Existence of Cyclicality of NIMS in Pakistan’s Banks have been explored by this study, by employing annual time series data from 1965-2013. Two stage least square (TSLS) is used for estimating the model. We not only detected the counter-cyclicality of NIMS but also present the responsible factors behind this behavior. “Monetary policy (MP)”, interest rate risk (IRR), the economy’s financial depth (DFD), inflation and banks capital holdings have been documented as key factors behind cyclicality of margins over the period. These results sustain even after using three different business cycle indicators. Furthermore, “bank lending channel” of MP has also been supported by the study. Supervisor:- Dr. Hasan Muhammad Mohsin