KARACHI: Banking sector deposits increased by 23.6 per cent year-on-year (YoY) in December, marking the second-highest growth on record, primarily due to a substantial rise in remittances via formal channels and government efforts to improve digitalisation to broaden the tax base.
Deposits at commercial banks reached Rs37.431 trillion as of December 2025, up from Rs30.283 trillion a year earlier, according to data from the State Bank of Pakistan published on Thursday.
Deposits saw moderate growth, rising by 5.8 per cent month-on-month (MoM).“A significant increase in remittances through official channels, higher digitalisation and documentation drive of the government to increase the tax net are the primary reason behind robust growth in banking deposits,” said Awais Ashraf, director of research at AKD Securities Limited.
Deposit growth in 2025 remained higher; however, the previous year’s holdings were impacted by the advance-to-deposit ratio (ADR) related tax. Analysts expect deposits to grow in the range of 10-15 per cent this year.
Banking sector advances fell to Rs14.88 trillion in December, representing a decrease of 7.1 per cent compared to a year ago but an increase of 10.9 per cent from the previous month. The ADR dropped to 39.8 per cent in December, down from 52.9 per cent in the same period last year, and slightly higher than 37.9 per cent in November.
In contrast, bank investments rose by 30.1 per cent to Rs37.91 trillion in December, with a modest month-on-month (MoM) increase of 3.2 per cent. The investment-to-deposit ratio (IDR) increased to 101.3 per cent in December from 96.2 per cent a year ago. In November, the IDR was 103.8 per cent.
The latest banking sector numbers came after the SBP held its benchmark interest rate unchanged at 10.5 per cent on Monday in a surprise move. However, the central bank cut the cash reserve requirement (CRR) for banks to 5.0 per cent from 6.0 per cent on a fortnightly average basis while also lowering the daily minimum maintenance requirement to 3.0 per cent from 4.0 per cent to support the economy.
This measure is positive for the broader economy, as it is expected to release Rs313 billion of liquidity into the banking system, said Insight Securities in a note.
“While the relaxation in CRR may support private sector credit growth, the incremental impact is likely to remain modest, given that the released liquidity represents only 2.2 per cent of total industry advances,” it said.
“Moreover, banks are already relying on borrowing facilities to invest in the government securities, suggesting that the entire liquidity release is unlikely to be channelled towards credit expansion,” it added.
