Bank deposit rate falls by 58bps in August

September 19, 2025 (MLN): Pakistan’s banking sector saw a notable recalibration in August 2025 as deposit and lending rates continued their downward drift, reflecting the broader monetary easing cycle.

According to official data, the return on bank deposits fell by 58 basis points to 5.32% during the month, compared with 5.91% in July.

On a yearly basis, the contraction has been far more dramatic, with the weighted average deposit rate plunging by 1,344bps from 18.76% a year earlier.

Lending rates have moderated as well, though at a slower pace. The weighted average lending rate for scheduled banks edged down 12bps month-on-month to 11.87%.

In annual terms, however, it marked a sharper decline of 717bps from August 2024, underscoring a significant softening in borrowing costs.

This divergence between deposit and lending rates widened the sector’s spread to 655bps in August, up 47bps from 608bps in July.

The increase provides some respite to banks’ margins, even as depositors face diminished returns.

Adjusting for inflation, the real deposit rate eased slightly to 1.89%, from 1.96% in July, while the real lending rate climbed to 8.44%, compared with 8.04% a month earlier.

Copyright Mettis Link News