October 14, 2020 (MLN): The total deposits held by commercial banks reached all time high at Rs 16.8 trillion by the end of September 2020, depicting a growth of 20% YoY and 3% MoM despite low interest rates.
The growth in commercial banks’ deposits can be ascribed to increasing remittances and limited cash related business activity amid pandemic which fueled banking sector’s deposits.
According to the data released by State Bank of Pakistan (SBP), the demand for fresh disbursements remained muted despite lower interest rates as total advances by commercial banks by the end of September 2020 increased marginally both on MoM and YoY basis to Rs.8.09 trillion. Consequently, advances to deposits ratio (ADR) dropped to 48% in Sep’20 from 49% in the previous month and 57% in Sep’19.
On the other hand, total investment of commercial banks grew by 20% YoY and 2% MoM, touched over a decade high of Rs 11 trillion.
As a result of this, banks' investment to deposit ratio (IDR) dropped to 66% in Sep’20 from 67% in the preceding month, while compared to the same month last year, it did not depict any change.
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