After having witnessed a decline of 5%MoM in Julu-12, the deposits of the total scheduled banks reverted back to their normal pace as they surged by 2.7%MoM to reach at Rs6.3tr in Aug-12.
On cumulative basis, the deposits have registered a growth of 6.8%8MCYTD as compared to 4.7% growth witnessed in the deposits during the same period last year.
This has been evident in the latest figure of M2 (Aug-31), in which M2 growth reached at 0.3% during the previous two months of FY13 as compared to negative growth witnessed during Jul-12.
On the other hand, the 6M KIBOR averaged at 10.93% during Aug-12, as compared to Jul-12 average of 12.01%, showing a decline of 108bps on monthly average basis.
“The reason for such decline in KIBOR rate was due to adjustment in yields on the back of SBP’s decision to cut the DR by 150bps in its last MPS (Aug-12),” said the analysts at InvestCap Research. The credit off-take trend of the banking sector remained sluggish during the review month as it was up by minor 0.3%MoM to reach at Rs3.7tr, while during 8MCY12, the advances of the banking sector increased by 6.3%.
The advance to deposit ratio (ADR) of the banking sector has reached 59%, down 138bpsMoM during Aug-12 and 28bps during 8MCY12.
The investment side of the banking sector on the other hand, showed a significant surge of 14.1% during 8MCY12 with an appreciation of 1.3%MoM witnessed during the month of Aug-12.
This growth under the investments head was in line with the extraordinary growth of Gov’t borrowing, in which Gov’t borrowed Rs200bn from commercial banking channels during the last two months of FY13. As expected, total deposits of the banking sector returned back to their norm after showing decline in the last month and remained in an upward trajectory during 8MCY12.
“The Gov’t’s heavy reliance on banking sector for borrowing is expected to keep the banking investments side higher and advances are expected to remain in sideways going forward,” the analysts said.
