Construction Credit Lags Behind Broader Private Lending Expansion 📈

• Overall Figures: Total bank loans to the construction sector reached Rs. 1,913 Bn at end-June 2026, registering a 16.1% YoY growth compared to 27.9% growth in overall private sector credit. In real terms (adjusted for inflation), construction lending expanded 8.7% YoY against 19.7% for total private credit. • Market Share & Credit Allocation: The construction industry’s share of total private credit declined from 18.7% in April 2025 to 17.1% in June 2026. The sector captured only 10.9% (Rs. 266 Bn) of the Rs. 2.44 T in new private credit extended over the 12-month period. • Sub-Sector Breakdowns: • Home Loans: Stood at Rs. 938 Bn; growth decelerated to ~4% annualized over the past 3 months due to higher borrowing costs, with prime lending rates rising to 10.92%. • Contractors & Developers: Totaled Rs. 892 Bn; lending re-accelerated to ~23% annualized in June, driven by expressway mobilization and cyclone reconstruction work. • Staff Housing Loans: Totaled Rs. 83 Bn. • Sector Drivers & Economic Context: Real construction GDP grew 13.9% in 2Q26 (down from 16.3% in 1Q26). Broader credit expansion remains consumption-led, dominated by financial & business services (+87% YoY; 19% share) and pawning (+52% YoY; 16% share). Rising material costs (cement, steel) following currency depreciation and Middle East conflict pressures continue to weigh on retail demand, leaving public infrastructure and energy projects as primary drivers.