KARACHI, Feb 1: The banking spread for the year 2006 was much higher than the previous year reflecting no sign of hope for the depositors.

The latest data provided by the State Bank on Thursday showed that the average banking spread for the calendar year 2006 reached 7.40 per cent, which was much higher than last year.

The figures showed that the banking spread rose substantially high despite a lot of talks from the official quarters about pressure on banks to improve return on deposits.

The average banking spread increased by 110 basis points during 2006 compared to average banking spread of 6.30 during 2005.

The main reason for high banking spread is the low return to depositors. State Bank Governor Dr. Shamshad Akhtar has been emphasizing for better return to depositors and was of the view that the depositors were getting negative returns on their deposits.

In the wake of high inflation like 8.9 per cent the return must not be less than 10 per cent, some analysts said. The State Bank governor irritated at several occasions that the SBP would use its power to influence banks for increasing the return on depositors.

However, the trend did not show any improvement from the banking side. Bankers said that the National Bank has recently started offering much higher return on their deposits, which reflects the SBP’s pressure for higher return.