Deposit growth hits 14-year low.

KARACHI -- Banks seem to have hit the brakes on deposit mobilisation in December, a rare development that analysts attribute to the lenders' attempt at reducing their tax bills.

In a break from the past when bankers would hustle for deposits at the end of the calendar year to meet performance targets, the annual pace of deposit mobilisation slowed down to 7.1 per cent for 2022, down from 17pc for 2021.

Their attempt to limit the deposit accumulation is meant to increase the advance-to-deposit ratio (ADR) - a performance benchmark that the government is using to charge a new tax on banks.

The ADR measures loans as a percentage of deposits. A lower ADR means the bank is investing a higher proportion of its deposits in risk-free government securities while ignoring private-sector borrowers.

'Banks want their ADRs to be recorded at a higher level, which'll save them from the new tax,' JS Global Head of Research Amreen Soorani said while speaking to Dawn on Thursday.

A bank can improve its ADR by either increasing its loans (numerator) or decreasing its deposits (denominator). Instead of loaning out more funds to improve their ADRs, banks...