By the conclusion of August 2023, commercial banks have witnessed an unprecedented surge in deposits, reaching an astounding Rs26.1 trillion. This remarkable uptick is primarily attributed to the prevailing high interest rates within the country.
According to recently updated data from the State Bank of Pakistan (SBP), the banking industry's deposits experienced a substantial growth of Rs. 3.95 trillion, marking an 18 percent increase compared to the Rs. 22.15 trillion recorded during the same period in the previous year. Furthermore, when juxtaposed with the Rs. 25.7 trillion from July 2023, bank deposits registered a 1.6 percent rise, equating to Rs. 408 billion in August.
Throughout August, bank advances displayed notable expansion, climbing by 8 percent to reach Rs. 11.8 trillion, while investments surged by an impressive 21 percent, settling at Rs. 22 trillion. This robust performance is reflected in the Investment-to-Deposit Ratio (IDR), which saw an increase to 84.3 percent in August, up from 82.1 percent the previous year.
However, in contrast, the Advance-to-Deposit Ratio (ADR) for banks during this period exhibited a decline, slipping to 45.1 percent. This shift towards a higher IDR is primarily driven by the subdued demand for private sector financing, a consequence of the challenging macroeconomic conditions stemming from the central bank's stringent monetary policies.