Pakistan’s consumer lending sector showed renewed momentum in July 2025, led by a sharp jump in automobile financing. According to fresh data from the State Bank of Pakistan (SBP), car loans climbed to Rs285.64 billion, marking a 3.27% increase from June and a 25.28% surge year-on-year.
This rebound is particularly notable given the tough lending environment of recent years, shaped by high interest rates, regulatory curbs on car loans, and steep import duties that pushed vehicle prices higher.
Housing and Personal Loans Also Edge Up
The uptick in borrowing wasn’t limited to autos. Loans for home construction and renovation rose to Rs208.48 billion, up nearly 3% compared to last year, while personal loans climbed 10.18% year-on-year to Rs263.27 billion.
In total, consumer credit reached Rs928.94 billion, a 15.83% jump from July 2024 and 1.69% growth from June 2025, reflecting improved lending appetite despite tight monetary conditions.
Mixed Trends in Private Sector Lending
The private sector also saw strong annual growth, with total borrowing hitting Rs9.48 trillion, 14.38% higher than last year. However, lending slowed 1.94% month-on-month, suggesting that businesses are taking a cautious approach amid economic uncertainty.
- Manufacturing loans: Rs5.19 trillion (↑11% YoY, ↓3% MoM)
- Construction loans: Rs216.13 billion (↑14.1% YoY, ↑2.75% MoM)
- Agriculture, forestry & fishing loans: Rs512.51 billion (↑29.52% YoY, ↑3.59% MoM)
The data points to resilient growth in agriculture and construction financing, sectors seen as key drivers of Pakistan’s economic recovery.
What This Means
The July figures signal a slow but steady rebound in Pakistan’s lending cycle, with consumers and businesses showing greater willingness to borrow despite high financing costs. Car financing, in particular, appears to be a leading indicator of improving consumer confidence, while robust agricultural borrowing underscores demand for capital in food production and related industries.
If interest rates ease in the coming months, this upward trend in consumer and sectoral lending could accelerate further, giving a much-needed boost to Pakistan’s sluggish economic activity.
