The State Bank of Pakistan (SBP) posted a massive profit of Rs3.42 trillion in FY24, a nearly 200% jump from last year’s Rs1.142 trillion as higher interest rates and exchange gain helped the central bank post record earnings.

“Higher interest rates and stable Pakistani Rupee helped SBP post these huge profits,” Mohammed Sohail, CEO of Topline Securities, said in a note.

The market expert noted that as 80% of these profits are given to the government, the overall government liquidity has improved.

Therefore, the central bank’s latest profit of Rs3.42 trillion translates into an earning of Rs2.74 trillion for the government, well above its budgeted amount.

In the budget, the government estimated a surplus profit from the SBP at a record Rs2.5 trillion (roughly $9 billion) during 2024-25.

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Meanwhile, due to the government’s improved liquidity, “we are seeing a rally in local currency bonds recently,” Sohail added.

Last week, following the federal government’s directives, the SBP rejected all bids of Pakistan Market Treasury Bills (MTBs) received in the auction.

In the consolidated profit and loss account, the SBP also showed a massive increase in share of profit from associates, which clocked in at Rs1.72 billion from Rs726 million in the previous year.

But its most significant improvement came in the exchange gain that stood at Rs186.1 billion, a stark contrast from a loss of Rs875 billion in FY23.

The SBP’s banknotes’ and prize bond printing charges increased from Rs17.8 billion in FY23 to Rs26.6 billion in FY24. Similarly, the central bank’s general administrative and other expenses also shot up to Rs56.1 billion from Rs42.7 billion.

SBP through the years

When taking a closer look, the SBP’s financial performance over the last ten years indicates a significant upward trajectory.

In FY2022-23, the central bank saw its profit increase from Rs749 billion in FY2021-22 to Rs1.14 trillion, signalling recovery after two years of stagnation.

During FY2020-21 and FY2021-22, the central bank registered steady profits, with Rs760 billion and Rs749 billion respectively, as Pakistan grappled with a fluctuating economic environment during the COVID-19 pandemic.

However, in FY2018-19, the central bank’s profits registered a rare downturn, as SBP posted a loss of Rs1.04 billion as the country faced a challenging economic outlook.

In FY2017-18, the SBP registered a profit after tax of Rs175 billion.