BankIslami Pakistan Limited is actively charting a course toward long-term resilience and digital leadership as it moves beyond a challenging fiscal year. During a recent corporate briefing, the bank management detailed a comprehensive forward-looking strategy that prioritizes low-cost deposit mobilization and a significant shift toward digital-first banking solutions. Despite facing a high-pressure interest rate environment throughout 2025 that impacted immediate profitability, the institution has utilized that period to implement structural improvements aimed at securing sustainable earnings and a more robust market position in the coming years.
A central pillar of this roadmap is the aggressive pursuit of a low-cost deposit base. BankIslami achieved an 18 percent growth in deposits during 2025, reaching a total of Rs660 billion. This performance aligns with the bank’s consistent five-year compound annual growth rate, and management intends to maintain this momentum throughout 2026. The strategy focuses heavily on maintaining a high ratio of current and savings accounts, commonly known as CASA. Specifically, the bank aims to keep its CASA mix stable at approximately 70 to 71 percent, with current accounts specifically targeted to remain between 43 and 44 percent of total deposits. This represents a significant evolution from 2020, when current accounts made up only 33 percent of the mix, indicating a durable shift in the bank’s funding profile.
On the lending side of the balance sheet, BankIslami is diversifying its portfolio to move away from heavy corporate concentration. The bank is instead focusing on high-yielding priority sectors that offer better margins and broader economic impact. Small and Medium Enterprise financing saw a massive surge of 122 percent in 2025, while agricultural financing grew by 32 percent. Both sectors are expected to remain the primary engines of credit growth in 2026. Additionally, the bank plans to revitalize its housing finance segment. Although growth in mortgages was a modest 2 percent last year, management views the underpenetrated housing market in Pakistan as a significant long-term opportunity. Conversely, auto financing remains a lower priority due to ongoing volatility in the local automotive market.
The financial landscape of 2025 was marked by a sharp decline in interest rates, with the average six-month KIBOR dropping to 11.40 percent from over 18 percent the previous year. This shift placed considerable pressure on the bank’s net spreads. However, BankIslami remains well-positioned for future fluctuations; management noted that every 100-basis point rise in interest rates could potentially boost the net spread by Rs2.0 billion to Rs2.5 billion. Furthermore, the bank has minimized its exposure to revaluation risks by ensuring that only about 4.5 percent of its sukuk portfolio is tied to fixed rates, allowing the majority of its assets to repriced alongside market movements.
While the bank’s cost-to-income ratio rose to 70 percent recently, management characterizes this as a deliberate investment phase rather than a lapse in efficiency. Over the past two years, the bank has added more than 1,100 employees and opened 97 new branches while funneling significant capital into technological infrastructure. Key digital milestones include the launch of the aik Digital App and the implementation of biometric One Touch banking. As BankIslami transitions into 2026, it aims to lower its cost-to-income ratio back toward the 50 percent mark. By blending a modern digital experience with a disciplined approach to asset quality and deposit growth, the bank is positioning itself as a pioneer in the evolving Islamic digital banking space.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
