Pakistan’s scheduled banks saw a Rs5.8 trillion or 19.3% increase in investments in the first nine months of 2025, rising from Rs30 trillion in January to Rs35.85 trillion by September, according to data from the State Bank of Pakistan (SBP).
This growth reflects both the banking sector’s continued preference for government securities and the growing financing needs of the state. The banking sector’s assets now account for 52.4% of GDP in FY25, compared to 49.1% in the previous fiscal year.
Despite the positive growth in investments, the SBP highlighted ongoing concerns about the limited flow of credit to the private sector. Banks continue to rely heavily on government securities for profits, with advances to the private sector falling to Rs13.46 trillion by September, down from Rs14.73 trillion in January, marking a decline of Rs1.27 trillion. This reduction reflects the sluggish demand for private sector credit, further intensifying the sector’s dependence on government bonds.
In contrast, corporate investments in government securities have also increased, reaching Rs7.86 trillion by June 2025, or 17% of total holdings. This trend is seen as a sign of risk aversion, with companies opting for risk-free returns on surplus liquidity rather than investing in business expansion.
While the central bank has kept its policy rate at 11% in its most recent monetary policy review, trade and industry groups argue that borrowing costs remain too high to stimulate new investment.
The government’s interest payments for FY25 were reported at around Rs8.89 trillion, lower than the initially budgeted Rs9.8 trillion, mainly due to easing interest rates and some fiscal relief.
