Pakistan’s banking sector saw a slight increase in deposit returns in February 2026, while lending rates continued to decline sharply.
According to data released by the State Bank of Pakistan (SBP), the weighted average return on deposits rose by 7 basis points to 5.04 percent in February, up from 4.97 percent in January. Despite the monthly uptick, deposit returns remained lower on a yearly basis, falling by 42 basis points compared to 5.46 percent recorded in February last year.
On the lending side, the weighted average lending rate across scheduled banks dropped to 11.02 percent, down 37 basis points from the previous month and 139 basis points lower than the same period in 2025.
This led to a sharp narrowing of the banking spread to 5.98 percent in February, compared to 6.41 percent in January 2026.
In inflation-adjusted terms, lending rates eased to 8.12 percent from 8.36 percent a month earlier, reflecting softer price pressures. Meanwhile, real deposit returns slipped to 1.94 perecnt from 2.14 percent, indicating that returns for savers remain limited despite the marginal rise in nominal rates.
In simple words, banks increased what they pay savers (deposit returns), but only by a small margin. At the same time, they cut the interest they charge borrowers (lending rates) more sharply.
This reduces banks’ profit margin (spread) and means savers still earn relatively low returns.
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