Banking sector spread inches up for the fourth month

February 27, 2019 (MLN): The banking sector spread has inched up to 5.42% in January 2019 marking an edge of 22bps over previous month and exhibiting a rise for the 4^th month straight.

As per data released by the central bank of Pakistan, lending rate for all banks (inclusive of zero markup) is 10.2% while the deposit rate is 4.78%.

Compared to the same period last year, the banking sector spread has risen by 59 bps, up from 4.83%, whereas during the seven months of current financial year, the spread has increased by 57 bps, up from 4.85%.

The lending rate in January 2018 was 7.72% which marks a rise of 392 bps over the year. On the other hand, the deposit rate last year was 2.89% meaning the figure has increased by 189 bps.

The notable difference in the pace of growth of these figures is the result of central banks’ monetary policy action in the last few rounds of Monetary Policy announcements.

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