Economic Survey 2025-26 highlights record assets, stronger deposits and profitability, while private-sector lending remains subdued
ISLAMABAD: Pakistan’s banking sector maintained strong growth during calendar year 2025 (CY2025), with total assets reaching a record Rs63.23 trillion, supported by rising deposits, higher investments, robust profitability and a strong capital base, according to the Economic Survey of Pakistan 2025-26.
The survey, citing data from the State Bank of Pakistan (SBP), showed that total banking sector assets increased from Rs53.69 trillion in CY2024 to Rs63.23 trillion in CY2025, representing growth of nearly 18%.
The expansion reflects the banking industry’s continued resilience despite a challenging economic environment, underpinned by improved financial soundness and sustained deposit mobilisation.
Investments surge as banks favour government securities
Banks significantly increased their investment portfolios during the year.
Net investments climbed to Rs39.07 trillion in CY2025 from Rs29.79 trillion in the previous year, highlighting banks’ continued preference for government securities and other low-risk financial instruments.
In contrast, net advances declined to Rs14.86 trillion from Rs15.81 trillion in CY2024, indicating slower lending to the private sector.
Consequently, the advances-to-deposit ratio (ADR) fell sharply to 37.5% from 49.7% a year earlier, reflecting a more cautious lending strategy by commercial banks.
Deposits reach new high
Deposits continued their strong upward trend during CY2025.
The banking sector’s deposit base expanded from Rs31.79 trillion in CY2024 to Rs39.66 trillion, providing banks with a larger and more stable source of funding while supporting overall balance sheet growth.
The stronger deposit mobilisation also contributed to improved liquidity across the banking system.
Equity and profitability strengthen
The banking sector further reinforced its financial position during the year.
Total equity increased to Rs4.00 trillion in CY2025 from Rs3.30 trillion in the previous year, strengthening banks’ capital buffers.
Profitability also remained robust. Profit before tax rose to Rs1.57 trillion, compared with Rs1.37 trillion in CY2024, while profit after tax increased to Rs716 billion from Rs644 billion.
The higher earnings reflect resilient banking operations despite relatively subdued private-sector credit growth.
Asset quality continues to improve
The Economic Survey showed continued improvement in the quality of banks’ loan portfolios.
Gross non-performing loans (NPLs) declined to Rs964 billion in CY2025 from Rs1.07 trillion a year earlier.
Meanwhile, net non-performing loans improved further to negative Rs74 billion, compared with negative Rs41 billion in CY2024, reflecting strong provisioning by banks.
Key Financial Soundness Indicators (FSIs) also strengthened.
The ratio of gross NPLs to gross loans improved to 6.1% from 6.3%, while the ratio of net NPLs to net loans improved to negative 0.5%, compared with negative 0.3% in the previous year.
Capital adequacy remains well above regulatory minimum
Pakistan’s banking sector maintained a strong capital position throughout CY2025.
The overall Capital Adequacy Ratio (CAR) increased slightly to 20.8%, compared with 20.6% in CY2024, remaining comfortably above the minimum regulatory requirement.
According to the Economic Survey of Pakistan 2025-26, the banking industry continued to demonstrate resilience through stronger capitalisation, improved asset quality, rising profitability and sustained deposit growth.
However, the decline in net advances and the lower advances-to-deposit ratio suggest that banks remained cautious in extending credit to the private sector, opting instead to allocate a greater share of their funds to investments, particularly government securities.