Agribusiness loans contracted by Rs. 64 billion during the first half of calendar year 2026, even as agriculture advances in the domestic private sector increased and financing to the sugar industry rose sharply, according to the State Bank of Pakistan’s Mid Year Performance Review of the Banking Sector.
In the domestic private sector, agriculture advances increased to Rs. 723 billion by the end of June 2026 from Rs. 664 billion in December 2025, representing a rise of Rs. 59 billion during the first half of the year. The figures are reported as outstanding advances, rather than fresh loan disbursements.
The report showed a mixed trend in agriculture-related financing during January through June 2026. While agribusiness loans recorded a decline in the public sector advances breakdown, the broader sector-wise analysis of credit disbursement showed that agribusiness was among the sectors that received financing during the period.
Public sector advances increased by Rs. 87 billion during H1CY26, mainly because financing to the energy sector rose by Rs. 183 billion. However, this increase was partly offset by a Rs. 64 billion contraction in agribusiness loans. The report attributed the rise in energy financing to lending linked to circular debt.
The report also highlighted a major increase in financing to the sugar sector. Unlike the Rs. 52 billion retirement recorded during H1CY25, the sugar sector availed Rs. 205 billion in financing during H1CY26. The increase was mainly driven by higher working capital requirements linked to increased sugarcane production, lower refined sugar prices and the absence of refined sugar exports, which affected the sector’s cash flows.
Sugarcane production increased by 6.2 percent to 89 million tons during fiscal year 2026, while average refined sugar prices fell to Rs. 153 per kilogram during H1CY26 from Rs. 166 per kilogram in the same period of the previous year. Pakistan did not export refined sugar during FY26, compared with exports of 765,734 metric tons in FY25.
The report’s asset quality review showed an improvement in agribusiness-related credit risk. Overall nonperforming loans declined by Rs. 62 billion during H1CY26, while the largest reductions came from agribusiness and individual borrowers. Agribusiness nonperforming loans decreased by Rs. 54 billion during the period.
The mixed performance suggests that agriculture-related financing expanded in some areas, particularly outstanding private-sector agriculture advances and sugar-sector working capital, while agribusiness lending in the public-sector breakdown declined.
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