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Finance & Banking vocabulary · Interest & Exchange Rates

Spread

Meaning in finance & banking, with examples

/spred/nounCommon term

In finance & banking, spread means: The difference between two rates or prices, such as between a bank's lending and deposit rates, or between the buying and selling price of a currency.

In Turkish: spread, fark, makas, marj

How it is used

The loan-deposit spread drives a bank's income; the FX spread is its margin on currency exchange; a credit spread is the extra yield a riskier borrower pays over a benchmark. Spreads widen or narrow (tighten) and are often quoted in basis points.

Example sentences

  1. Our loan-deposit spread narrowed this quarter because deposit costs rose faster.

  2. The bank's FX spread on euro sales is wider at weekends.

Common collocations

  • loan-deposit spread
  • credit spread
  • bid-ask spread
  • spreads widen
  • spreads tighten
  • interest rateThe price of borrowing money, shown as a percentage of the amount borrowed or saved for a period, usually one year.
  • basis pointOne hundredth of one percentage point (0.01%). It is used to describe small changes in interest rates and yields precisely.
  • net interest marginA bank's interest income minus its interest expense, divided by its average interest-earning assets. It shows how profitably the bank lends and invests.
  • foreign exchangeThe buying and selling of currencies, or foreign currency itself. It is often shortened to FX or forex.
  • yieldThe income an investment earns, shown as a percentage of its price or value. For a bond, it is the return an investor gets by buying at the current price.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Interest & Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.