Banking sector spreads lowers to 7.07% in May 2012

Karachi, June 27, 2012 (PPI-OT): The spreads of bank have eased off by 58 bps to 7.07% during May 2012 against 7.65% during the same month last year and 7.22% in April 2012.

According to Alfalah Securities Limited, the spreads have dropped mainly due to increase in deposit rates also contributed by the decision of SBP where the minimum interest rates were increased to 6% higher by 1% on saving account in the monetary policy announced in April 2012 and the advances rates have also witnessed a slight drop in May 2012. The drop in spread would negatively affect the profitability of the banking industry however, since the banks have shifted more towards investment in government papers therefore, the impact would not be very significant.

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