State Bank of Pakistan's profit falls 20% in FY26
Lower interest earnings outweighed a turnaround in exchange gains, even as the bank transferred a record PKR 1.93 trillion to the government
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
The State Bank of Pakistan’s profit after tax fell about 20% in fiscal year 2025-26 (FY26) as a sharp decline in interest and markup earnings outweighed a turnaround in exchange-related gains, according to the central bank’s consolidated financial statements.
The central bank posted a profit after tax of about PKR 2 trillion in FY26, compared with PKR 2.51 trillion a year earlier.
The decline came as interest and markup earnings fell to PKR 1.92 trillion from PKR 2.60 trillion, reflecting lower interest rates and reduced earnings from interest-bearing assets. Total income declined to PKR 2.11 trillion from PKR 2.60 trillion.
Exchange gains improve
The SBP’s exchange-related performance improved significantly during the year. It recorded an exchange gain of PKR 76.40 billion in FY26, compared with an exchange loss of about PKR 55 billion in the previous fiscal year.
The improvement, however, was not enough to offset the decline in core interest and markup income.
The central bank’s tax expense rose about 41% to PKR 3.20 billion from PKR 2.27 billion a year earlier, according to the financial statements.
Higher currency printing, administrative costs
The SBP also reported higher operating expenses during the year.
Spending on the printing of banknotes and prize bonds increased to about PKR 29 billion in FY26 from PKR 24.67 billion in the preceding fiscal year.
General administrative expenses rose to PKR 61.53 billion from PKR 52.25 billion.
The higher expenses added pressure to profitability at a time when income from the SBP’s interest-earning operations was declining.
SBP transfers PKR 1.93 trillion to government
Despite the decline in annual profit, the SBP transferred about PKR 1.93 trillion in profits to the federal government during FY26, according to data cited by AKD Securities.
The transfer was about PKR 496 billion, or roughly 35%, higher than the government’s budgeted transfer of about PKR 1.4 trillion.
The larger-than-budgeted transfer could provide additional fiscal space for the government to increase development spending or consider relief through a reduction in the Petroleum Development Levy, according to AKD Research.
The SBP’s profit transfers have become an important source of non-tax revenue for the federal government and can help support the budget when other revenue streams fall short.
Comprehensive income also declines
The SBP’s total comprehensive income fell to PKR 2.53 trillion in FY26 from PKR 3.20 trillion in the previous fiscal year after accounting for unrealized amounts and expenses related to staff retirement benefits.
The results highlight the impact of lower interest rates on the central bank’s earnings, even as stronger exchange-related income provided some offset.
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