Interest rate spread (lending rate minus deposit rate, %)

The interest rate spread, representing the differential between the rates banks charge for loans to the private sector and those they offer for deposits, serves as a crucial indicator of the banking sector's health and profitability. This metric not only reflects the cost of borrowing versus the incentives for saving but also highlights the risk assessment practices of financial institutions. Variations in this spread can signify broader economic conditions, such as inflationary pressures or shifts in monetary policy. Additionally, because the specific terms governing these rates can vary significantly across countries, the spread is influenced by local regulatory frameworks, competition levels, and consumer behavior, making it a complex but insightful tool for analyzing an economy's financial landscape. Source: