Islamic banking in Pakistan reached a historic milestone in 2025, capturing nearly 23 percent of the country’s total banking assets, according to the State Bank of Pakistan’s (SBP) Financial Stability Review 2025.
The central bank reported that Islamic Banking Institutions (IBIs) recorded their largest-ever expansion in branch networks. This reflects accelerating demand for Shariah-compliant financial services across the country.
Assets of Islamic banks grew by 30.7 percent during the year, outperforming conventional banks for the second consecutive year and reinforcing the sector’s rising role within Pakistan’s financial system.
Risk indicators also improved significantly. The non-performing financing (NPF) ratio declined to 2.4 percent by the end of 2025, compared with 3.5 percent a year earlier, indicating stronger asset quality and reduced credit risk.
SBP noted that sustained expansion, improved risk management, and strong capital buffers continue to support the sector’s long-term growth momentum.
Islamic banking = replace the word interest with something else
But you pay more still