Islamabad, Nov 21: Banks Achieve 44% Gross ADR as They Race to Avoid Additional Govt Taxes
The Banking Sector’s Gross Advance to Deposit Ratio (ADR) increased to 44% as of October 25, 2024, up from 39% on September 27, 2024. According to Topline Securities, gross advances grew by 11%, reaching Rs. 13.4 trillion, while deposits declined by 1% to Rs. 30.5 trillion during this period.
This rise is significant as the government has imposed an additional tax on banks failing to achieve a 50% ADR threshold by December 2024. Currently, the sector’s ADR stands at 44%.
Few Banks Exceeding the Target
As of June 30, 2024, only 3 out of 19 listed banks—Samba Bank (SBL), Faysal Bank (FABL), and Askari Bank (AKBL)—reported a gross ADR above 50%. Meeting this threshold remains a challenge for the majority of banks, potentially leading to higher tax provisions.
Tax Implications
If all listed banks were to lend the additional advances required to meet the 50% target, the government could face an estimated revenue loss of Rs. 157 billion in taxes. However, failure to achieve the target may result in banks incurring higher tax liabilities.
