KARACHI: The deposits of banking system surged to a new record high of Rs16.886 trillion by end of September 2020, according to data released by State Bank of Pakistan (SBP) on Wednesday.
The bank deposits reached to new record-level from previous all-time high of Rs16.327 trillion by end of August 2020.
The deposits of the banking system recorded growth of 20.39 percent in September 2020 when compared with the stock of Rs14.026 trillion in the same month of the last year.
The significant growth in banking deposits has been attributed to higher foreign inflows and safe venue to keep money amid coronavirus pandemic.
They said that growth in deposits has been fueled by higher remittances (+15 percent YoY in USD and 27 percent YoY in PKR terms during eight months of 2020), while lack of business activity due to COVID-19 (cash-based) may have also resulted in increase in bank deposits.
Investments of banks have increased to Rs11.09 trillion by end of September 2020, which is 19.65 percent higher when compared with the investment of Rs9.269 trillion in the same month of the last year.
Investment to Deposit Ratio (IDR) is around 66 percent in September 2020. The higher IDR is largely due to high interest rates at the start of the year and low appetite for risk (advances) due to COVID-19 lately.
On the other hand, advances have grown by just 1.5 percent YoY to Rs8.094 trillion by end September 2020 as compared with Rs7.975 trillion by end of same month of the last year.
This is despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020 as the impact of COVID-19 pandemic has reduced the overall risk appetite of banks.