Banking spreads decline in July '14
Ghulam Raza Rajani KARACHI: Banking spreads witnessed a sharp MoM drop of 41bps in Jul'14 to 5.95 per cent; highest dip in CY14TD. Although asset yield inched down by meager 4bps MoM to 11.06 per cent but a hefty increase in deposit cost of 36bps to 5.11 per cent stretched down the overall spreads which were attractive in Jun'14.
This is due to rise in deposit rate to a costlier deposit mix by banking industry. It is pertinent to note that during most part of CY14TD asset yield remained stagnant on account of heavy investment in gov't securities and spreads move mainly on account of deposit cost.
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