Pakistan’s banks advances have increased to PKR 15.6 trillion as of December 27, which translates into PKR 700 billion worth if lending in a month.
Banking sector advances have increased by 4.7% from PKR 14.9 million as of November end.
However, bank deposits decreased to PKR 30.1 trillion, down 3.3% from PKR 31.1 trillion the previous month.
Consequently, the advance-to-deposit ratio (ADR) increased to 51.8%, up from 47.8% in the prior month, after having bottomed out at 38.4% in August 2024.
Following discussions between bank presidents and government officials, it was decided to abolish the 50% tax on the ADR and to increase the corporate tax rate on banks from 39% to 44% for 2024.
This tax rate is expected to decrease by 1% each year over the next two years, reaching 43% in 2025 and 42% in 2026.
The government anticipates generating an additional PKR 60 to 70 billion from these tax changes to address a revenue shortfall of approximately PKR 386 billion during the last six months of 2024, with total collections of PKR 5.623 trillion compared to PKR 6 trillion in the same period last year.
Furthermore, banks' investments increased by PKR 300 billion, or 1% in a month, totaling PKR 29.3 trillion, with an investment-to-deposit ratio of 97.5%, an increase of 4.3 percentage points.
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