Karachi, May 2025 – Pakistan’s scheduled banks reported a notable rise in customer deposits during April 2025, as total deposits surged to Rs32.32 trillion. This marks a 1.8% increase from Rs31.75 trillion recorded at the end of March, according to the latest data released by the State Bank of Pakistan (SBP).
When measured on a year-on-year basis, the growth is even more significant. Deposits held by banks in April 2025 jumped by 13.7% compared to Rs28.42 trillion in April 2024. This trend reflects continued confidence among depositors, as well as the ongoing expansion in formal banking activity across the country.
While deposits expanded, the same could not be said for lending. Total advances by scheduled banks declined by 2.5% in April, falling to Rs13.14 trillion from Rs13.47 trillion in the preceding month. However, when compared to April 2024, advances still posted a healthy annual increase of 9.2%, up from Rs12.03 trillion.
The widening gap between deposits and advances has had a direct impact on the banking sector’s performance ratios. The Advances to Deposits Ratio (ADR), a key indicator of credit growth in the economy, declined to 40.7% in April. This represents a drop of 179 basis points from the previous month and a decline of 167 basis points compared to the same period last year.
This decline in ADR points to persistently weak demand for private-sector credit, which has been under pressure due to subdued economic activity and high interest rates. Analysts note that businesses remain cautious in expanding operations or seeking credit, while the government continues to dominate borrowing from the banking sector to finance its fiscal deficit.
On the other hand, banks’ investments in government securities and other safe instruments saw steady growth. Total investments increased by 2.6% in April to reach Rs33.2 trillion, compared to the previous month. On a yearly basis, the growth in investments was more pronounced at 21.7%.
With banks channeling more funds into investment instruments than loans, the Investment to Deposit Ratio (IDR) climbed to 102.7%. This marks a monthly increase of 76 basis points and a substantial 674 basis points rise over April 2024. The IDR exceeding 100% reflects that banks are investing more than the total deposits they hold, primarily by deploying surplus liquidity and government borrowings through treasury operations.
The changing trends in bank deposits, lending, and investments underscore the shifting dynamics of Pakistan’s financial system. With lending demand from the private sector remaining weak, banks continue to prioritize safer, government-backed investment avenues. This shift is also reflective of macroeconomic uncertainties and a cautious stance by financial institutions in extending credit.
Overall, the growth in deposits points to stronger financial inclusion and public trust in the banking system. However, the declining credit appetite and increased government borrowing continue to shape the financial landscape, highlighting the need for policy adjustments to stimulate private-sector participation and economic growth.