CBN Lowers Interest Rate, Triggers New Bank Lending Rates
The Central Bank of Nigeria (CBN) has announced a reduction in the monetary policy rate (MPR) by 50 basis points, setting it at 26.50% from the previous 27%. This decision was made unanimously during the 304th Monetary Policy Committee (MPC) meeting held in Abuja, as confirmed by CBN Governor Olayemi Cardoso.
Banks Adjust Lending Rates in Response
In alignment with the CBN's move, commercial and merchant banks across Nigeria have released their latest lending rates. These rates, which include prime and maximum lending figures, are designed to reflect the new MPR and provide clarity for customers and businesses. The CBN emphasized that publishing these rates is part of its transparency and disclosure policy, aimed at guiding borrowing decisions in the economy.
According to data published on February 27, the average loan rate for banks has decreased, with the prime lending rate now at 24% and the maximum lending rate at 32%. Prime lending rates are typically offered to customers with strong credit profiles and low risk, while maximum rates apply to those with lower credit ratings or higher risk.
Detailed Breakdown of Bank Rates
Here is a comprehensive list of the new lending rates from various banks:
- Zenith Bank: Prime rate of 25.00%, maximum rate of 32.00%
- Access Bank: Prime rate of 25.50%, maximum rate of 32.00%
- United Bank for Africa (UBA): Prime rate of 28.50%, maximum rate of 32.00%
- Guaranty Trust Bank: Prime rate of 3.00%, maximum rate of 35.00%
- Other banks such as Polaris Bank, Sterling Bank, Wema Bank, Keystone Bank, and Union Bank have also updated their rates, with variations reflecting individual risk assessments and market conditions.
This release follows earlier reports indicating that total loans to customers from 10 commercial banks in Nigeria rose to N66.49 trillion in the first nine months of 2024, with an average Loan-to-Deposit Ratio (LDR) of 46.72%. The LDR is a key liquidity indicator, showing that for every N100 deposited, banks lent N46, highlighting ongoing lending activity in the sector.
The CBN's rate cut and the subsequent bank adjustments are expected to influence borrowing costs, potentially stimulating economic activity by making credit more accessible to businesses and individuals. This move underscores the central bank's efforts to manage inflation and support growth in the Nigerian economy.
