The State Bank of Pakistan (SBP) has reported a notable improvement in the country’s financial stability, highlighting a significant reduction in systemic risks during 2025, according to its latest Financial Stability Review.
The report notes that growth in financial sector assets was primarily driven by the banking industry, which recorded an increase of 13.7 percent. This expansion reflects improved resilience and strengthening fundamentals within the sector.
The central bank also observed a steady rise in the volume of digital and direct transactions across the country, indicating growing adoption of technology-driven financial services and increased financial inclusion.
Pakistan’s equity market delivered an outstanding performance during the year, contributing to enhanced investor confidence and a more favorable investment climate.
In the banking sector, asset quality improved as non-performing loans declined, signaling better risk management and recovery trends among financial institutions.
The report further highlighted rapid growth in Islamic banking, with its network and market share expanding to 22.9 percent, underscoring increasing public preference for Shariah-compliant financial services.
Despite these positive developments, the State Bank cautioned that global geopolitical tensions and cyber security risks remain key challenges that could impact the stability of Pakistan’s financial system in the future.