Samba Bank Limited, a subsidiary of the Saudi National Bank (SNB), has announced a significant shift in its business strategy. The bank revealed plans to convert from a conventional banking model to a full-fledged Islamic bank, marking a strategic move in response to the growing demand for Shariah-compliant financial services in Pakistan.
The announcement was made public through a notice filed with the Pakistan Stock Exchange (PSX) on Thursday, March 13, 2025. According to the notice, the board of Samba Bank has given in-principle approval to the transition. The bank stated that the tentative conversion plan would be submitted to the State Bank of Pakistan (SBP) for review and approval in due course.
This move reflects Samba Bank’s efforts to align itself with the increasing shift towards Islamic banking in Pakistan, a sector that has experienced impressive growth over the past two decades. The rise of Islamic banking has been driven by a combination of factors, including strong customer demand for Shariah-compliant products, supportive regulatory policies, and an increasing number of financial institutions offering Islamic banking options.
Islamic banking in Pakistan has evolved rapidly, with both dedicated Islamic banks and conventional banks introducing Islamic banking windows to serve the growing demand. The sector’s expansion is evident in recent data from the State Bank of Pakistan. According to SBP’s latest figures, the assets of the Islamic banking industry increased by Rs192 billion from the quarter ending June 2024, reaching a total of Rs9,881 billion by the end of September 2024. Similarly, deposits in Islamic banks grew by Rs233 billion during the same period, reaching Rs7,596 billion.
The decision to transition to Islamic banking comes as Samba Bank seeks to capitalize on these positive growth trends in the sector. By embracing Shariah-compliant banking principles, the bank aims to cater to a growing customer base that values ethical financial solutions in line with Islamic law.
In its notice, Samba Bank also highlighted its recent financial performance for the year 2024. The bank reported a profit after tax of Rs699.33 million for the year, marking a significant decline of over 43% compared to the previous year’s profit of Rs1.24 billion. While the drop in profits raises some concerns, it could also be an indication of the bank’s ongoing transformation as it shifts its focus toward Islamic banking.
Samba Bank’s move follows a similar decision by another financial institution, the Bank of Khyber, which recently began its transition into a full-fledged Islamic bank. The growing number of banks opting to adopt Islamic banking principles reflects the industry’s increasing prominence and the need to adapt to the shifting landscape of the financial services sector in Pakistan.
The transition to Islamic banking aligns with broader global trends, as Islamic finance has gained significant traction across many regions, particularly in the Middle East and Southeast Asia. The increasing interest in Islamic financial products offers opportunities for banks to expand their customer base, attract new investors, and ensure compliance with Shariah law.
As Samba Bank moves forward with its transition, it will likely focus on developing a comprehensive range of Shariah-compliant products and services to meet the needs of its diverse clientele. This could include everything from personal banking services to corporate financing solutions, all designed to adhere to the ethical and legal standards of Islamic finance.
In conclusion, Samba Bank’s decision to shift to Islamic banking underscores the growing importance of the sector in Pakistan and its potential to reshape the financial landscape. As the bank takes the necessary steps to secure regulatory approval, it will be interesting to see how this transformation impacts its future financial performance and growth trajectory in the evolving banking environment.