Islamic banking in Bangladesh recorded continued year-on-year expansion at the close of 2025, although the latest quarterly figures indicate a moderation in growth momentum amid broader macroeconomic pressures, including weaker trade performance and a softening labour market.
According to Bangladesh Bank data, total deposits within the Islamic banking system reached Tk 4.81 trillion at the end of December 2025. This represents a quarterly increase of Tk 108.76 billion, or 2.31 per cent, compared with September 2025. On a year-on-year basis, deposits rose by Tk 414.34 billion, equivalent to 9.42 per cent, up from Tk 4.40 trillion in December 2024.
Despite this growth, Islamic banks accounted for 24.38 per cent of total deposits across the wider banking sector, underscoring their significant but still minority share in the financial system.
Investment activity, broadly equivalent to loans and advances, also expanded. Total investments stood at Tk 5.25 trillion at the end of December 2025, reflecting a quarterly rise of Tk 74.89 billion (1.45 per cent). Compared with the same period in 2024, investments increased by Tk 457.61 billion, or 9.55 per cent, from Tk 4.79 trillion.
However, the investment-to-deposit ratio (IDR) declined to 0.94 from 0.96 in September 2025 and 0.97 a year earlier, suggesting a more cautious lending environment and relatively restrained credit deployment despite liquidity availability.
Key indicators of Islamic banking performance
| Indicator | Dec 2024 | Sep 2025 | Dec 2025 | Quarterly Change | Year-on-Year Change |
|---|---|---|---|---|---|
| Deposits (Tk trillion) | 4.40 | 4.70 | 4.81 | +2.31% | +9.42% |
| Investments (Tk trillion) | 4.79 | 5.18* | 5.25 | +1.45% | +9.55% |
| Investment-Deposit Ratio | 0.97 | 0.96 | 0.94 | – | Declining |
| Export receipts (Tk billion) | 388.22 | 355.28 | 315.31 | -11.25% | -18.8% |
| Import payments (Tk billion) | 533.35 | 491.74 | 470.07 | -4.42% | -11.9% |
| Remittances (Tk billion) | 319.14 | 261.35 | 275.38 | +5.36% | -13.7% |
| Branches | — | — | 1,743 | Expansion | Growth |
| Islamic windows | — | — | 976 | Expansion | Growth |
| Employment | 52,565 | 50,944 | 47,460 | -6.84% | -9.71% |
*Approximate derived figure based on quarterly change.
Mixed external sector performance
The external trade segment processed by Islamic banks showed notable weakness during the October–December quarter of 2025. Export receipts declined sharply by 11.25 per cent to Tk 315.31 billion compared with the previous quarter, reflecting subdued global demand and competitiveness challenges. Imports also fell by 4.42 per cent to Tk 470.07 billion, indicating slower domestic industrial activity.
Remittance inflows, however, provided a partial offset. Funds channelled through Islamic banks rose by 5.36 per cent to Tk 275.38 billion during the quarter, supporting liquidity conditions in the banking system.
Structural expansion amid efficiency concerns
Despite the mixed macroeconomic signals, the Islamic banking network continued to expand. The number of branches, including those operated by conventional banks offering Islamic services, reached 1,743 by December 2025, while Islamic banking windows increased to 976, reflecting ongoing institutional growth and demand for Sharia-compliant financial services.
Nevertheless, total employment in the sector declined to 47,460, down from 50,944 in September and 52,565 a year earlier, suggesting operational consolidation or efficiency-driven restructuring.
Analysts have emphasised the importance of strengthening trade financing mechanisms, improving fund utilisation efficiency, and diversifying investment portfolios to sustain long-term growth. Greater support for export-oriented industries was also highlighted as essential to stabilising earnings and enhancing resilience.
Policy Exchange Bangladesh Chairman Dr Masrur Reaz observed that while the sector’s year-on-year growth demonstrates underlying resilience, the slowdown in quarterly expansion reflects cautious lending behaviour amid liquidity pressures and subdued credit demand. He added that maintaining momentum would require targeted policy support and improved financial intermediation in the coming quarters.