Pakistan’s private sector received Rs. 873 billion in net bank financing during the current fiscal year through July 12. According to the State Bank of Pakistan, lending increased 29 percent from Rs. 676 billion during the same period last year.
The latest data showed a major shift within the country’s banking sector. While overall private sector financing increased, lending patterns changed significantly between Islamic and conventional banking operations.
Islamic Banking Lending Pattern Shows Major Shift
Full-fledged Islamic banks extended Rs. 160 billion in net financing during the review period. However, this represented a 54 percent decline from Rs. 347 billion recorded a year earlier.
Meanwhile, Islamic banking divisions of conventional banks sharply increased their lending activity. They extended Rs. 729 billion in financing compared with Rs. 140 billion during the corresponding period last year.
Consequently, Islamic banking windows at conventional banks accounted for a much larger share of private sector financing.
Conventional Banking Records Net Loan Retirement
Overall private sector credit continued growing despite elevated borrowing costs. The State Bank of Pakistan’s policy rate currently stands at 11.5 percent. Therefore, commercial lending rates generally remain above the benchmark.
However, conventional banking operations recorded a net retirement of Rs. 17.6 billion in loans. This marked a reversal from the Rs. 187 billion in net lending reported during the same period of the previous fiscal year.
The latest figures highlight changing financing trends across Pakistan’s banking industry. Meanwhile, overall private sector borrowing maintained steady growth despite higher interest rates and shifting lending patterns.
