Rate cuts shrink SBP profits in 2025-26
KARACHI: The State Bank of Pakistan (SBP) has remitted Rs1,932 billion to the federal government as profit for 2025-26, helping reduce its dependence on large domestic borrowings. With the easing of monetary policy , the central bank’s profitability is also declining. From a peak of 22pc a few years ago, the benchmark interest rate has been reduced in intervals to 11.5pc. However, rising energy…
In FY26, the State Bank of Pakistan (SBP) remitted Rs1,932 billion to the federal government, contributing to a decrease in its reliance on substantial domestic borrowings. The central bank's profitability has declined due to a reduction in the benchmark interest rate, which has been lowered in intervals from a peak of 22pc to 11.5pc.
However, energy price hikes caused by Middle East tensions have once again increased inflationary pressures. The bank reported a net profit of Rs1,990 billion for the fiscal year, with Rs1,932 billion being transferred to the federal government after accounting for statutory requirements. In FY25, the SBP earned a profit of Rs2.5 trillion, which was mostly remitted to the government, helping to reduce the central bank's borrowing from banks and the corporate sector.
The surplus liquidity from the SBP's profits has assisted the government in keeping fiscal deficits within limits and collecting higher non-tax revenue, which is not transferable to the provinces. Domestic debt reached Rs59.94 trillion by the end of 2025-26, growing by 9pc or approximately Rs4.969 trillion. The country's total liquid foreign reserves stood at $22.587 billion as of August 21, with the SBP's forex reserves increasing by $17 million to $17.098 billion and commercial banks holding $5.488 billion.
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