Spread in bank interest rates widens further

The existing spread between interest rates in the country's banking sector widened further as the commercial banks cut interests on public deposits far deeper than on lending, bankers said.
Such imbalance in rate adjustments, according to economists, is meant for keeping banks' profit margins higher.          
The weighted average spread between lending and deposit rates offered by the commercial banks rose to 4.86 per cent in March 2016 from 4.81 per cent in the previous month, according to the central bank's latest statistics.
The spread was 4.84 per cent in January 2016. On the other hand, the weighted average rates on deposits came down to 5.92 per cent in March from 6.10 per cent in the previous month while interest rates on lending dropped to 10.78 per cent from 10.91 per cent.
"Existing trend in both lending and deposit may continue until June this year," Syed Mahbubur Rahman, managing director and chief executive officer of Dhaka Bank Ltd, told the FE Tuesday.
He also said most of the banks were now offering lower lending rates due mainly to lower demand for good credits.