The State Bank of Pakistan published its Mid-Year Performance Review of the Banking Sector, finding that the sector remained sound during the first half of 2026. Bank balance sheets expanded by 9.1%, primarily through investment in government securities, while advances increased across public and private segments and deposits rose by PKR 3,673 billion. Asset quality improved, with the nonperforming loan ratio falling to 5.5% in June from 6.1% in December 2025 and provisioning coverage rising to 110.2% from 107.7%. Capital adequacy remained strong at 19.6%, and macro stress tests indicated that the sector, including large systemically important banks, could withstand severe shocks over a two-year horizon. Earnings growth was more moderate, with return on assets easing to 1.1% and return on equity to 19%. Equity market stress increased amid geopolitical developments in the Middle East, while foreign exchange and money markets were calmer. Systemic Risk Survey respondents ranked commodity price volatility, including oil prices, as the leading risk, followed by global geopolitical risk.
2026-09-14State Bank of Pakistan
State Bank of Pakistan finds banking sector resilient in first half of 2026 as assets rise 9.1%
The State Bank of Pakistan found that the banking sector remained resilient in the first half of 2026, with assets up 9.1%, a 19.6% capital adequacy ratio and improved asset quality. Stress tests indicated that banks could withstand severe shocks over two years, although earnings moderated and commodity price volatility and geopolitical risks remained key concerns.