Bank deposits rise 13.6% to Rs35.38tr in November as lending slows

Deposits held by commercial banks rose to Rs35.38 trillion in November, marking a year-on-year increase of 13.6%, according to data released by the State Bank of Pakistan (SBP).On a month-on-month basis, deposits grew by 0.7%. 

Analysts attributed the YoY increase to stronger remittance inflows and a gradual shift toward formal savings as inflation eased.

Topline Securities said it expects deposit growth to accelerate to 16–18% in 2025, compared with last year, noting that deposit mobilisation in the previous year was affected by taxation linked to the advance-to-deposit ratio (ADR).

SBP data showed that banking sector advances declined to Rs13.421 trillion in November, down 9.8% from a year earlier, although they increased by 1.1% compared to October. The ADR fell to 37.9% in November from 47.8% in the same month last year and was marginally higher than 37.8% recorded in October.

Analysts said the year-on-year contraction in private sector credit reflected a temporary spike in lending during the fourth quarter of 2024, driven by ADR-related tax considerations. They added that the month-on-month increase indicates a gradual recovery in private sector borrowing, supported by improving economic conditions and lower interest rates.

In contrast, bank investments rose sharply to Rs36.732 trillion in November, showing a 26.5% increase from a year earlier and a 0.5% rise from the previous month. The investment-to-deposit ratio climbed by 1,062 basis points year-on-year to 103.8%, although it edged down by 15 basis points compared to October.