KARACHI: The banking sector of Pakistan has demonstrated steady performance with key financial soundness indicators pointing to stability in capital adequacy, earnings, and asset quality.
Economic Survey of Pakistan for the year 2025-26 also highlighted that the financial sector has maintained resilience amid broader economic pressures, underscoring gradual improvements in overall banking sector fundamentals.
According to survey, the banking sector’s asset base grew by 17.8 percent YoY during CY2025, reaching Rs 63.2 trillion by the end of December 2025, mainly driven by investments.
On the funding side, deposit growth accelerated to 24.7 percent to Rs 37.659 trillion by end of December 2025. Deposits remained the mainstay of funding, financing 62.7 percent of the asset base, while borrowings financed 25.1 percent.
The Capital Adequacy Ratio (CAR) improved to 20.8 percent by the end of December 2025 from 20.6 percent a year earlier. The prevailing CAR is well above the domestic and international minimum benchmarks of 11.5 percent and 10.5 percent, respectively.
Earnings also remained steady, with after-tax profit of the banking sector rising to Rs 716 billion in CY25, up from Rs 644 billion in CY24.
Asset quality profile remained broadly stable and the non-performing loan (NPL) to gross loan ratio fell to 6.1 percent in December 2025 from 6.3 percent in December 2024. The net NPLs-to net loans ratio further improved to negative 0.5 percent in December 2025 from negative 0.3 percent in December 2024, indicating muted credit risk in the delinquent portfolio on a net basis.
Since its inception, Islamic banking in Pakistan has also demonstrated substantial growth. Total assets of Islamic Banking Institutions (IBIs) increased by Rs 3,397 billion by the end of December 2025, representing a YoY growth of 30.7 percent to reach Rs 14,467 billion.
Similarly, deposits rose by Rs 3,132 billion or 39.6 percent to Rs 11.037 trillion by the end of December 2025. Consequently, Islamic banking accounted for 22.9 percent of the overall banking industry’s assets and 27.8 percent of its deposits.
Financial Sector Reforms during July-March FY 2026 is also encouraging. In line with the SBP strategic Plan 2023-28 and Vision 2028, the SBP continued to undertake reforms to maintain price and financial stability, promote financial inclusion, strengthen resilience, and support a technologically advanced financial system.
The SBP has developed a comprehensive Cyber Resilience Strategy, namely Cyber Shield 2025-30, for the SBP regulated entities.
As the banking ecosystem faces an increasingly sophisticated cyber threat landscape, the strategy aims to enhance cyber defenses of the SBP regulated entities through a holistic, adaptive and collaborative approach built upon five foundational pillars, namely strengthening cyber resilience, maturing cyber security governance, enhancing collaborations and partnerships, developing cyber workforce and continuously evolving the cyber security programs.
Copyright Business Recorder, 2026
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