Industry officials said Islamic banking assets could exceed Rs25 trillion by 2028 if the current growth trajectory continues.

They added that the December 2026 projections were indicative estimates based on current market trends and available data, and actual outcomes could vary depending on regulatory and economic conditions.