The spread of the banking sector declined by 30 basis points (bps) to 7.33% in November this year from 7.63% registered in the same period of the last year.

But, average spread for the period from January to November 2009 still indicated the increasing growth and touched to 7.49% as against 7.25% in the same period of time a year ago.

The fall in the growth of spread is credited to drop in the lending rates of the banking sector, which was occurred due to soft monetary policy stance of the central bank.

Earlier, the State Bank of Pakistan (SBP) has released banking spread numbers in November 2009. The SBP said, “After a consecutive rise during last two months, banking spread once again dropped by 8bps in the month of November 2009.”

The pre-policy impact of monetary easing was clearly evident in the spread numbers. The sectoral reports of spread showed that in November 2009, lending rates declined by 9bps on monthly basis to 13.58% while cost of deposits remained constant at 6.25% against 6.26%, a month ago.

Further, report showed that as domestic economy is going through a falling interest rate scenario after a tight monetary stance, lending rates have also dropped to 13.58% inline with KIBOR after touching the mark of 14.66% in January this year.