Pakistan’s banking sector demonstrated remarkable resilience and strategic refinement throughout 2025, significantly improving its funding structure by pivoting toward low-cost deposits. This shift has played a crucial role in protecting the profitability of financial institutions amidst a fluctuating economic landscape. Data released by Arif Habib Limited (AHL) indicates that the share of current accounts—deposits on which banks typically do not pay interest—surged to 41 percent of total deposits by the end of 2025. This represents a notable increase from the 36 percent recorded in 2024, signaling that the industry is successfully reducing its reliance on more expensive, interest-bearing funding sources.
The growth in these non-remunerative deposits has been substantial in absolute terms as well. Current account deposits across the system rose by 4.7 trillion rupees, reaching a staggering total of 16.3 trillion rupees. This influx of liquidity suggests a broader trend of formalization within the economy and a growing preference for transactional banking. By securing a higher proportion of cheaper funding, banks are better positioned to support their net interest margins (NIMs), which remain a primary indicator of healthy earnings. Analysts suggest that this efficiency in the deposit mix will act as a buffer for the sector, potentially sustaining strong earnings even if broader economic conditions face headwinds or if interest rate environments shift.
A closer look at individual performance reveals that certain institutions have been particularly effective at capturing these low-cost funds. Standard Chartered Bank Pakistan led the industry with the highest proportion of current accounts, which now make up 59 percent of its total deposit base. United Bank Limited (UBL) followed closely with 51 percent, while MCB Bank and Meezan Bank reported current account shares of 49 percent and 48 percent, respectively. These figures underscore a competitive drive among major players to optimize their balance sheets and minimize interest expenses. For Islamic institutions like Meezan Bank, maintaining a high level of current account deposits is especially vital for staying competitive with conventional peers while adhering to Shariah-compliant frameworks.
Looking forward into 2026, the banking sector’s robust capitalization and improved asset quality provide a stable foundation for continued growth. While the State Bank of Pakistan has maintained the policy rate at 10.5 percent to anchor inflation, the banks’ ability to draw in 16.3 trillion rupees in current account deposits provides them with ample liquidity to facilitate private sector credit. This structural shift is not just about short-term gains; it reflects a long-term evolution in how Pakistani banks manage risk and efficiency. By successfully migrating away from high-cost fixed deposits, the sector has effectively “future-proofed” its margins against potential volatility in the global and domestic markets.
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