Total deposits held by scheduled commercial banks expanded by 15.07 percent year-on-year to reach 37.64 trillion rupees in May 2026, up from 32.72 trillion rupees recorded during the corresponding period last year. Official statistics published by the State Bank of Pakistan through its weekly statement for May 29, 2026, indicate a sustained accumulation of system-wide liquidity across the domestic banking sector over the past twelve months. However, on a sequential monthly basis, total bank deposits experienced a mild contraction of 0.62 percent compared to the 37.88 trillion rupees recorded at the end of April 2026. Total credit extended by scheduled banks grew by 13.04 percent year-on-year, with aggregate advances reaching 14.72 trillion rupees in May 2026 compared to 13.02 trillion rupees in May 2025. On a month-on-month basis, bank advances edged upward by 0.37 percent from the April 2026 level of 14.67 trillion rupees. As a result of these credit flow dynamics, the system-wide Advances to Deposit Ratio clocked in at 39.11 percent. This reflects a year-on-year drop of 70 basis points, while showing a slight recovery of 39 basis points on a sequential monthly basis.
Concurrently, total investments held by scheduled banks climbed to 39.93 trillion rupees at the end of May 2026, marking a 15.33 percent increase from 34.63 trillion rupees in the same period last year and an 0.86 percent rise from 39.59 trillion rupees in April 2026. Because bank asset accumulation continues to favor sovereign and high-yield government instruments over private credit expansion, the Investment to Deposit Ratio rose to 106.08 percent. This represents an increase of 24 basis points compared to May 2025 and an expansion of 156 basis points relative to the previous month.
The continuing divergence between bank investment portfolios and private credit allocation underscores broader structural patterns within Pakistan’s financial sector. Commercial lenders maintain heavy allocations toward government paper and low-risk debt instruments, keeping the Investment to Deposit Ratio well above 100 percent while private sector credit demand adjusts to prevailing macroeconomic borrowing rates and risk assessments. This investment-heavy stance by scheduled commercial banks highlights how liquidity management strategies remain tightly anchored to government debt auctions. With sovereign borrowing continuing to absorb a substantial portion of bank balance sheet capacity, commercial institutions are maintaining elevated investment portfolios to secure steady risk-adjusted returns.
At the same time, the sub-40 percent Advances to Deposit Ratio points to persistent caution among private sector borrowers and financial institutions regarding corporate debt expansion. While absolute loan disbursements grew modestly year-on-year, credit growth continues to lag deposit creation, keeping the overall credit-to-deposit balance weighted toward sovereign holdings. As monetary policy conditions evolve and economic activity calibrates across industrial and commercial sectors, analysts expect financial institutions to closely monitor deposit stability and private sector loan uptake through the remainder of the fiscal year.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.