Rate cuts shrink SBP profits in 2025-26

Dawn reported that the State Bank of Pakistan (SBP) has handed Rs1,932 billion in surplus profit for 2025-26 to the federal government, easing its reliance on heavy domestic borrowing. The central bank's annual financial statements, issued on Thursday, put its net profit for FY26 at Rs1,990 billion before the deduction of required allocations.

The central bank's earnings are falling along with the policy rate, which peaked at 22 per cent a few years ago and has since been lowered in stages to 11.5 per cent. Energy prices have risen again amid strain in the Middle East, renewing inflationary pressure. The FY26 figure also sits well below the Rs2.5 trillion profit recorded in FY25.

The surplus has helped the government cover the yearly tax revenue shortfall, keep the fiscal deficit within limits, and retire short-term domestic debt in favour of long-term Pakistan Investment Bonds. Domestic debt reached Rs59.94 trillion by the end of 2025-26, rising 9 per cent or about Rs4.969 trillion. Liquid foreign reserves totalled $22.587 billion in the week ending August 21, while the SBP's own holdings rose $17 million to $17.098 billion.