[orillaVar]

KARACHI - According to latest figures released by the SBP, the loans/deposits spread for the overall banking sector reached 7.14 percent during Jun-12.
This represents an increase of 7 basis points (bps) month-on-month (MoM). “We expect that the full year average spreads of CY12 are likely to remain in the range of 7.0 percent to 7.2 percent as we believe that the upcoming announcement of monetary policy rate is expected to remain at the current level (12 percent),” said InvestCap Research analyst Mazhar A. Sabir.
The reasons cited by the analyst for this included macroeconomic imbalances, rising inflation pressure owing to Ramadan factor, fiscal weakness and huge security related expenditures. The average interest rate spread of the banking sector during 6MCY12 (Jan-Jun 2012) stood at 7.24 percent as compared to 7.62 percent in the same period last year, registering a decline of 38bpsYoY.
Whereas, spreads compared with the month of June last year, a considerable decline of 72bpsYoY was also witnessed.
The weighted average deposit rates on outstanding deposits including zero mark up, declined by 6bpsMoM to 5.82 percent during Jun-12 compared to deposit rate of 5.88 percent last month. Highest deposit rates witnessed in the pubic sector fund, which stood at 6.0 percent (down 10bpsMoM), followed by deposit rate on private sector funds which stood at 5.81 percent (down 3bpsMoM). On CY12TD basis, the rate on outstanding deposit remained average at 5.82 percent, witnessed a decline of 6bps during 6MCY12.
The yields on outstanding loans including zero mark up remained stagnant during the month and showed the surge of just 1bpsMoM to reach at 12.96 percent in Jun-12. While during CY12TD, the rate on outstanding loans fell by 50bps compared to the rate of 13.46 percent during Dec-11