The banking sector witnessed record growth in deposits, advances, and investments in June 2022 despite an increasingly tough business climate.
According to data released by the State Bank of Pakistan (SBP), the deposits of the banking sector have surged to a record level of over Rs. 22.8 trillion by the end of June 2022 mainly due to an increasing policy rate which also pushed up the deposits rates of the banking industry to a double-digit level.
The profit rate of various products of commercial banks, and mutual funds on various investment features including saving accounts have attracted money in the banking and financial system. Recently, the policy rate was further increased to 15 percent which will likely attract more funds in the banking and financial system.
Further, the advances of the banking system also witnessed a slight increase reaching an all-time high level of Rs. 10.88 trillion. The consistent appetite for borrowing from banks by the industry is due to the economic recovery of the previous financial year. However, high markup rates might slow down the growth of the advances from July onwards.
Similarly, the investments of the banking and financial sector also surged to a record all-time high of Rs. 17.4 trillion. The investment is mainly in the government’s papers, Sukuk, and privately placed Term Finance Certificates.
The investment may also continue its pace in the months to come. The advance to deposit ratio surged to 47.7 percent and the advance to investment ratio increased to 76.4 percent by end of June 2022.