Analysts cited multiple plausible explanations for the rise
in bank deposits, the biggest being, increase in the rate of return on deposits
on the back of persistent hike in the policy rate.
In the face of difficult macroeconomic circumstances, such
as bearish stock market activity, keeping surplus funds in the banks remained
one of the preferred choices.
Analysts also attribute the increase to robust inflow of remittances
on the back of depreciating Pak rupee (PKR).
Roshan Digital Accounts also helped in attracting funds,
supporting banking sector’s deposits.
Due to consumers' increasing preference for using digital
payment methods, cash was allowed to remain in the bank accounts.
Since the policy rate remains on the higher side, banks remained
focused on mobilizing current accounts and extend their branch networks in
order to protect net interest margins.
Banking sector succeeded in maintaining asset quality
despite uncertain politico-economic landscape, according to analysts, which is
despite that banks have indicated in recent briefings that they have provided
enough for any unforeseen event.
Banks’ advance-to-deposit ratio increased by 463 basis
points (bps) to 53%, while the investment-to-deposit ratio rose by1,233 bps to
79.7% in December 2022..
Banks’ advances were up 17%YoY to PKR11.9 trillion as of
December 31, 2022. The advances rose by 7.4%MoM.
The investments by banks jumped 26.7%YoY to PKR18 trillion.
