There are indications that banks are widening their interest rate margin apparently to cushion the impact of rising inflation on their operating cost and profitability. This involves raising lending rates and reducing deposit rates.
As a result bank customers now pay higher interest rates on loans while they receive lower interest rate on their deposits.
Latest data by the Central Bank of Nigeria, CBN, on banks’ deposit and lending interest rates showed a 3.15 percentage points increase in the average maximum lending rate to 30.73 per cent in February 2022, as against 27.58 per cent in December 2021.
Similarly, the average prime lending rate rose by 0.10 percentage points to 11.78 per cent in February against 11.68 per cent in December.
On the other hand, the average deposit rate in banks fell by 0.47 percentage points to 4.6 per cent in February from 5.07 per cent in December.
The data further shows that the average interest rate on one-month deposit fell by 0.27 percentage points to 3.46 per cent in February from 3.73 per cent in December. Similarly, average interest rate on 3-months deposits fell by 0.46 percentage points to 4.48 per cent in February from 4.49 per cent in December.
