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CBN Report Outlines Banks’ Deposit, Lending Rates



  • 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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Union Bank Secures US$40 Million Facility from IFC Global Trade Finance



Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

Union Bank of Nigeria Plc said it has secured a US$40,000,000 finance guarantee facility from the IFC, a member of the World Bank Group.

In a note to the Nigerian Stock Exchange, the lender said the facility would help boost access to finance for local businesses and enable increased international trade for Nigeria.

It explained that the facility “will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.

“The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.

Under the IFC’s Global Trade Finance Program (GTFP) terms of the agreement, GTFP offers benefiting banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions.

Accordingly, these guarantees are transaction-specific and may vary depending on underlying instruments like letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.”

Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our
customers. Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.

Eme Essien Lore, IFC’s Country Manager for Nigeria, said, “Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today. We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.

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Apapa Customs Command Generate N367.6bn in Nine Months



Nigeria Customs Service

Customs Command Apapa Realises N367.6bn Between January and September

The Nigeria Customs Service, Apapa Command, said it generated N367.6 billion in the nine-month ended September 2020.

Mohammed Abba-Kura, the Customs Area Controller, disclosed this while speaking with newsmen in Lagos.

He said a total of 328 containers of goods worth N19.5 billion were seized during the period. This, he said represents an increase of 37 containers when compared to the same period of 2019.

Speaking further, Abba-Kura said the N367.6 billion realised in the first nine months of the year, represented a 17 percent or N54.1 billion increase from N313.5 billion it collected during the same period of 2019.

The Apapa Command generated N14.3 billion as revenue in the third quarter from customers’ duty and other charges.

He said “The difference recorded was made possible as a result of resilience of officers in ensuring that importers and agents are made to do proper declarations, adhere strictly to import/export guidelines in tandem with extant laws.”

Commenting on the seizures, Abba-Kura said, “These items were seized mainly because of various forms of infractions which range from false declarations, non-adherence to import/export guidelines and failure to comply with other extant regulations as enshrined in the Customs and Excise Management Act.

“In the area of export trade, the period under review recorded exportation of goods worth N26,273,706,822 exported from the country.”

“These exported goods include mineral resources, steel bars, agricultural products among others with a total tonnage of 378,447 million tonnes free on board value of $85.8m. Similarly, the volume of export from January to September 2020 stood at N78.6bn with FOB $257,003,965.”

He added that the compliance level rose to about 60 percent during the period, highlighting the reason for the surge in the number of seizures made.

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Nigeria’s Foreign Reserves Dip Further to $35.69 Billion



Global debt

Nigeria’s External Reserves Decline by $50.84 Million to $35.69 Billion

Nigeria’s foreign reserves declined by $50.84 million in eleven days to $35.69 billion, according to the latest data from the Central Bank of Nigeria (CBN).

In the data released on the apex bank website, the nation’s foreign reserves stood at $35.75 billion as of October 2, 2020 but depreciated to $35.69 billion on October 13, 2020.

The foreign reserves plunged from $44.25 billion posted on August 19, 2019 to $41.85 billion as of September 30, 2019 before sustaining the downward trend to $36.30 billion on June 19, 2020 despite the Central Bank of Nigeria devaluing the Naira twice to prevent huge capital flight that trailed COVID-19 outbreak.

Weak oil prices amid low demand for the commodity compounded Nigeria’s woes as the central bank continues to struggle to sustain foreign exchange intervention and ease dollar scarcity in a nation that depends on imports for most of its consumption.

However, the plunge in revenue generation alongside low foreign direct investment due to the weak economic outlook and low investment sentiment, negatively impacted the attractiveness of Nigerian assets.

The apex bank, in its monthly report released for May, said “Nigeria’s international reserves decreased marginally from $36.43bn at end-April to $36.19bn at end-May 2020.

“The net decrease in reserves was due to the sales of foreign exchange at the Secondary Market Intervention Sales and Investor and Exporter windows as well as payments to external creditors.

“Thus, the level of import cover for goods and services, decreased from 4.0 months in April to 3.9 months in May 2020, but remained above the IMF threshold of 3.0 months.

“A comparative analysis of reserves per capita in May 2020 showed that Nigeria’s reserves per capita was $176.58, compared to $889.73 for South Africa, $491.10 for Angola, $218.94 for Egypt and $24.10 for Ghana.

It explained that “Sequel to the COVID-19 pandemic, the viability of the external sector in 2020 is expected to deteriorate, given the present worsening current account balance and depletion of external reserves driven, largely, by decelerating export receipts, particularly oil.

“Specifically, the degree of external reserves accumulation is expected to decelerate, as outflows are expected to outweigh inflows.

“As a result, external reserves are expected to lie between $29.9bn and $34.3bn at end-December 2020 (predicated on current declining oil price between $20 and $40).”

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