Pakistan Banking Deposits Hit Rs31 Trillion in January 2025

Pakistan’s banking sector saw deposits climb to Rs31.03 trillion in January 2025, a 12.6% increase from the previous year, based on data from the State Bank of Pakistan (SBP) released Thursday. Compared to the prior month, deposits grew by 2.4%, showing steady growth in the financial sector.

Total advances, or loans given out by banks, reached Rs14.73 trillion, up 21.8% from last year. However, they dropped 8% from December, suggesting banks are being more careful with lending. Awais Ashraf from AKD Securities Limited explained that this shift follows the removal of a tax tied to the advance-to-deposit ratio (ADR), pushing banks to focus on gathering deposits rather than lending aggressively.

This caution lowered the ADR to 47.5% in January, down from 52.9% the month before and up slightly from 43.9% a year ago. Meanwhile, bank investments rose to Rs30.02 trillion, a 17.3% yearly increase and a 3.1% monthly gain, indicating a preference for safe options like government securities during uncertain times.

Moody’s, a global credit rating agency, recently shifted its outlook for Pakistani banks from stable to positive, pointing to the government’s improving finances—rated Caa2 with a positive outlook—as a key factor. Government securities make up 55% of banking assets as of September 2024, tying the sector’s health closely to the government’s fiscal progress. Still, Moody’s warned of ongoing risks from liquidity issues and external pressures.

Non-performing loans rose to 8.4% of total loans by September 2024, up from 7.6% the year before, but loans are just 23% of total bank assets, keeping broader risks low. The sector’s solid performance is building confidence among investors and officials, though maintaining this growth will depend on careful financial management and economic stability.