The State Bank of Pakistan (SBP) announced a remarkable profit of Rs3.42 trillion for FY24, nearly doubling last year’s earnings of Rs1.14 trillion. This surge in profits is attributed to higher interest rates and favorable exchange gains.
Mohammed Sohail, CEO of Topline Securities, noted that the combination of elevated interest rates and a stable Pakistani Rupee significantly contributed to these record earnings. With 80% of the SBP’s profits allocated to the government, this substantial profit translates to approximately Rs2.74 trillion for the government, surpassing its budgeted estimate of Rs2.5 trillion for the 2024-25 fiscal year.
Despite the anticipated surplus, concerns about fiscal space persist in Pakistan. Sohail added that improved government liquidity has recently led to a rally in local currency bonds.
In a recent auction, following federal directives, the SBP rejected all bids for Pakistan Market Treasury Bills (MTBs). The bank also reported a significant increase in its share of profits from associates, rising to Rs1.72 billion from Rs726 million the previous year.
One of the key drivers of the SBP’s profit growth was the exchange gain, which reached Rs186.1 billion, a stark turnaround from a loss of Rs875 billion in FY23. However, the costs associated with printing banknotes and prize bonds rose from Rs17.8 billion in FY23 to Rs26.6 billion in FY24, and overall administrative expenses increased from Rs42.7 billion to Rs56.1 billion.
Examining the SBP’s financial trajectory over the past decade reveals significant growth. The bank’s profit increased from Rs749 billion in FY2021-22 to Rs1.14 trillion in FY2022-23, marking a recovery after two years of stagnation. During the economic challenges of FY2020-21 and FY2021-22, the SBP still managed profits of Rs760 billion and Rs749 billion, respectively. Notably, in FY2018-19, the bank faced a loss of Rs1.04 billion amid a difficult economic landscape, while it reported a profit of Rs175 billion in FY2017-18.
