The total deposits held by scheduled banks in Pakistan climbed to an all-time high of Rs35.21 trillion by the end of September 2025, reflecting a steady increase in the country’s banking liquidity. According to the latest data released by the State Bank of Pakistan (SBP), deposits recorded a month-on-month (MoM) growth of 2.2%, up from Rs34.46 trillion in August. On a yearly basis, deposits surged by 12.3%, compared to Rs31.34 trillion held during the same month last year.
The consistent expansion in deposits signals stronger public confidence in the banking system, supported by stable monetary conditions and a shift toward formal financial savings. Despite challenges in the broader economy, the banking sector has managed to maintain robust liquidity levels, with households and corporations continuing to park their funds in interest-bearing instruments.
Meanwhile, total advances registered a moderate 2.0% MoM growth, rising to Rs13.46 trillion in September from Rs13.19 trillion a month earlier. On a yearly comparison, advances posted a 9.4% increase, up from Rs12.31 trillion in September 2024. While credit expansion has continued, the pace remains modest as private sector borrowing remains cautious amid higher interest rates and restrained investment sentiment.
The divergence between deposit and advance growth led to a slight reduction in the Advances-to-Deposits Ratio (ADR), which stood at 38.2% in September. This marks a decline of six basis points (bps) on a monthly basis and 104 bps year-on-year. The lower ADR reflects continued weak credit appetite from the private sector and a preference for safe, low-risk investments.
According to analysts, the sustained liquidity in the banking sector has been largely driven by government borrowing needs, as commercial banks continue to play a major role in financing fiscal requirements through investments in sovereign instruments. Total investments of scheduled banks declined marginally by 1.3% MoM to Rs35.82 trillion in September, but on a yearly basis, they recorded a solid 16.7% increase, indicating banks’ sustained appetite for government securities.
As a result, the Investment-to-Deposit Ratio (IDR) dropped 362 bps MoM to 101.7%, though it remained 377 bps higher on a yearly basis. The elevated IDR underscores banks’ ongoing preference for investing in risk-free government instruments rather than expanding credit exposure to the private sector.
This trend aligns with broader macroeconomic conditions, where businesses have been cautious in seeking new credit due to rising input costs, fluctuating exchange rates, and uncertain demand patterns. Meanwhile, the government’s borrowing requirements have remained high, pushing banks toward Treasury bills and Pakistan Investment Bonds to secure stable returns.
Industry experts believe that while the growth in deposits highlights the strength of the formal financial system, reviving private sector credit will be essential for sustaining economic recovery. As inflation stabilizes and policy rates adjust in the coming quarters, banks may gradually shift focus from government securities toward private lending, unlocking new opportunities for industrial and commercial growth.
The banking sector’s overall balance sheet remains resilient, supported by healthy capitalization and liquidity buffers. With deposits surpassing Rs35 trillion, Pakistan’s financial institutions are well-positioned to support upcoming fiscal and developmental priorities while maintaining systemic stability.
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