The banking industry’s investments and deposits are still growing steadily, which results in healthy margins on bank balance sheets.
Bank Deposits Surge To Rs. 26.8 Trillion in Nov 2023
The State Bank of Pakistan (SBP) reports that the banking sector’s deposits rose by Rs. 4 trillion in just a single year, from Rs. 22.7 trillion at the end of November 2022 to Rs. 26.8 trillion in November 2023.
The elevated interest rate persisted in enticing clients to allocate their funds towards mutual funds, term-deposit certificates, and savings accounts.
Consequently, the commercial banks’ deposit mobilization trend remained continuously positive.
Moreover, in a similar vein, bank reserves have allowed them to park their investments in Sukuks and government papers.
Moreover, bank investments increased by approximately Rs. 6 trillion to Rs. 24.5 trillion as of November 2023 from Rs. 18.4 trillion as of November 2022.
Industry’s Positive Growth
However, in the coming months, the industry’s total deposits are probably going to be surpassed by the investments made by commercial banks.
The advances made by the banks demonstrated an annual growth of 7.9 percent, rising from Rs. 11 trillion reported by the end of November 2022 to Rs. 11.9 trillion by the end of November 2023.
However, the percentage of advance to deposit dropped from 48.5 percent to 44.6 percent.
In contrast, the ratio of investments to deposits increased from 81.3 percent to 91.7 percent.
Furthermore, the nation’s low economic activity and high interest rates are the main drivers of these trends.
To read our blog on “Deposits leaving US banks is biggest economic crisis in 10y,” click here.