KARACHI: Credit to the private sector posted robust year-on-year growth of over 15 percent in August 2025, driven by easing financial conditions, improving economic activity and continued decline in budgetary borrowing.
According to the State Bank of Pakistan (SBP), credit to the private sector reached Rs 9.744 trillion in August 2025, compared to Rs 8.441 trillion in August 2024, showing a robust year-on-year increase of 15.4 percent, or Rs 1.303 trillion.
On a monthly basis; however, the trend remained negative as private sector credit declined by 1.7 percent, falling by Rs 173 billion from Rs 9.917 trillion in June 2025 to Rs 9.744trillion in August 2025.
Credit to private sector hits Rs1.4trn mark
SBP believed that the demand for private sector credit is likely to maintain its recent momentum, despite some risks arising from the anticipated post-flood slowdown in economic activity.
The federal government’s net budgetary borrowing from the banking system has declined sharply following the transfer of Rs 2.4 trillion in profits from the State Bank of Pakistan (SBP) to the national exchequer. This reduction in government borrowing has created fiscal space for the private sector, enabling an increase in banks’ credit to the non-government sector.
Private sector credit growth accelerated on the back of easing financial conditions, strengthening economic activity, and a sustained decline in government budgetary borrowing.
According to SBP, the expansion in credit was broad based, with increases recorded in working capital loans, fixed investment advances and consumer financing and the key borrowing sectors included textiles, telecommunications, and wholesale and retail trade.
A detailed analysis revealed that private sector investment in securities and shares surged by 31 percent year-on-year, reaching Rs 260 billion in August 2025 compared to Rs 198 billion in the same month last year. In addition, loans to the private sector increased by Rs 1.24 trillion, rising to Rs 9.484 trillion in August 2025 from Rs 8.243 trillion in August 2024.
Meanwhile, the auto financing also surged to a 26-month high in Aug 2025. Auto financing reached Rs294 billion, up 29 percent YoY and 3 percent MoM. However, it remains 20 percent below the peak of Rs368 billion recorded in Jun 2022.
According to Topline Securities, the recovery reflects improving consumer demand amid falling interest rates and is expected to further lift auto sector sentiment, with stronger sales and earnings outlook for listed companies.
Copyright Business Recorder, 2025
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