KARACHI: The weighted averaged banking spread during the month of August 2020 decreased by 12bps, as compared to July 2020. Overall banking spread stood at 4.9 percent in August 2020, compared to 5.0 percent in the preceding month.
Decrease in banking spread was led by relatively higher decline in lending rates, which stood at 8.7 percent during the month, a 22bps month-on-month decline, while deposit rates stood at 3.8 percent during August 2020, declining by 10bps on MoM. To note, policy rate was kept unchanged by Monetary Policy Committee (MPC) at 7.0 percent during their meeting conducted on September 21, 2020. “In our view, banking spread has room for slight decline of 15-20bps, as delayed impact of policy rate cut on lending rates is largely incorporated”, Ahmed Rauf, an analyst at Sherman Securities said.
Copyright Business Recorder, 2020
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