In January-22, banking sector deposits increased by 16.8% year on year to PKR 19.9 trillion. On a sequential basis, however, there was a 4.9 percent drop (PKR 1.0 trillion) as the year-end phenomenon played out and large flows entered the banking system. According to a research by BMA Capital, advances growth outpaced deposit growth for the third month in a row, rising 17.4 percent YoY to PKR 10.0 trillion, while the drop was 2.0 percent on a month-over-month basis.
Resultantly, ADR largely maintained last year’s level of around 50% against 48.4% witnessed in Dec-21. Investments continued to trend strong as largely expected given the attractive yields on offer. In Jan-22, total investments surged to PKR 14.4Trn, ↑26.3% YoY pulling ADR to 72.3% from 66.8% in the SPLY. Going forward, we expect robust double digit growth in deposits to continue while IDR levels are expected to remain in excess of 70% in the near term. However, we can expect lending growth to ease off as TERF related disbursements decline.