KARACHI: Banking sector deposits rose by 20.1 per cent year-on-year (YoY) to Rs36.586 trillion in February, according to data from the State Bank of Pakistan, published on Tuesday.However, these deposits saw a slight decline, falling by 0.2 per cent month-on-month (MoM).
Awais Ashraf, director of research at AKD Securities Limited, said that although bank deposits experienced both annual and monthly increases, they declined in the first two months of this fiscal year. This drop was primarily due to the coincidence of Ramadan and Eid-ul-Fitr, which led to a surge in cash demand, as indicated by the increase in currency in circulation.
“However, investments continued to rise, fuelled by the government’s growing fiscal requirements, which were primarily funded through increased borrowings,” Ashraf said. Analysts expect deposits to grow in the range of 10-15 per cent this year.
Banking sector advances rose to Rs14.534 trillion in February, representing an increase of 4 percent compared to a year ago and a growth of 1.7 per cent from the previous month. The advance-to-deposit ratio dropped to 39.7 per cent in February, down from 45.9 per cent in the same period last year, and slightly higher than 39 per cent in January.
Bank investments increased by 25.4 per cent to Rs39.156 trillion in February, with a nominal MoM increase of 0.8 per cent. The investment-to-deposit ratio (IDR) rose to 107 per cent in February from 102.5 per cent a year ago. In January, the IDR was 106 per cent.
The government’s continued dependence on bank borrowings for budgetary support has led banks to boost their investments in risk-free government securities. This, however, limits the availability of credit for the private sector.
