PACRA Maintains the Entity Ratings of BankIslami Pakistan Limited.

The assigned rating of BankIslami Pakistan Limited ("BIPL" or the "Bank") reflects its advancing institutional stature within Pakistan's evolving Islamic banking industry, underpinned by a progressively expanding customer base, an unwavering commitment to Shariah-compliant financial solutions, and the institutional backing of the JS Group. BIPL occupies a position of historical and strategic distinction within the country's rapidly evolving Islamic banking landscape, with its integration within the JS Group continuing to reinforce its operational capacity, market positioning, and long-term growth prospects. The Bank continues to advance its digital transformation agenda through the launch of "AIK", Pakistan's first dedicated Islamic digital banking platform, and the implementation of FOCUS, an AI-enabled financing origination and credit underwriting system. Furthermore, the planned investment in core banking software will enhance operational efficiency, strengthen digital capabilities, and support the Bank's long-term growth objectives.
On the financial front, gross advances of the Bank marginally declined, with non-performing financing declined to PKR 21.9bln (CY24: PKR 24.2bln). Consequently, the infection ratio receded from 7.4% to 6.8% at the end of CY25. Provisioning buffers remain adequate, providing reasonable coverage against residual credit risk. Deposits increased to PKR 660bln (CY24: PKR 559bln), primarily driven by robust growth of 35.2% in current accounts, reflecting the effectiveness of the Bank's deposit mobilization, branch outreach efforts, and strengthening customer relationships. The capitalization profile of the Bank remained adequate during CY25; however, growth in risk-weighted assets and settlement of a long-term SBP facility moderated the CAR to 16.6% (CY24: 24.1%), while remaining above the regulatory requirement. Going forward, potential revaluation pressures arising from the interest rate environment are expected to be partially offset through improved spreads and profitability. Furthermore, during CY25, BIPL’s profitability declined amid margin compression arising from the declined interest rate environment and elevated operating expenses linked to higher administrative expenses and continued investment in digital infrastructure. Net markup income declined to PKR 35.7bln (CY24: PKR 46.4bln), while operating expenses increased to PKR 31.8bln (CY24: PKR 22.7bln). Consequently, profit after tax decreased to PKR 6.0bln during CY25 (CY24: PKR 11.8bln).
On the strategic front, the Bank's growth strategy is centered on reinforcing its feet-on-ground presence through an expanded branch footprint, induction of seasoned branch banking talent from the industry, and enhancement of branch infrastructure and customer experience. These initiatives are expected to deepen market penetration, strengthen customer relationships, and support sustainable deposit mobilization. Concurrently, management continues to focus on enhancing operational efficiency while expanding its presence in the SME segment to drive financing growth and portfolio diversification. The Bank has also reiterated its commitment to maintaining regular dividend payouts, reflecting confidence in its earnings generation capacity and sound capital position.
The Bank’s strong franchise and strategic focus are expected to support sustainable growth and profitability, while maintaining asset quality will remain important. Moreover, potential revaluation losses from the interest rate environment are expected to be offset by improved margins and profitability.

About the Entity
BIPL commenced operations in Apr-06 and is listed on PSX. BIPL is a subsidiary (75.12%) of JS Bank Limited. Mr. Ali Hussain holds 12.53% of the stake while the remaining stake is widely spread among general public. BIPL’s nine-member board of directors including the CEO constitutes representatives of sponsoring group and independent directors. The Chairman will be appointed in the upcoming board meeting, as FPT clearance from SBP is awaited. Mr. Rizwan Ata, a seasoned banker, is serving as CEO. A team of competent professionals assist the CEO.