On an iPhone, contact pictures are stored within the Contacts app and are associated with individual contacts in your address book. The actual image files are stored in a specific location within the device's internal storage.
However, this file is not directly accessible to users.
Now the question is. Which email account is being used by you to store Contacts
When you look deeply you will find that Contacts are neither stored on an iPhone nor on SIM. They are synced to an email account that you may have added and enabled Contacts. It could be Google, iCloud, AOL, Exchange, Outlook, Yahoo, or any Other email client server.
When you enable Contacts in any of the email accounts they are displayed to you through the Contacts App. When you edit these contacts on an iPhone they are ultimately edited on the client-server.
Look for the pictures on the email client server.