The average return on bank deposits declined marginally to 5.28% in September 2025, slipping by 5 basis points (bps)from 5.32% in August, according to the latest data from the State Bank of Pakistan (SBP).
At the same time, the average lending rate charged by scheduled banks eased to 11.68%, marking a 19bps decline from 11.87% in the previous month. Consequently, the banking sector’s interest rate spread — the difference between lending and deposit rates — narrowed by 14bps to 6.40 percentage points.
In inflation-adjusted terms, both deposit and lending rates remained positive, with the real deposit rate at 1.94% and the real lending rate at 8.34%, given that headline inflation stood at 5.6% year-on-year in September. On an annual basis, the average lending rate recorded a steep 665bps fall from 18.33% in September 2024.
These figures indicate that while nominal interest rates have eased slightly, monetary conditions remain restrictive in real terms.
