Key Takeaways
- Aggregate profit of Pakistan’s banking sector rose to Rs. 370 billion in the first half of 2026.
- Noninterest income increased significantly, driven by foreign exchange dealings and higher fees and commissions.
- Capital adequacy ratio stood at 19.6 percent, indicating strong solvency and ability to withstand economic shocks.
Pakistan’s banking sector has shown resilience, with aggregate profits rising to Rs. 370 billion in the first half of 2026, according to the State Bank of Pakistan’s Mid-Year Performance Review.
While net interest income declined slightly to Rs. 1,140 billion from Rs. 1,157 billion in the first half of 2025, noninterest income saw a significant boost, reaching Rs. 370 billion from Rs. 289 billion during the same period.
The increase in noninterest income was primarily attributed to foreign exchange dealings, gains from the sale of securities, and higher fees and commissions, which were supported by increased remittances and elevated oil prices.
Banks also recorded higher gains from the sale of securities, reflecting efforts to realize gains and avoid potential losses due to increased secondary market yields.
Despite geopolitical tensions, the banking sector’s profitability remained stable, with stronger noninterest income, reversals in credit loss allowances, and write-offs offsetting the decline in net interest income.
The sector’s capital adequacy ratio stood at 19.6 percent, indicating a robust solvency position, and the latest macro stress tests showed that the sector, particularly large systemically important banks, was expected to remain solvent and withstand severe economic shocks over the projected two-year period.
The balance sheet of the banking sector expanded by 9.1 percent to Rs. 68,997 billion during the first half of 2026, mainly due to increased investments in government securities.
Private sector lending also recorded moderate growth, with long-term financing for small and medium-sized enterprises continuing to grow, and mortgage lending gaining momentum, largely due to the government’s subsidized housing scheme.
Banks mobilized an additional Rs. 3,673 billion in deposits during the period under review, contributing to the sector’s financial stability.
Financial market conditions were mixed during the first half of 2026, with volatility increasing in the equity market and the foreign exchange and money markets remaining relatively stable.
