Salman Khan
Salman Khan

KARACHI: The bank deposits grew by 17 per cent to Rs19.9 trillion during the last 12 months from January 2021, the State Bank of Pakistan (SBP) reported on Thursday.

Bankers found it very attractive as the increased deposits mean the banks earn more.

The balance sheets of all scheduled banks showed they earned healthy profits during the calendar year 2021. The increased liquidity also supported the private sector which borrowed record money during this period.

However, the higher deposits helped the banks to invest more in the government papers to earn risk-free profits.

The data shows the banks’ investment increased by 26pc to Rs14.4 trillion in January compared to Rs11.4tr in January 2021 as the government relies entirely on banks for domestic borrowing.

Recently, the government changed its strategy and started borrowing more from the non-bank sector like insurance and other corporate sectors. The government is facing liquidity problems due to restrictions from IMF not to borrow from the central bank since 2018.

The advances of the banking system also increased by 17.4pc to Rs9.944tr compared to Rs8.467tr in January 2021, reflecting higher borrowing by the private sector. The government believes the higher private sector borrowing is a reflection of higher economic activities while it has projected to achieve a growth rate of over 5pc in FY22.

The advance-to-deposit ratio slightly edged up to 49.8pc in January compared to 49.6pc in January 2021.

However, the investment-to-deposit ratio went up by 546 basis points to 72.3pc during the period under review from 66.8pc in January 2021.

Banking is one of the best profit-making industries while it achieved sustainable growth in an economy where most of the sectors are vulnerable.

Published in Dawn, February 11th, 2022

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Ultimate price
Updated 02 Nov, 2024

Ultimate price

To dismantle culture of impunity for crimes against journalists, state must ensure that perpetrators do not go unpunished.
Mastung bombing
02 Nov, 2024

Mastung bombing

INSTABILITY continues to haunt Balochistan, as Friday morning’s bombing in Mastung has shown. At least nine...
Plane speak
02 Nov, 2024

Plane speak

DESPITE all its efforts to facilitate PIA’s privatisation, it seems the government only ended up being taken for a...
Seeking investment
Updated 01 Nov, 2024

Seeking investment

Foreign visits will be fruitless unless crucial structural, policy reforms directly affecting investors are focused.
State-backed terror
01 Nov, 2024

State-backed terror

OVER the past year or so, India’s reportedly malign activities in foreign countries have increasingly come under the radar, with
Shared crisis
01 Nov, 2024

Shared crisis

WITH Lahore experiencing unprecedented levels of smog, the Punjab government has announced a series of “green...