The return on bank deposits fell to 5.28% in September 2025, down 5 basis points (bps) from 5.32% in August, according to data released by the State Bank of Pakistan (SBP).
The average lending rate for all scheduled banks also decreased by 19bps to 11.68% in September, compared to 11.87% in August, while the banking sector spread narrowed by 14bps to 6.40 percentage points.
In real terms, both deposit and lending rates remained positive, with the real deposit rate at 1.94% and the real lending rate at 8.34%, as headline inflation stood at 5.6% year-on-year during the month.
On an annual basis, the weighted average return on deposits plunged by 1,290bps from 18.18% in September 2024, reflecting the lagged impact of the monetary easing cycle that began earlier this year amid declining inflation.
Similarly, the lending rate fell 665bps year-on-year from 18.33%, marking one of the sharpest drops since the post-pandemic monetary loosening in 2020.
Despite the nominal rate reductions, monetary policy remains tight in real terms, with depositors earning above the inflation rate and borrowing costs still elevated.
