LAHORE: Banking spreads in December 2014 has shown an improvement to 6 per cent as against 5.8 per cent in November. During CY 2014, spreads remained depressed, clocking in at 5.98 per cent, down 26bps, owing to lower lending rates and flat deposit costs. Going forward, experts see narrowing spreads due to ongoing monetary easing cycle in the country, where SBP is expected to cut policy rate by 100-150bps in next 6 months.
Lending rates on outstanding loans remained stable at 10.9%, whereas rate on deposits declined to 4.9% as compared to 5.1% in the previous month, statistics of central bank reveal.
Textile and food sector remained the major borrower in the month owing to seasonal higher cash requirements for cotton and cane purchase. During full CY2014, demand for the credit remained encouraging, as the cumulative credit off-take to private sector surged to Rs257 billion from Rs167 billion in CY2013 and average Rs75 billion during past 5 years.
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