- Listed banks earned Rs170 billion profit in 3Q2025, marking 8pc year-on-year growth
According to Economic Survey of FY2025, the State Bank of Pakistan (SBP) continued to operate within its regulatory and supervisory ambit during FY 2025 to create a conducive and thriving environment for the banking industry. It is recorded that the banking sector of the country showed a steady performance that is reflected in the major financial soundness indicators related to capital adequacy, earnings, and asset quality.
Assets base of the sector grew by 15.8 percent year on year (YoY) in FY2024 to reach Rs 53.7 trillion by close December-2024. The expansion was chiefly driven by investments and advances. The share of investments in total assets slightly fell to 55.5 percent in December-2024 from 56.1 percent in December-2023, while that of advances enhanced to 29.4 percent in December-2024 from 26.3 percent in December-2023. On the funding side, deposits and borrowings financed 59.2 percent and 27.9 percent of the asset base, respectively in December-2024. Statistics showed that the asset quality indicators manifested no serious concerns as Non-Performing Loans (NPLs) are more than fully covered by the loan loss allowances and provisions. NPLs to total loans ratio declined to 6.3 percent in December-2024 as against to 7.6 percent in December-2023. Earnings of the banking sector stayed steady; after-tax profit of the banking sector inched up to Rs 644 billion in FY2024 from Rs 642 billion the last year.
After-tax return on assets (ROA) reached at 1.3 percent in December-2024, and after-tax return on equity (ROE) was 21.5 percent in December2024. Solvency indicators, like Capital Adequacy Ratio (CAR), enhanced to 20.6 percent by end December-2024. The prevailing CAR is well above the domestic and international minimum benchmarks of 11.5 percent and 10.5 percent, respectively. Presently, different sources mentioned that our country’s banking sector sustained its position as the economy’s most profitable and low-risk industry in the third quarter of 2025, with earnings mainly fuelled by government borrowing and investments in high-yield securities.
According to the experts, listed banks collectively earned Rs170 billion in profit during 3Q2025, marking an 8 percent YoY rise and a 2 percent quarter-on-quarter (QoQ) rise. While the sector’s asset base continues to expand faster than any other industry, private-sector lending has plunged to record lows, with net credit off-take remaining negligible nearly four months into the ongoing fiscal year. Experts also noted that the sector’s net interest income (NII) grew 6 percent YoY but remained almost flat on a QoQ basis. Furthermore, on a quarterly basis, most banks registered marginal changes as gains in some were offset by falls in others, though a few benefited from a shift in deposits toward current accounts and increased business volumes.
| Pakistan: Structure Of Interest Rates (%) | |
|---|---|
| Month | SBP Policy (Target) Rate |
| 6-May-25 | 11.00 |
| 28-Jan-25 | 12.00 |
| 17-Dec-24 | 13.00 |
| 5-Nov-24 | 15.00 |
Experts also recorded that non-interest income climbed 13 percent YoY and 1 percent QoQ to Rs146 billion, supported by capital gains, fee-based earnings, and higher foreign-exchange revenues. At the same time, non-interest expenses grew 19 percent YoY and 5 percent QoQ to Rs329 billion, largely because of higher remittance-related costs. Consequently, the sector’s cost-to-income ratio grew to 47.9 percent in 3Q2025, up from 45.9 percent in the previous quarter and 43.3 percent a year earlier. Despite muted credit growth, analysts also recorded that the banking industry’s profitability remains resilient, supported through sustained government borrowing and stable earnings from fixed-income instruments. The government officials also registered in the economic survey FY2025, during the period July-March FY2025, an accommodative monetary policy stance with cumulative reduction of 1100 bps in the SBP policy rate has been translated into the Weighted Average Lending Rate (WALR), decreasing from 20.8 percent in March 2024 to 12.4 percent in March 2025. Similarly, the Weighted Average Deposit Rate (WADR), offered on fresh deposits, also declined to 5.0 percent in March 2025 from 10.4 percent in March 2024.
Accordingly, the banking spread, the difference between the lending and deposit rates, and the cost of channeling funds through intermediaries declined from 10.4 percent in March 2024 to 7.4 percent in March 2025, which remained instrumental for private sector credit demand.