The return on bank deposits in Pakistan increased to 5.05% in December 2025, up 57 basis points from the previous month’s 4.48%, according to official banking sector data. This rise marks a notable improvement for savers and reflects a broader trend toward positive real returns.
On an annual basis, however, the weighted average deposit rate remains significantly lower than last year, falling by 926 basis points from 14.31% in December 2024. Despite this decrease, the upward movement in December signals growing confidence among depositors as banks adjust to changing monetary conditions.
Meanwhile, the lending rate for all scheduled banks stood at 11.32%, down 40 basis points compared to November 2025, and down 262 basis points from the same period last year. Consequently, the banking sector spread narrowed by 97 basis points to 627 basis points in December, compared to 724 points in November, highlighting a shift in the balance between borrowing and saving costs.
Real deposit rates, which were deeply negative at -5.16% in December 2024, have turned positive, rising to 1.52% in December 2025 from 1.09% in November. This change indicates that bank deposits are now preserving purchasing power, signaling a restoration of saver confidence.
Similarly, the real lending rate has increased from 1.3% a year ago to 7.79% in December 2025, though slightly below the 8.44% recorded in November. The combination of rising deposit returns and moderated lending rates demonstrates a gradual normalization in Pakistan’s banking sector, providing both savers and borrowers with improved financial predictability.
Analysts note that the shift toward positive real returns for deposits could encourage higher savings, strengthen liquidity in the banking system, and support financial stability. The adjustment in interest rates also aligns with expectations of gradual monetary easing and stable inflation trends, contributing to a more balanced financial environment for both households and businesses.
Overall, December 2025 marked a turning point in the banking sector, with improved deposit returns, positive real rates, and narrower spreads reinforcing confidence in the financial system and signaling healthier conditions for both savers and investors in Pakistan.
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