- Pakistan’s economy shows signs of recovery, with Moody’s forecasting 3 percent growth.
International experts recorded that the global banking sector is a multifaceted and diverse sector, with a mix of large multinational institutions, regional banks, and smaller community banks serving various markets. In recent decades, this sector has undergone significant transformations, driven by technological advancements, globalization, and changing regulatory environments. Statistics showed in 2024, banks had revenues or income of Rs 2.46 trillion. This was divided into two parts: net interest income, which was Rs 1.9 trillion, and non-net interest income, which was Rs 560 billion.
| Total Deposits Of Scheduled Banks (Stock) (Rs in Mn) | ||||||||
|---|---|---|---|---|---|---|---|---|
| As on last week of: | March | April | May | June | July | Aug | Sep | Oct |
| 2016 | 9,559,122 | 9,767,624 | 9,744,399 | 10,060,188 | 10,304,705 | 10,165,792 | 10,510,703 | 10,446,971 |
| 2017 | 11,170,035 | 11,214,048 | 10,992,696 | 11,980,697 | 11,701,701 | 11,651,413 | 11,979,886 | 11,777,383 |
| 2018 | 12,571,277 | 12,276,660 | 12,258,375 | 13,062,787 | 12,551,434 | 12,691,719 | 13,031,815 | 12,666,020 |
| 2019 | 13,456,273 | 13,148,866 | 13,459,780 | 14,458,307 | 13,747,355 | 13,977,401 | 14,025,990 | 13,912,112 |
| 2020 | 15,126,310 | 14,475,797 | 15,480,920 | 16,229,036 | 16,121,585 | 16,327,253 | 16,886,204 | 16,663,978 |
| 2021 | 17,905,610 | 17,561,051 | 17,955,414 | 19,795,921 | 18,839,306 | 19,207,710 | 19,829,406 | 19,343,894 |
| 2022 | 20,475,993 | 20,052,416 | 21,151,357 | 22,809,627 | 22,100,920 | 22,151,700 | 22,820,094 | 22,412,402 |
| 2023 | 23,579,638 | 23,428,551 | 24,387,527 | 25,507,568 | 25,702,313 | 26,110,114 | 26,318,274 | 26,397,599 |
| 2024 | 28,321,593 | 28,415,964 | 29,348,503 | 31,121,615 | 30,603,442 | 30,778,250 | 31,342,453 | 31,116,035 |
| 2025 | 31,626,220 | 32,316,280 | – | – | – | – | – | – |
The State Bank of Pakistan (SBP) has injected a significantly high amount of Rs11.85 trillion into conventional and Shariah-compliant commercial banks for up to 14 days. The injections are aimed at enhancing liquidity in the banking system to meet upcoming demand coming mainly from government to finance its fiscal deficit. The government’s reliance on domestic debt has once again gone up in the wake rise in expenditures and shortfall in collection of revenue in taxes through the Federal Board of Revenue (FBR).
The Ministry of Finance recorded in its Monthly Economic Update & Outlook April, 2025 the total expenditures grew by 23.2 percent to Rs10.36 trillion in July-March fiscal year 2024-25, with current spending up 17.2 percent to Rs9.56 trillion, markup payments (18.2 percent) and non-markup expenditures (15.7 percent). On the other hand, sources recorded that the collection of revenue in taxes by the FBR hit a shortfall of Rs703 billion in the first 9-month of FY2025, collecting a total of Rs8.46 trillion during July-March 2024-25 against the target of Rs9.17 trillion.
The government of Pakistan has revised down the FBR’s annual tax collection target from Rs12.91 trillion to Rs12.33 trillion for the ongoing fiscal year 2024-25. SBP said that the Islamic banking assets had for the first time reached Rs11.5 trillion ($40.7 billion) by the close of March in this year, as Pakistan actively moves toward implementing a fully Shariah-compliant financial system. Pakistan’s Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest and align the country’s whole banking system with Islamic principles by 2027. Following the order, the government of Pakistan and State Bank have taken various initiatives ranging from changing laws to issuing sukuk Islamic bonds to replace interest-based treasury bills and investment bonds.
Moody’s rating has revised Pakistan’s banking sector outlook from stable to positive, attributing the change to stronger financial performance and a recovery in macroeconomic situations from last year’s downturn. It is reported that Pakistan’s banks are heavily invested in government securities, holding approximately 50 percent of their total assets in sovereign bonds. The upgrade reflects a more favorable liquidity position and enhanced external financing conditions, in line with the government’s positive credit rating trend.
According to Moody’s, the outlook upgrade aligns with the enhanced sovereign credit rating of Pakistan as banks remain highly exposed to government risk through their substantial holdings of sovereign debt. The agency noted that Pakistan’s fiscal and monetary initiatives, coupled with an International Monetary Fund (IMF) program, have helped stabilise its economy. Pakistan’s economy has shown signs of recovery, with Moody’s forecasting a GDP growth rate of 3 percent for 2025, up from 2.5 percent in 2024 and a contraction of 0.2 percent in 2023. SBP cut the policy rate to 11 percent, amid trade and industry sectors advocating for a significant cut. SBP’s policy rate, after being slashed by 1,000bps from 22 percent since June 2024 in six intervals, previously reached at 12 percent.
Pakistan has become one of the fastest growing markets for branchless banking in the World. These developments include increased competition, new business models, technological innovation, transformation in customers’ needs and behaviors, and regulatory proportionality. International development agencies and media have now been highlighting Pakistan for its market and institutional environment for branchless banking. In fact the branchless banking is going to dominate the retail banking landscape in the long-term.