The Central Bank of Nigeria (CBN) has alleged that customers are paying more on loans and getting less on deposits from commercial banks.
According to a new CBN report, customers 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 released at the weekend, ndicated 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 – leading to upward pressure on market rates and cost of production for the manufacturing sector.
The CBN observed that 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.
Despite the rise in lending rates, CBN Governor, Godwin Emefiele said aggregate domestic credit (net) grew by 5.16 per cent in June 2020 compared with 7.47 per cent in May 2020.
The total gross credit in Nigeria rose by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020.
The apex bank said these credits were largely recorded in manufacturing, consumer credit, general commerce, and information and communication and agriculture, which are productive sectors of the economy.