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SWOT Analysis of Islamic Banking Sector in Pakistan
STRENGTHS WEAKNESSES
Rapid growth with 19% share in total banking Shortage of trained Shariah scholars and
assets and 23.2% in deposits. Islamic finance professionals.
Resilience during economic crises due to Limited awareness and financial literacy
asset-backed and risk-sharing principles. among the general public.
Strong support from the State Bank of Pakistan Underdeveloped legal and regulatory
and Federal Shariat Court directives. framework for full Shariah transition.
High public trust in Shariah-compliant financial Product innovation and technology
solutions. integration lag behind conventional banks.
Wide network of branches (Meezan, Al Baraka, Low penetration in rural areas and small
etc.) with growing customer base. enterprises.
Ethical investment focus appeals to both
faith-based and socially responsible investors.
S W
SWOT
OPPORTUNITIES O T THREATS
Competition from established conventional
C
02
2
Full Islamization of the banking sector by 2027 C
7
opens market expansion. banks offering Islamic windows.
Untapped potential in Islamic fintech, Takaful, Delays or resistance in legal reforms for a
and Sukuk markets. fully Islamic financial system.
Increasing global demand for ethical finance Macroeconomic instability impacting
and Halal investments. investor confidence and liquidity.
Strategic partnerships and investment from Gulf Global financial regulations are sometimes
and Southeast Asian economies. incompatible with Islamic banking models.
Government incentives for Islamic finance Risk of reputational damage due to
infrastructure and capacity building. perceived non-compliance or
mismanagement.
SOURCES
1. Hussain, R. A., & Nazir, A. (2024). Comparative analysis of Islamic and conventional banking in Pakistan. Review of Economic Trends, 1(1), 19-25.
https://journals.uol.edu.pk/ret/article/download/3166/1543/15121.
2. Difference between Islamic and Conventional Banks in Pakistan https://sarmaaya.pk/learn/article/islamic-conventional-banks-comparison-pakistan
3. Differences between Conventional Bank and Islamic Bank
https://www.ubldigital.com/Banking/UBL-Ameen/Knowledge-Center/Differences-between-Conventional-Bank-and-Islamic-Bank
4. Differences between Conventional Bank and Islamic Bank https://ubank.com.pk/difference-between-islamic-banking-and-conventional-banking/
5. Khan, N., Ramzan, M. ., Kousar, T. ., & Shafiq, M. A. . (2023). Impact of Bank-Specific Factors on Credit Risk: Evidence from Islamic and Conventional Banks of Pakistan.
Pakistan Journal of Humanities and Social Sciences, 11(1), 580–592. https://doi.org/10.52131/pjhss.2023.1101.0375
6. The Business Research Company. (2025). Islamic Finance Global Market Report 2025.
https://www.thebusinessresearchcompany.com/report/islamic-finance-global-market-report
7. Asian Development Bank. (2018, July). An overview of Islamic banking and finance in Asia. https://www.adb.org/publications/overview-islamic-banking-and-finance-asia
8. Khan, H. A. (2025, April 9). $170 million raised in Pakistan’s largest-ever IPO for Lucky Islamic Money Market Fund. Arab News.
https://www.arabnews.com/node/2596455/pakistan
9. Zubair, M. (2024, December 31). The Islamic finance market is expected to reach $5 trillion in 2025. Al Huda CIBE. https://alhudacibe.com/pressrelease237.php
10. Siddiqui, R. (2015, November 8). Beyond Islamic finance for SAARC countries. Knowledge Seeker/Distributor.
https://www.linkedin.com/pulse/beyond-islamic-finance-saarc-countries-rushdi-siddiqui
90 ICMA’s Chartered Management Accountant, Mar-Apr 2025
