Key Takeaways
- Agribusiness loans contracted by Rs. 64 billion during the first half of 2026.
- Agriculture advances in the domestic private sector increased to Rs. 723 billion.
- Financing to the sugar sector rose sharply, with Rs. 205 billion in new loans.
The State Bank of Pakistan’s Mid Year Performance Review of the Banking Sector revealed a mixed trend in agriculture-related financing during the first half of 2026. While agribusiness loans contracted by Rs. 64 billion, overall agriculture advances in the domestic private sector increased to Rs. 723 billion, up from Rs. 664 billion in December 2025.
The report highlighted that public sector advances increased by Rs. 87 billion, mainly due to a rise in energy sector lending by Rs. 183 billion. However, this increase was partly offset by the contraction in agribusiness loans.
Despite the decline in agribusiness loans, the broader sector-wise analysis of credit disbursement showed that agribusiness was among the sectors that received financing during the period. The increase in energy sector lending was attributed to lending linked to circular debt.
The sugar sector saw a significant increase in financing, with Rs. 205 billion in new loans, compared to Rs. 52 billion in the same period of the previous year. This increase was driven by higher working capital requirements linked to increased sugarcane production, lower refined sugar prices, and the absence of refined sugar exports.
Sugarcane production increased by 6.2 percent to 89 million tons during fiscal year 2026, while the average refined sugar price fell to Rs. 153 per kilogram during the first half of 2026, down from Rs. 166 per kilogram in the same period of the previous year. Pakistan did not export refined sugar during fiscal year 2026, compared with exports of 765,734 metric tons in fiscal year 2025.
The report’s asset quality review showed an improvement in agribusiness-related credit risk. Overall nonperforming loans declined by Rs. 62 billion during the first half of 2026, with the largest reductions coming from agribusiness and individual borrowers. Agribusiness nonperforming loans decreased by Rs. 54 billion during the period.
The mixed performance suggests that agriculture-related financing expanded in some areas, particularly outstanding private-sector agriculture advances and sugar-sector working capital, while agribusiness lending in the public-sector breakdown declined.
