LAHORE (PPI) Profitability of the banking sector saw an annual increase of 5 percent to reach Rs73 billion during CY10 as against Rs70 billion of the last year. Average gross banking spread reached 49 percent in CY10 versus 48 percent in CY09. Net interest income (NII) increased by 10 percent YoY to Rs258b in CY10. The sector booked a provision of PKR63bn in CY10 from Rs74b in last year, depicting a significant decline of 15 percent YoY. Almost all of the listed commercial banks have announced their financial results for the CY10. In CY10, the banking sectors (our coverage is limited to 97 percent of the sectors market capitalization) profitability grew by 5 percent to reach PKR73.43bn as against PKR70.02bn in last year mainly driven by lower provisioning and higher NII. SCBPL and MEBL showed the highest growth of 329 percent and 61 percent YoY respectively in the bottom line in CY10 whereas the highest plunge of 80 percent and 61 percent was posted by SBL and SILK respectively. NII of the banking sector grew by 10 percent YoY mainly due to substantial increase in interest income than the increase interest expense. Interest income witnessed an increase of 8 percent to PKR526bn owing to increase in earning assets and yield on the same. On cost side, interest expense also surged by 7 percent YoY to Rs268bn in CY10 due to increase in cost of deposits.