Karachi, February 21, 2025 – Foreign banks operating in Pakistan have repatriated a substantial amount of $165 million in profits and dividends during the first seven months (July–January) of the fiscal year 2024-25, according to a report released by the State Bank of Pakistan (SBP).
This marks a 98% increase compared to the $83.4 million withdrawn during the same period in the previous fiscal year.
The sharp rise in repatriation highlights how foreign banks continue to benefit from Pakistan’s liberal policies, which allow them unrestricted outward remittances of their earnings. Over the past two years, banks have witnessed significant profits, primarily due to the country’s high interest rates. Additionally, the government’s reliance on banks for budget financing has provided them with a secure investment opportunity, further boosting their earnings.
According to SBP data, foreign banks sent $134 million in profits and dividends related to Foreign Direct Investment (FDI) back to their home countries during the first seven months of the current fiscal year. This represents an impressive 109% growth, compared to $64.2 million during the same period last year. The stock market also witnessed capital outflows, as foreign banks repatriated $30.5 million from equity investments between July and January, up from $19.2 million in the previous fiscal year.
Market analysts believe that the surge in profit and dividend outflows is primarily due to improved economic conditions in Pakistan. The stabilization of exchange rates and an increase in foreign exchange reserves have given the government confidence to ease restrictions on foreign currency movements. As a result, foreign banks have been able to transfer their earnings abroad without facing liquidity concerns.
While the repatriation of profits is a routine process, the significant increase underscores the profitability of the banking sector in Pakistan, despite economic challenges. However, some experts caution that excessive capital outflows may create pressure on the country’s external accounts. Policymakers may need to strike a balance between maintaining an investor-friendly environment and ensuring that enough capital remains within Pakistan’s financial system for sustainable growth.