Islamic Banking Gains Market Share in H1 2026
Islamic banks expanded assets and deposits faster than the overall banking sector, raising their share to 23.7% of assets and 29.2% of deposits by June 2026.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Positive · Buy bias
Islamic banking growth boosts Banks sector; Buy bias on Islamic bank tickers.
Sectors & Direction
Desk read
Desk call: Buy bias · Positively affected
- BanksPositively affected
Companies
Companies Mentioned
- ISL· Positively affected · Buy bias
Mentions in This Briefing
Sectors: Banks — Positive · Buy bias. PSX tickers: ISL. Islamic banking growth boosts Banks sector; Buy bias on Islamic bank tickers.
Full Story
Open on ProPakistani## Islamic Banking Outpaces Conventional Banks
The State Bank of Pakistan’s Mid‑Year Performance Review shows that Islamic banking institutions grew 13% in the first half of 2026, outpacing the 11.5% growth recorded in the same period last year.
## Asset and Deposit Share Increases
- Islamic banks’ share of total banking assets rose to 23.7% at the end of June 2026, up from 22.9% in December 2025. - Their share of total deposits climbed to 29.2%, compared with 27.8% a few months earlier.
## Drivers of Growth
The surge is attributed to strong performance by full‑fledged Islamic banks and the launch of dedicated Islamic windows and branches by several conventional banks seeking to capture demand for Shariah‑compliant products.
## Overall Banking Sector Context
During the same period, total banking deposits grew 9.3% to Rs 43,332 billion and the sector’s balance sheet expanded 9.1% to Rs 68,997 billion, indicating a healthy environment for both Islamic and conventional players.
## Implications for Investors
The rising share of Islamic banking assets and deposits signals intensifying competition and a growing customer base for interest‑free financial services, which could translate into better earnings prospects for listed Islamic banks.