SBP profit drops 20% to Rs1.99 trillion in FY26 amid lower interest income

The State Bank of Pakistan (SBP) posted a 20% year-on-year decline in net profit to Rs1.99 trillion for FY26, primarily due to a sharp fall in earnings from its financial assets.

 

According to the central bank's financial statements for the year ended June 30, 2026, SBP's profit fell by Rs506 billion from Rs2.499 trillion recorded in FY25.

 

Income generated through discount, interest, mark-up and profit on financial assets declined to Rs2.037 trillion during FY26, compared with Rs2.801 trillion in the previous fiscal year — a decrease of Rs764 billion.

 

Following statutory and accounting appropriations, the central bank transferred a surplus of Rs1.932 trillion to the federal government. The remittance provides significant non-tax revenue support to the government and helps ease its reliance on additional domestic borrowing.

 

Over recent years, the SBP has transferred substantial profits to the government, assisting authorities in managing fiscal financing needs amid persistent gaps in tax revenue collection.

 

The availability of surplus liquidity has also facilitated the retirement of short-term domestic debt and encouraged a shift towards longer-term borrowing through Pakistan Investment Bonds (PIBs), while reliance on Market Treasury Bills has declined.

 

The drop in the central bank's profitability coincides with the easing of monetary policy. Pakistan's benchmark policy rate, which previously peaked at 22%, has been gradually reduced to 11.5%.

 

Meanwhile, expenditure on banknote and prize bond printing rose by around 18% during FY26. Printing-related costs increased to Rs29.1 billion from Rs24.667 billion a year earlier, reflecting an increase of Rs4.433 billion. These charges are paid to Pakistan Security Printing Corporation, a wholly owned subsidiary of the SBP.

 

The SBP's unconsolidated financial statements and auditors' report were also submitted to the federal government and the Majlis-e-Shoora (Parliament) in accordance with Section 40(3) of the State Bank of Pakistan Act, 1956.

 

Separately, Pakistan's domestic debt climbed to Rs59.94 trillion by the end of FY26, marking an annual increase of approximately Rs4.969 trillion, or 9%.