Banking Sector’s ADR Declines to 38% in June 2025

The gross Advance-to-Deposit Ratio (ADR) for the banking sector continued its decline, reaching 38% in June 2025.

According to Arif Habib Limited (AHL), the banking sector’s ADR was 38.1% in June 2025, a decrease of 172 basis points (bps) from 39.8% in May 2025.

The ADR decreased by 186bps year over year from 40% in June 2024.

The Investment-to-Deposit Ratio (IDR) for the banking sector decreased to 103% in June 2025 from 105.8% in May 2025, a decrease of 282bps. The IDR increased by 608bps over the previous year from 96.9% in June 2024.

The rise in IDR demonstrates that banks are making significant investments in government instruments, potentially as a result of high yields, a low credit appetite, or a lack of demand from the private sector.

According to the data, the banking sector’s deposits grew strongly both year-over-year (14.1%) and month-over-month (8.5%), reaching Rs35.5 trillion in June 2025.

Investments increased faster than deposits and advances year over year (21.2%), reaching Rs36.6 trillion in June 2025.

Advances (loans) were Rs13.5 trillion in June 2025, up 8.7% year over year and 3.8% month over month, indicating a partial recovery in credit demand.