KARACHI, Aug 30: The profitability growth rate of listed banks has declined in the first half year ended June 30, 2006 compared to the same period last year, said a research report.

Banking sector was the most profitable sector of the KSE as their earnings soared by 99pc to Rs47.5 billion in calendar year 2005.

“In the first half of 2006, their profitability growth rate was slowed down to 68 per cent, mainly due to higher base effect, as compared to 96 per cent recorded in the corresponding period last year,” according to the report of Jahangir Siddiqi and Company.

As on March 31, 2006, listed banks represented 75pc and 73pc in total deposits and assets of the banking sector and occupied 78pc share in total earnings.

“Major growth was witnessed in large-size commercial banks (NBP, UBL, MCB and ABL) with their combined earnings soared by 96pc to Rs20bn,” said Mohammad Imran, researcher at JS brokerage house.

Large commercial banks’ profitability growth was mainly contributed by their higher spreads as their cost of deposits was on the lower side as compared to other banks.

Banks have been profiteering on the basis of high banking spread which reached to 7.42 per cent in July 2006. Banks failed to pass on their profits to the depositors and managed to show record profits. The trend still persists despite the decline in overall profit of the banking sector.

Last year the listed banks booked a profit of 99 per cent while the profitability of large commercial banks was more than 100pc.