Tag: bank deposits

KARACHI: A withdrawal of Rs790 billion has been seen from the banking system during January 2021 owing to higher demand following acceleration in the economy on ease in coronavirus related restrictions, experts said.

The total deposits of the banking system fell to Rs17,086 billion by end of January 2021 as compared with record high of Rs17,876 billion by December 2020, according to statistics released by State Bank of Pakistan (SBP) on Monday.

Experts said that the rate of COVID infections had decreased significantly over the last one month and it returned normalcy in business and commercial activities.

The government also eased the restrictions that were imposed on high number of cases in second phase of the COVID during December 2020.

The experts attributed the record high banking deposits in December 2020 to financial closing of banks, which made all efforts to show maximum amount of deposits to improve their balance sheet.

This was reason of large withdrawal from the banking system in the month of January 2021, they added.

However, the deposits by end of January 2021 at Rs17,086 billion is still 16.5 percent higher when compared with deposits of Rs14,673 billion in same month of the last year.

KARACHI: Deposits of the banking system have reached a record high of Rs17.87 trillion owing to higher remittances and lack of cash-based business activities, analysts said on Thursday.

The deposits hit a record high to Rs17.87 trillion by end of December 2020 after posting an increase of 22.14 percent when compared with Rs14.63 trillion by the end of December 2019, according to data released by the State Bank of Pakistan (SBP).

According to the analysis of Topline Securities, the growth in deposits has been fueled by higher remittances (+17.5 percent YoY in USD and 27.5 percent YoY in PKR terms during 11M2020), while lack of business activity due to COVID-19 (cash-based) may have also increased bank deposits.

 Investments have grown by 31 percent to Rs11.5trn in 2020. At the start of the year, the high yield on offer had already lured banks to move towards investments, which was compounded further as COVID-19 hit strangling business activity and in turn loan growth.

 Advances grew by just 2 percent in 2020 as banks remained wary of overall economic conditions due to COVID-19. However, the last quarter of 2020 for Advances has been relatively better with 3.4 percent QoQ growth. The aggressive cuts in interest rates by the Pakistan Central Bank since Mar-2020 may be starting to reap fruits as the impact of the COVID-19 pandemic also lowers and economic activity picks up.

Investment to Deposit Ratio (IDR) had already depicted an improvement to 67 percent in Sep-2020, which has been maintained at year-end. To recall this was 66 percent in Jun-2020 and 60 percent in Dec-2019. 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. ADR has dropped to 48 percent from 49 percent in Sep-2020 (to recall, this was at 51 percent in Jun-2020 and 56 percent in Dec-2019).

 Provisioning has also seen a substantial increase as banks have opted to increase General Provisioning in the wake of COVID-19, however, the last quarter has seen provisions stabilizing as the banks feel that they have adequately provided for up until Sep-2020.

M2 growth clocked in at 16 percent in 2020 primarily driven by the stellar deposit growth this year and a 19 percent increase in Currency in Circulation (CIC). CIC increased to Rs6.30trn by the end of December 2020, with CIC as a percent of M2 clocking in at 29 percent, above the past 5-year average of 27 percent. Reasons for increasing CIC can be attributed to low-interest rates and evasion from tax authorities.

Going forward, we expect Deposit growth in the range of 12-14 percent during 2021E, while we expect Advances to grow by around 4-6 percent, where banks are expected to remain risk-averse given concerns over further waves of COVID-19.

KARACHI: Deposits of the banking system have increased by 18 percent to Rs16.84 trillion by end of November 2020 as compared with same month of the last year, according to details released by the State Bank of Pakistan (SBP).

The banking deposits were at Rs14.31 trillion by November 2019.

The deposits of the banking system have increased by 1.1 percent in November 2020 as compared with Rs16.66 billion in October 2020.

The banking deposits hit all time high of Rs16.88 trillion in September 2020.

Banking experts said that the deposits were increasing due to second phase of coronavirus. In the first phase the deposits witnessed significant increase due to shrinking investment avenues.

FBR to get information of banking deposits, payments, profit on debt

The State Bank of Pakistan (SBP) has reported a significant withdrawal of Rs222 billion from the banking system during October 2020. According to SBP statistics, banking deposits fell to Rs16,664 billion by the end of October 2020, down from a record high of Rs16,886 billion at the close of September 2020.

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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.

Karachi – The banking sector in Pakistan has witnessed a historic surge in deposits, reaching an all-time high of Rs16.327 trillion by the end of August 2020, according to data released by the State Bank of Pakistan (SBP) on Thursday.

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KARACHI: The deposits of banking systems have reached record high at Rs16.23 trillion by end of June 30, 2020, according to data released by State Bank of Pakistan (SBP) on Tuesday.

The deposits of baking system registered 12.24 percent growth by end of June 2020 as compared with Rs14.46 trillion by end of same month last year.

Analysts at Topline Securities explained that during second quarter of 2020, the deposits have increased by higher-than-largely-expected 7 percent, as Net Domestic Assets (NDA) of the Banking System increased by 6 percent during this period, on the back of 11 percent increase in the government borrowings for budgetary support.

Investments have grown by 40 percent YoY and 3 percent MoM to Rs10.68 trillion by end June 2020. The same is up 21 percent YTD (vs. 6 percent YTD growth by end March 2020).

As a result, IDR has increased to 66 percent in June 2020 from 53 percent in June 2019 and 61 percent in March 2020.

On the other hand, Advances have grown by just 1 percent YoY, and have actually declined by 2 percent MoM in June 2020 despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020.

This is due to the impact of the pandemic COVID-19, which has caused the overall slowdown in the economic activity. In YTD 2020, advances are up 1 percent.

As a result, ADR has dropped to 51 percent in Jun-2020 from 56 percent in Jun-2019 and 55 percent in March 2020.

The Currency in Circulation (CIC) has increased by 17 percent in YTD 2020 to Rs6.19 trillion, with CIC as a percentage of M2 clocking in at 31 percent, above past 5-year average of 27 percent.

Going forward, the analysts expect deposit growth in the range of 10-11 percent during 2020 (vs. historical 3-year average growth of 11 percent), while they expect advances to grow by around 5 percent during the year (vs. historical average 3-year growth of 14 percent).

KARACHI: The deposits of banking system high record high at Rs15.48 trillion in May 2020 despite sharp cut in policy rate cut and Eid festival.

According to statistics released by State Bank of Pakistan (SBP) on Monday the deposits of banking system sharply grew by 15 percent to Rs15.48 trillion by end of May 2020 as compared with deposits of Rs13.459 trillion in the same month of the last year.

The deposits of banking system by May 2020 also grew by 7 percent when compared with Rs14.475 trillion in April 2020.

The banking system witnessed record high deposits despite cut in key policy rate by the SBP during the past two months.

The SBP in its latest monetary policy announcement on May 15, 2020 reduced the policy rate by 100 basis points to bring down to 8 percent.

The cumulative reduction in key policy rate was 525 basis points during the past two months.

Further, the deposits hit record high despite Eid festival when people opt to withdraw cash. However, on this Eid-ul-Fitr the SBP had not issued fresh currency notes due to coronavirus.

Banking experts said that due to partial halt in business activities and easing lockdown to allow opening of markets in the last days of the month of Ramazan helped the banking system to have massive deposits.

KARACHI: Bank deposits hit record high at Rs15.13 trillion by end of March 2020, according to data released by State Bank of Pakistan (SBP).

The deposits of the banking sector grew by 12.4 percent YoY and 2.1 percent MoM in March 2020 to Rs15.13 trillion. The deposits are also up 3.4 percent in YTD 2020.

Analysts at Topline Securities said that banks’ focus for deposit mobilization remained more towards Investments compared to Advances during the period given the high yields on govt. papers.

As a result, Investments grew by 61.7 percent YoY and 6.6 percent MoM to Rs9.30 trillion in March 2020, with Investment to Deposit Ratio (IDR) increasing to 61.5 percent in March 2020 from 42.7 percent in March 2019 and 58.9 percent in Feb-2019. The Investments are also up 5.6 percent in YTD 2020.

On the other hand, Advances grew by just 4.7 percent YoY and 0.6 percent MoM in March 2020 hindered by high interest rates and slowdown in overall economic activity.

The Advances are up only 1.2 percent during YTD 2020. As a result, ADR dropped to 54.6 percent in March 2020 from 58.6 percent in March 2019 and 55.4 percent in Feb-2020.

As per the available 2M2020 numbers, Advances to the textile and consumer sectors increased by 9 percent YoY each.

The Currency in Circulation (CIC) in YTD 2020 has registered an increase of 6.5 percent to Rs5.6 trillion. Additionally, CIC as a percentage of M2 clocked in at 29 percent above the historic 5-year average of 27 percent.

Going forward, we see limited Deposit growth in the range of 6-7 percent during 2020 (vs. historical average 3-year growth of 11 percent), in line with the nominal GDP growth amidst slowdown in economic activity because of the outbreak of Covid-19. We expect Advances to grow by around 5 percent during the year (vs. historical average 3-year growth of 14 percent).

KARACHI: The deposits of banking system hit all-time high of Rs14.672 trillion by end of January 2020 owing to higher returns on attractive interest rates.

According to State Bank of Pakistan (SBP), the deposits of banking system grew by 12.36 percent to Rs14.672 trillion by January 2020 as compared with Rs13.057 trillion in the same month of the last year.

The banking deposits were previously hit all-time high of Rs14.632 trillion by end of December 2019.

Analysts said that the higher interest rate attracted the investors to keep their money in banking system for higher returns.

The SBP kept the policy rate unchanged at 13.25 percent in the last monetary policy on January 28, 2020.

The analysts also believed that the slowdown in economy also discouraged new investment in the industrial and other avenues. Therefore, profit through banking deposits has become prime option.

The higher deposits also provided room for banks to invest in government papers. The higher investment in government securities resulted in significant profitability of the banks.

Analysts said that the year 2019 was an exceptional year for the banking sector with profitability increasing by 20 percent or Rs30 billion to reach Rs177 billion, in spite of economic slowdown.

The primary driver this year has been the net interest income which has increased by 27 percent from Rs486 billion to Rs620 billion, which is mainly due to higher interest rates.

Weighted average policy rate in 2019 remained 12.2 percent compared to 7.2 percent in 2018.

In absolute terms, the highest yearly profit was earned by MCB bank (Rs23.8 billion) followed by UBL (Rs19 billion) and NBP (Rs16.6 billion). However in terms of earnings growth BIPL came out on top with 247 percent growth followed by MEBL with 73 percent and AKBL with 58 percent growth, said analysts at Arif Habib Limited.

As mentioned Net Interest Income (NII) of the banks remained major earnings driver in 2019. In Pakistan rising interest rates bodes well for banks as around 34 percent of deposits are non-remunerative (Current Deposits on which banks give no return) that leads to a higher spread. Top banks with the highest growth in NII are BIPL (78 percent), MEBL (65 percent) and SCBPL (50 percent).