Nigerian banks raise lending rates to 30 per cent

Customers are paying more on loans and getting less on deposits from commercial banks, a Central Bank of Nigeria (CBN) report has said.

They paid between 15.01 per cent and 30.70 per cent on borrowed funds but the interest paid on their term deposits dropped by 1.46 per cent to 6.27 per cent, the CBN’s economic report for the first quarter of the year shows.

The report released at the weekend, indicated that the average prime and maximum lending rates rose by 0.02 per cent point and 0.47 per cent  point, respectively, to 15.01 per cent and 30.70 per cent, in the review period. The percentage were above their levels in the preceding quarter.

The average prime and maximum lending rates stood at 29.98 per cent and 14.99 per cent respectively in the fourth quarter of last year.

The rising lending rates, analysts said, have led to upward pressure on market rates and cost of production for the manufacturing sector.

The CBN observed that despite the rise in lending rates, banks were paying less deposit interest to depositors. The average term deposit rate fell by 1.46 percentage points to 6.27 per cent. The spread between the average term deposit and average maximum lending rates widened by 1.93 per cent  points to 24.43 per cent points.

The margin indicated that customers are paying 24.43 per cent higher fee than they are getting from banks.

However, the Monetary Policy Rate (MPR), which is the benchmark for interest rate at which the CBN lends to the commercial banks, is currently at 12.5 per cent.

– The Nation