KARACHI: Bank deposits grew 22 per cent year-on-year fuelling both the investment and advan-ces in the just-ended fiscal year 2020-21.

According to the State Bank of Pakistan data, the banking sector deposits continued to rise reaching Rs19.795 trillion by June 30.

Bankers believe that the growth in deposits was due to record 27pc increase in remittances and a drop in consumption by the general public due to coronavirus. The data reflected that deposits increased by 10pc on a month-on-month basis.

The data showed that the credit demand also increased during the year.

The advances rose by 10pc on year-on-year basis at the end of the fiscal year on June 30. The gross advances were Rs8.996tr. The advan­ces increased by 2pc month-on-month in June.

The investments gone up by 29pc during the year compared to last year.

On June 30, the investment reached at Rs13.742tr. Due to higher deposits growth and less advances, the banks were dealing with excess liquidity in the system and ultimately the investments showed very high increase.

“With interest rates exp­ected to rise this year, banks have aggressively built positions towards the shorter end of the yield curve,” said a report of Arif Habib Research.

Gross advance-to-deposits ratio ratio has settled at 45.45pc as of June 30 against 50.54pc in last fiscal year and 49.07pc in June, as banks mobilised liquidity towards investments.

“The investment-to-dep­­­osit ratio stands at 69.42pc in FY21 against 65.82pc in FY20 and 72.78pc last month,” said the report.

Published in Dawn, July 15th, 2021