EDITORIAL: Recent commentary from the Pakistan Banks’ Association (PBA) highlights what it describes as strong growth in private sector credit in the current fiscal year, accompanied by an improvement in the banking industry’s Advance to Deposit Ratio (ADR). A surface level analysis would reveal impressive performance based on year-on-year growth. Between July to September 2025, private sector credit offtake was higher by roughly 15 percent compared to the same months a year earlier. Read at face value, the numbers suggest a sector rebuilding its risk appetite. The month-to-month data, however, tells a more restrained story. Recall that private sector lending had increased sharply between September 2024 and March 2025, particularly in short tenor facilities to corporates and non-bank financial institutions. This coincided with the period in which commercial banks were managing their ADR positions ahead of the one-time Dec 2024 levy on banks at year end with an ADR below 50 percent. When that levy expired, the temporary expansion began to unwind and private credit stabilised around a higher base by second quarter of 2025. It is after this point that the PBA points to a strong recovery. Yet private sector advances after March 2025, have largely moved sideways, not higher. Corporate lending, in particular, levelled off around Rs 9.7–9.9 trillion from April 2025 onward, fluctuating within a narrow band in subsequent SBP monthly statistics. Fixed investment loans also remained range-bound at Rs4.5 trillion. Similarly, working capital lending had normalised from the late 2024 peak and then flattened. There is little evidence of sustained incremental growth through mid and late 2025. The industry-wide ADR tells the same story. Industry ADR had bottomed out at 38.4 percent in August 2024, a historic low. Between, October 2024–March 2025, it climbed back up to an average of 47 percent. And, as temporary positions matured, it has returned to a fresh low of 37.9 percent as of November 2025, which is a new low. A genuine recovery would imply a persistent upward trend. That trend is not visible. This distinction matters because the growth the PBA refers to is almost entirely year-on-year. That growth exists because the ADR-driven lending surge left private sector advances at a higher base. The debt stock is definitely higher than it was a year earlier. But the flow has not grown meaningfully following March 2025. In statistical terms, the system has plateaued. Some segments show movement, but are not large enough to change the aggregate picture. PBA is correct in pointing out that lending to SMEs has increased from roughly Rs 540 billion in autumn 2024 to above Rs 690 billion by late 2025. Consumer finance has risen from around Rs 800 billion to just above Rs 1 trillion, a year-on-year increase of 24 percent. Delinquency ratios also remain broadly stable, according to SBP reported figures. These are welcome developments, but they do not materially shift the industry-wide ADR. The structure of credit also remains familiar. Short-term lending still dominates tenor profiles while long-term lending has not shown a durable lift. Sectoral exposure continues to cluster around textiles, agribusiness and chemicals, rather than broadening out. Is it therefore fair to say that private sector credit is certainly higher today than it was a year ago. However, it is less accurate to describe this as a post-June 2025 recovery in a new fiscal year indicating lending appetite or ADR improvement. A recovery implies direction but the data show a plateau. For policymakers and market observers, the lesson is straightforward. Year-on-year growth tells you where the banking system stands relative to the past. Month-to-month movement tells you whether momentum still exists. Until SBP statistics begin to show sustained increases in private sector advances, rising long-term credit implying capacity expansion and modernisation, and a steadily climbing ADR outside of one-off balance sheet window dressing events, talk of a renewed private credit cycle will remain premature. For now, the industry looks to be where it has been since the first half of 2025: stable but not expanding its private sector footprint. Any future claims of ADR recovery must distinguish between residual base effects and genuine forward momentum. Only the latter signals a durable shift in Pakistan’s credit cycle. Copyright Business Recorder, 2026