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Pakistan’s banking sector emerged as one of the country’s most profitable industries in 2025, with listed banks posting cumulative after-tax profits of Rs671 billion, an increase of 11 per cent over the previous year.
The sector’s performance was underpinned by a prolonged period of elevated interest rates, with the State Bank of Pakistan maintaining the policy rate in the range of 11–12pc for much of the year. The high-rate environment enabled banks to earn substantial returns on their investments in government securities, reinforcing profitability despite subdued private-sector credit demand.
Commercial banks further expanded their exposure to sovereign debt during the year. Scheduled banks’ investments in government securities rose to Rs38.25 trillion by December 2025, up from Rs35.85tr in September and Rs30tr at the beginning of the year. Overall holdings of government paper increased by more than 27pc during calendar year 2025. Banks remained the principal financiers of the public sector, accounting for nearly 78pc of Rs49.17tr in outstanding government securities, as heightened risk aversion and elevated fiscal financing needs continued to restrain lending to the private sector.
