Written by The Banking Post
Islamic banking in Bangladesh maintained steady year-on-year growth at the end of 2025, though quarterly indicators point to a slowdown amid broader economic pressures.
Data from Bangladesh Bank shows total deposits in the Islamic banking system reached Tk 4.81 trillion in December, up 2.31 per cent from the previous quarter and 9.42 per cent year-on-year. Islamic banks now hold 24.38 per cent of total deposits in the banking sector.
Investment—commonly referred to as loans and advances—also grew, reaching Tk 5.25 trillion by year-end. This marked a 1.45 per cent quarterly increase and a 9.55 per cent rise compared to a year earlier, accounting for 29.10 per cent of total sectoral lending.
However, the investment-deposit ratio declined to 0.94, down from 0.96 in the previous quarter, indicating a more cautious lending approach amid liquidity constraints and softer credit demand.
External trade-related activities weakened during the quarter. Export receipts handled by Islamic banks fell by over 11 per cent, while import payments declined by 4.42 per cent compared to the previous quarter.
Remittance inflows, however, offered some relief, rising by 5.36 per cent and helping support liquidity in the system.
The sector continued to expand its footprint, with the number of branches rising to 1,743 and Islamic banking windows reaching 976 by the end of December.
Despite this expansion, employment declined, with the total workforce falling to 47,460 from over 50,000 in the previous quarter.
Analysts said the mixed performance reflects resilience, but also emerging pressures. “The steady year-on-year growth shows underlying strength, but slower quarterly momentum suggests a cautious stance amid liquidity pressures and subdued demand,” said M Masrur Reaz.
They emphasised the need to strengthen trade financing, diversify investment portfolios and support export-oriented sectors to sustain growth and improve efficiency in the coming months.
