KARACHI: The provisional banking spread during November 2021 inched down by 3bps compared to October.

Overall, banking spread stood at 4.2 percent in November, 2021, data released by State Bank of Pakistan (SBP).

Lending rates stood at 8.0 percent during November, up by 11bps on month-on-month basis. Meanwhile, deposit rates also improved by 13bps to 3.8 percent during the month under review.

On a cumulative basis, banking spread decreased by 17bps during the first 11 months of CY21.

In addition, fresh lending rates stood at 8.7 percent during November, up by 46bps on month-on-month basis, while fresh deposit rates decreased by 42bps on MoM to 3.9 percent. “We believe the fresh deposit rate witnessed a correction due to sudden increase of 78bps in October, 2021,” Ahmed Rauf, at Sherman Securities said.

Banking spreads continue to move in favourable direction

Thus, fresh banking spread during November stood at 4.8 percent — up 88bps on month-on-month basis.

To note, the SBP’s Monetary Policy Committee decided to raise policy rate by 100bps to 9.75 percent during the meeting held last week.

“We believe that the impact of recent hikes of 250bps in November and December is yet to be reflected in banking spreads,” Ahmed Rauf said.

“We expect banking spreads to slightly shrink in the coming months before improving from second quarter of 2022 onwards.”

Copyright Business Recorder, 2021