KARACHI: Average banking spreads for October 2021 were 4.18 percent, down 48bps on year-on-year basis; taking 10 months of CY21 average spreads to 4.32 percent down 87bps on YoY.

During October 2021, lending rates clocked in at 7.89 percent, down 51bps on YoY, while deposit rates remained nearly flat at 3.71 percent.

After a streak of 12 months, fresh spreads have once again averaged lower to the weighted average banking spreads for the month, Amreen Soorani at JS Global Capital said, adding that fresh banking spreads decreased in October 2021, standing at 3.95 percent, down 109bps on YoY, as improvement in lending rates by 22bps YoY was not enough compared to the 131bps YoY rise in fresh deposit rates.

For 10 months of CY21, fresh spreads also witnessed a similar trend, declining by 49bps on YoY. The recent cumulative hike of 175bps in Policy Rate is yet to be reflected in fresh lending rates.

“With the KIBOR moving plus 200bps already, we believe adjustment of the hike in policy rate is soon to be reflected in the sector’s topline, hence we can expect sharp increase in spreads in the months to follow,” Amreen added.

Copyright Business Recorder, 2021