KARACHI: The country’s commercial banks have witnessed 10 per cent increase deposits amidst declining interest rates in the first half of 2015.
On a year-on-year basis, deposits of the banking sector increased 10% in January-June to Rs9.1 trillion, which is notably higher than the 8% average growth recorded during the last five years.
The State Bank of Pakistan (SBP) has cut the benchmark interest rate by 3%, bringing it down to 7% since October 2014 on the back of low inflation. As a result, banking spreads shrank to 5.75% for the first five months of 2015, which shows almost 5% attrition over the spread of 6.05% reported for the same period of 2014.
This has prompted banks to mobilise low-cost deposits in the shape of current and saving accounts that now represent 70% of total deposits as opposed to 65% in 2010.
Banks’ financials up to June 30 have not been released yet. But a look at the industry-wide data for 2014 reveals that the largest market share of customer deposits belonged to Habib Bank (16.8%) followed by National Bank (12%), United Bank (10.5%), MCB (7.6%), ABL (7.5%) and Bank Alfalah (6.4%).
In contrast, the largest market share of loans and advances at the end of 2014 belonged to NBP (14.9%) followed by HBL (13.5%), UBL (10.5%), ABL (6.7%), MCB (6.6%) and Bank Alfalah (6.2%).
