Bank deposits rise 20% to Rs36.6 trillion in February, dip slightly month-on-month

Banking sector deposits rose 20.1% year-on-year to Rs36.586 trillion in February, according to data released by the State Bank of Pakistan, although deposits declined marginally by 0.2% compared to the previous month.

Bank advances stood at Rs14.534 trillion in February, up 4% year-on-year and 1.7% month-on-month. The advance-to-deposit ratio declined to 39.7% from 45.9% a year earlier, indicating a relatively lower share of lending compared to deposits.

Analysts said the monthly dip in deposits reflects seasonal cash demand, with higher currency circulation during Ramadan and Eid-ul-Fitr impacting deposit levels in the early part of the fiscal year.

Despite the short-term decline, deposits are expected to grow between 10% and 15% over the year.

Investments by banks increased 25.4% to Rs39.156 trillion, with a 0.8% rise on a monthly basis. The investment-to-deposit ratio rose to 107%, compared to 102.5% last year and 106% in January.

Analysts noted that banks continue to channel funds into government securities to support fiscal requirements, reflecting increased reliance on borrowing. This trend has constrained credit availability for the private sector.