• CBN Report Outlines Banks’ Deposit, Lending Rates

The Central Bank of Nigeria (CBN) has made public, the deposit and lending rates obtainable in commercial and merchant banks.

In a CBN report titled: ‘Deposit and Lending Rates in the Banking Industry’ obtained by The Nation, the apex bank said the disclosure is in furtherance of the transparency and full disclosure stance of the regulator.

It also aligns with the Monetary Policy Committee (MPC) decision that the lending rates obtainable in Deposit Money Banks (DMBs) be made public to guide business decisions.

The applicable rates for banks as at May 18 showed that while some banks lend cheaply to prime borrowers, their maximum lending rate to other category of borrowers went as high as 49.50 per cent per annum for the agricultural sector.

The report showed that Union Bank Plc lends to public utilities sector at 17.50 per cent, prime rate, and 24.50 per cent maximum rate. The bank lends for general purpose at 17.50 per cent, prime, and 52.50 per cent maximum.

Average rate for demand deposit at Union Bank is 0.50 per cent; 4.20 per cent for savings and 12.48 per cent for demand deposit. The bank however, lends to agriculture at 23.50 per cent, prime, and has 49.50 per cent as its maximum lending rate for the sector. Mining and quarrying borrow at 17.50 per cent, prime, and 33 per cent maximum. Power and Energy borrow at 22 per cent, prime, and 22 per cent, maximum, while oil and gas borrow at 7.50 per cent, prime, and 26 per cent maximum.

The CBN’s data showed that Unity Bank pays the highest average interest rate of 16 per cent per annum to depositors on time deposit, while GTBank pays the lowest of 7.13 per cent to time depositors.

First City Monument Bank (FCMB) lends at three per cent to oil and gas sector, prime rate, but its maximum rate to the sector is 30 per cent. Stanbic IBTC Bank lends at 11 per cent to oil and gas sector, prime rate, and has 30 per cent as its maximum rate to the sector.

The data showed that Skye Bank lends at nine per cent to government, prime rate, and 31 per cent maximum rate to the market segment.

Diamond Bank lends to oil and gas at 20 per cent prime, and has 30 per cent as its maximum lending rate to the sector.

For FirstBank, its average interest rate on demand deposit is zero per cent; 4.20 per cent average interest rate for savings deposit and 7.50 per cent for time deposit. The bank lends to agriculture at nine per cent, prime, 27 per cent maximum; manufacturing borrows at 20 per cent, prime, and 28 per cent maximum, while real estate borrows at 20 per cent, prime, and 27 per cent maximum. Finance and insurance borrow at 20 per cent prime, and 27 per cent maximum, while education borrows at 19 per cent prime, and 27 per cent maximum.

The power sector borrow at 19 per cent prime, 27 per cent maximum while capital market borrows from the bank at nine per cent prime, and 27 per cent maximum; oil and gas borrow at 20 per cent prime, and 28 per cent maximum.

For United Bank for Africa (UBA PLc), its average interest rate on deposit is 0.28 per cent; the lender pays 4.20 per cent on savings deposit, and 10.86 per cent for time deposit. The bank lends to agriculture at seven per cent, prime, and 25 per cent, maximum; manufacturing, 19 per cent, prime and 29 per cent maximum.

Access Bank’s average interest rate on demand deposit is 0.05 per cent; savings deposit is 4.20 per cent while time deposit is 11.84 per cent. The bank’s prime lending rate for agriculture, forestry, and fishing is 19 per cent; while maximum lending rate for the sector is 30.50 per cent. The bank’s prime lending rate to manufacturing is 14 per cent; while 30.5 per cent is its maximum lending rate. The lender lends to government at 16 per cent, prime, and 26.50 per cent maximum rate.

Its loans to education sector is priced at 19 per cent; and 30.50 per cent is the maximum rate. Power ad energy, oil and gas borrow at 15 per cent form the bank, prime while its maximum rate is 30.50 per cent.

Guaranty Trust Bank Pls’ average interest rate on demand deposit is 2.90 per cent; savings deposit at 4.20 per cent and time deposit at 7.713 per cent. The bank lends to agriculture at seven per cent, prime, 21 per cent maximum rate.

Manufacturers borrow from GTBank at 12 per cent, prime, 25 per cent maximum. The bank lends to real estate at 19 per cent, prime, 23 per cent maximum, while finance and insurance sector borrow from the lender at 21 per cent prime, 25 per cent, maximum. Government borrows at 18 per cent, prime, 18 per cent, maximum rates.

Speaking on the lending rates, Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, said such rates further depresses investment and hurt the economy. According to him, it further alienates and causes disconnection between the banks and their customers.

“It will be an investment suicide for any businessman to borrow at such rates. It is an abnormality to lend at such rates in an economy that wants to create jobs and recover from recession. I urge the CBN to critically look at those rates and take immediate decision that will boost the real sector,” he said.

Yusuf added: “If you want the private sector to be engine of growth, you have to deal with interest rate. Lending to customers at such rates will further increase the level of default of borrowers because the higher the lending rate, the higher the default rate”.

On banks’ claims that their cost of operations is high, he said the apex bank can also reduce the Cash Reserve Ratio and Monetary Policy Rate (MPR) to reduce cost of funds for banks.

“Banks need to create credit that supports the economy, by boosting production and reducing poverty,” Yusuf said.