SBP rakes in Rs1.163 trillion profit in FY20

KARACHI: The State Bank of Pakistan (SBP) raked in a net profit of Rs1.163 trillion in the fiscal year 2019-20 as compared with the net loss of Rs1.043 billion recorded during the previous year.

In its Annual Performance Review for the fiscal year 2019-20, the central bank said: “The stability in the exchange rate allowed the SBP to return to profitability after incurring loss in the preceding year. The profit so earned by the bank in the year ended June 30, 2020 is highest in its history.”

It said the high interest rate prevalent in the first three quarters of the year allowed the bank to accrue a significant amount of interest income from the interest sensitive assets, particularly lending to the government and income from the bank’s open market operations.

Further, during the year, the liquidity mopping up operations were relatively on reduced scale and hence, the interest expense registered a substantial decline.

The SBP’s total assets were recorded at Rs12.273 trillion as of June 30, 2020, as compared with Rs11.467 trillion on June 30, 2019, showing an increase of Rs806 billion.

The annual performance review said the SBP’s total liabilities stood at Rs11.219 as of June 30, 2020, compared with Rs10.761 trillion as of June 30, 2019, showing an increase of Rs458 due to an increase in the currency in circulation.

SBP Governor Reza Baqir in his review said the economy and financial sector faced challenges during FY20 due to the need to address unsustainable past macroeconomic imbalances, and later, the COVID-19 pandemic.

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“Despite numerous challenges during FY20, Pakistan’s economy performed relatively better, particularly on the external and fiscal fronts. During the first half of the year, the policy focus remained on stabilizing the economy and building adequate buffers. The country also witnessed a smooth transition to a market-determined flexible exchange rate regime and prohibition of government borrowing from SBP.”

He said the central bank’s initiatives and support measures are estimated to have provided a stimulus of around Rs1.6 trillion or 3.9 per cent of GDP.