Bank Customers Pay 36% For Loans, Get 1.15% On Deposits

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Bank customers are paying 36 per cent maximum lending rates for loans but getting an average of 1.15 per cent interest on savings deposits with their banks, the Central Bank of Nigeria (CBN) data has shown.

The report, released at the weekend in furtherance of the apex bank’s transparency and full disclosure stance, showed that as of September 17, 2021, manufacturers pay a maximum rate of 36 per cent per annum for Stanbic IBTC loans, Heritage Bank (35 per cent), Heritage Bank (35 per cent), FCMB (30 per cent), Zenith Bank (30 per cent), Fidelity Bank (24 per cent) and Keystone Bank (34 per cent), among others.

Heritage Bank priced its agriculture and forest loans at 35 per cent per annum, followed by Keystone Bank (34 per cent), Zenith Bank (30 per cent), Providus Bank (30 per cent), Sterling Bank (33 per cent), Polaris Bank (32.50 per cent) among others.

Loans to the government were priced highest in the industry, with Union Bank collecting 49 per cent per annum maximum loan rate from its government customers followed by FCMB and Stanbic IBTC (42 per cent), Heritage Bank (41 per cent), Sterling Bank (33 per cent), Providus Bank (30 per cent), Wema Bank (30 per cent), Zenith Bank (30 per cent) among others.

However, Ecobank, Access Bank, FCMB, Fidelity Bank, GTBank, Keystone Bank and Polaris Bank pegged their interest rate on savings at 1.15 per cent.

Others that adopted the same of 1.15 per cent on savings deposits are Stanbic IBTC, Sterling Bank, Titan Bank, UBA, Union Bank, Wema Bank and Zenith Bank.

Heritage Bank pays 4.20 per cent, which is the highest interest on savings deposit on the reviewed date, followed by SunTrust Bank which pays 4.10 per cent.

Ecobank pays 9.67 per cent for time deposit, others are Access Bank (9.52 per cent), Coronation Bank (8.55 per cent), Heritage Bank (13.88 per cent), GTBank (5.57 per cent), Keystone Bank, 8.22 per cent), Nova Merchant Bank (10.72 per cent), Rand Merchant Bank (8.85 per cent), Sterling (9.77 per cent). Others are Zenith Bank (4.72 per cent), Wema Bank (4.94 per cent), UBA (1.00 per cent) FCMB (0.25 per cent), among others.

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The CBN observed that despite the rise in lending rates, banks were paying less deposit interest to depositors with the rising spread between an average term deposit and average maximum lending rates.

Bank Customers Pay 36% For Loans, Get 1.15% On Deposits

The spread gap indicated that customers are paying a far higher fee than they are getting from their banks.

The rising lending rates, analysts said, have led to upward pressure on market rates and the cost of production for the manufacturing sector. They insisted that the rate at which a customer is charged for loans is dependent on the perceived risk level attached to such customers. That explains why prime customers get loans at relatively cheaper rates.

However, the Monetary Policy Rate (MPR), which is the benchmark interest rate at which the CBN lends to the commercial banks, is currently at 11.5 per cent.

Speaking at the end of the Monetary Policy Committee (MPC) meeting held last week in Abuja, CBN Governor Godwin Emefiele noted the improvement in lending to the real sector following the introduction of the Loans-to-Deposit Ratio (LDR) in 2019.

“Industry gross credit increased by N6.63 trillion from N15.57 trillion at end-May, 2019 to N22.20 trillion at end-July, 2021. The credit growth was largely recorded in manufacturing, oil and gas and agriculture sectors,” he said.

He noted the moderate improvement in both the manufacturing and non-manufacturing Purchasing Manager’s Indices (PMIs), though still below the 50-index point benchmark, showed a marked improvement over time.

“In August 2021, the Manufacturing and non-Manufacturing PMIs improved to 46.9 index points apiece, compared with 46.6 and 44.8 index points, respectively, in July 2021. This was attributed to an increase in new orders, driven largely by rising demand, the uptrend in business activity and further normalisation of economic activities,” he said.