Bank deposit rate rises by 7bps in Feb

March 18, 2026 (MLN): Pakistan’s banking sector witnessed a modest improvement in deposit returns during February 2026, while lending rates continued their downward trajectory, resulting in a notable compression in spreads.

The weighted average return on bank deposits inched up by 7 basis points (bps) to 5.04%, compared to 4.97% in January, according to the latest data issued by the State Bank of Pakistan (SBP).

However, on a year-on-year basis, deposit returns remain subdued, declining by 42bps from 5.46% recorded in the same period last year.

On the lending side, the weighted average lending rate across all scheduled banks fell to 11.02%, marking a 37bps decline from the previous month and a sharper 139bps drop compared to February 2025.

As a result, the banking sector’s spread, the difference between lending and deposit rates, narrowed significantly by 43bps to 5.98%, down from 6.41% in January 2026.

In real terms, lending rates eased to 8.12% from 8.36% in the previous month, reflecting the impact of easing inflationary pressures.

Meanwhile, real deposit rates declined to 1.94%, compared to 2.14% in January, indicating that returns to savers remain constrained despite nominal gains.

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