Banking sector spread climes to 5.2% for Dec’18
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KARACHI: The Banking sector spread for the month of Dec’18 climbed to 5.20 per cent, (+6bps MoM/ +35bps YoY), rising for the third consecutive month.
The analyst anticipated the SBP Monetary Policy Committee to announce another round of hikes in the range of 50-100bps, due at the end of January 2019.
The latest numbers issued by the State Bank of Pakistan (SBP) show that to a 425bps cumulative surge in policy rates during the year, industry spreads improved by 35bps only, leaving ample room for improvement come calendar year 2019.
The Lending yield on outstanding loans was up 192bps YoY to arrive at 9.66 per cent – the highest witnessed since June 2015, amidst the most aggressive reversal in rates since calendar year 2008. Meanwhile, despite the immediate re-pricing component, the deposit cost was up 157bps only, clocking in at 4.46 per cent, due to strengthening of the non-remunerative funding base of the industry.
Nevertheless, the average spread for the industry was recorded at 4.89 per cent for calendar year 2018 compared to 4.94 per cent for calendar year 2017 (-5bps) mainly owing to the less aggressive uptick in overall spreads compared to rate reversals.
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