Pakistan Banking Sector Review and Outlook

SBP oldState Bank of Pakistan (SBP) has recently released numbers relating to the banking sector deposits, investments and advances for month of December 2015. The number exhibits some interesting trends.

Increase in Deposits

The aggregate deposits of banks increased by 12%YoY during December’15 clocking to Rs9.3 trillion. This growth translated into an increase in investments and advances going up by 32% and 7% respectively on yearly basis. While investments were reported at Rs6.7 trillion in December’15, advances were paltry Rs4.8 trillion.

On monthly basis, deposits increased slightly from their previous month level, showing a 2%MoM rise, while advances also increased by 2%MoM. Investments surged by 2%MoM basis showing a continued interest in government papers.

IDR and ADR move in different directions

IDR increased by significant 1,105bps while ADR dented by 205bps on yearly basis and clocked at 51.39% and 72.28% respectively. In comparison to November’15, ADR increased due to positive movements in advances and deposits figures while IDR showed a slight negative movement as compared to last month.


Despite low interest rates, the consumer demand for credit is still slow. It seems that the banks are still interested in risk free government papers as banks are still reluctant to make headways into advances. However, with banks trying to meet targets for healthy loans, evident from some movement in advances. Banks need to focus on boosting advances base to be profitable in the long run. Furthermore upcoming materialization of CPEC and other government backed mega projects will help credit off-take numbers in coming months.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.