The State Bank of Pakistan’s most recent monthly data release shows notable changes in the banking sector spread for November 2023. Based on the weighted average lending and deposit rates, the spread has decreased by 9 basis points (bps) month-over-month (MoM) to 7.63% from 7.72% in October 2023.
YEARLY COMPARISON HIGHLIGHTS GROWTH
On a yearly basis (YOY), the banking sector spread has witnessed an increase of 1.3% year-on-year (YoY), rising from 6.33% in November 2022 to its current level.
LENDING AND DEPOSIT RATE DYNAMICS
In November 2023, the lending rate for all banks was 19.27%, a 7 basis point MoM decline. Nevertheless, there was a noticeable YoY increase of 5.15%.
Concurrently, there was a 3 basis point increase in the deposit rate from the previous month, to 11.65%, which represents a significant 3.85% increase from November of last year.
FRESH LENDING AND DEPOSIT RATES TRENDS
The reviewed month saw a sharp increase in new lending rates, reaching 21.21%, a notable 5.29% YoY increase and a noteworthy 1.28% MoM increase.
On the other hand, fresh deposit rates decreased by 7 basis points in a single month to 10.77%. However, compared to November 2022, there has been a YoY increase of 3.17%.
IMPACT ON BANKING SECTOR SPREAD
The banking sector’s spread on new deposits increased by 1.35% month over month in November as a result of these changes. The banking industry is dynamic, as indicated by the data, and industry analysts and stakeholders should keep a close eye on these trends and their potential effects on the financial landscape.
