Samba Bank has decided to convert from conventional banking to a fully Islamic financial institution. The bank’s board has given in-principle approval for the transition. Now, it will submit its roadmap to the State Bank of Pakistan (SBP) for approval. This move aligns with the growing trend of financial institutions shifting toward Shariah-compliant banking.
Following the announcement, Samba Bank’s share price dropped by 5.56%, trading at Rs8.49. Investors reacted with uncertainty over the bank’s transition plan. However, the shift reflects the increasing demand for Islamic banking in Pakistan. The SBP defines Islamic banking as a system aligned with Islamic values and free from interest-based transactions.
Last month, the Bank of Khyber also began its transition to Islamic banking. The sector continues to grow rapidly in Pakistan. SBP data shows that Islamic banking assets increased by Rs192 billion in the quarter ending September 2024. Deposits also rose by Rs233 billion, reflecting strong public interest in Shariah-compliant financial services.
Islamic banking now holds a 19% share of total banking assets and 23.2% of total deposits in Pakistan. The industry recorded 17.4% growth in assets and a 23.3% increase in deposits year-on-year. With more banks making the shift, Islamic banking is expected to expand further in the coming years.