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Islamic banks in Bangladesh posted steady year-on-year growth in February 2026, with deposits and investments rising, signalling a gradual return of confidence in the sector despite a cautious short-term outlook.

Deposits grew 9.27 per cent to Tk 4.76 trillion, while investments increased 11.38 per cent to Tk 5.88 trillion compared to a year earlier, according to data from Bangladesh Bank.

However, month-on-month movement remained muted. Deposits edged up only slightly from Tk 4.74 trillion in January, while investments rose marginally from Tk 5.85 trillion, reflecting a conservative lending approach amid economic uncertainties.

The annual growth trend suggests improving depositor confidence following disruptions in 2024, supported by regulatory oversight, liquidity support and institutional reforms. Mudaraba-based accounts continued to dominate, accounting for nearly 87 per cent of total deposits, with the private sector contributing over 90 per cent.

Islamic banks maintained a stable share of the overall banking system, holding about 24.38 per cent of total investments, while conventional banks retained the majority.

Total assets of Islamic banks rose 9.46 per cent year-on-year to Tk 9.34 trillion, indicating gradual expansion of their balance sheets.

External sector indicators showed mixed performance. Export receipts through Islamic banks fell 15.26 per cent year-on-year to $604 million, while import payments also declined, pointing to subdued trade activity.

Remittance inflows, however, remained strong. Although slightly lower than the previous month, inflows rose 31.65 per cent year-on-year to $661 million, underscoring continued trust among expatriates.

Agent banking emerged as a key growth driver, with deposits in the segment rising 27.44 per cent to Tk 269 billion. Islamic banks accounted for more than half of this total, highlighting their strong presence in rural and underserved areas.

Meanwhile, workforce numbers declined by 5.79 per cent to 45,240 employees, reflecting increased automation and digitalisation across operations.

Experts say the sector is on a recovery path. “The rise in deposits and investments reflects gradual confidence returning, though weak monthly growth shows banks remain cautious,” said an economist.

They noted that strong remittance flows demonstrate resilience, but weaker trade transactions remain a concern, making sustained policy support and reforms critical for maintaining momentum.