Bank deposits drop 2.8 per cent, loans surge by 7.6 per cent: SBP data

ISLAMABAD: Bank deposits in Pakistan dropped by 2.8 per cent in December, falling to Rs30.28 trillion from Rs31.15 trillion at the end of the previous month.

However, when compared to December last year, deposits saw an increase of 8.8 per cent, up from Rs27.84 trillion, according to data released by the State Bank of Pakistan (SBP).

On the other hand, bank loans or “advances” showed significant growth. They rose by 7.6 per cent to Rs16.01 trillion in December, compared to Rs14.87 trillion in November. Over the past year, advances have surged by 29.6 per cent, up from Rs12.35 trillion in December 2023

Due to the slower growth in deposits and the strong rise in loans, the Advances to Deposits Ratio (ADR) climbed to 52.9 per cent, which is a 5.11 per cent increase compared to the previous month. When looking at year-on-year figures, the ADR jumped by 8.5 per cent.

Investments made by banks also went up slightly, by 0.4 per cent, reaching Rs29.13 trillion compared to the previous month. When compared to last year, investments saw a notable increase of 15.2 per cent.

As a result, the Investment to Deposit Ratio (IDR) also rose, increasing by 2.99 per cent from last month to 96.2 per cent. Compared to the same month last year, the IDR rose by 5.39 per cent.

In a separate development, the SBP held an auction of Market Treasury Bills (MTBs) on Wednesday, raising Rs325.5 billion, slightly lower than the target of Rs350 billion. The maturity amount for this auction was Rs515 billion.

The yields or returns on these treasury bills saw a slight dip. For the 3-month bills, the cut-off yield was 11.5887 per cent, which is down by 0.20 per cent. The 6-month bills saw a 0.39 per cent decrease, with yields standing at 11.4048 per cent, and for the 12-month bills, yields dropped by 0.41 per cent to 11.3898 per cent.

The auction received a strong response, with a total of Rs1.4 trillion worth of bids submitted. For the 3-month bills, the SBP received Rs163.14 billion in bids, Rs373.48 billion for the 6-month bills, and Rs864.04 billion for the 12-month bills.

Out of these, the SBP accepted Rs3.31 billion for the 3-month bills, Rs5 billion for the 6-month bills, and Rs211.97 billion for the 12-month bills. Additionally, the SBP picked up Rs105.23 billion from non-competitive bids, bringing the total amount raised to Rs325.5 billion.

The bid-to-cover ratio, which measures the demand for the bills, rose to 4.3 from 3.04 in the previous auction. This means the SBP accepted around 23.2 per cent of the total bids received.

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