First Bank, Zenith, Others Announce New Condition to Save Money in Bank After CBN Made Changes

• An interest rate of 8.18% on deposits is now offered to customers of 19 deposit money institutions
• This is after the CBN increased the minimum interest rate to 30% after the recent MPC meeting
• Banks offering 8.18% include Access Bank, Citi Bank, Ecobank, Fidelity, First Bank of Nigeria, Keystone Bank

Legit.ng journalist Zainab Iwayemi has 5 years of experience covering the Economy, Technology, and Capital Market.

In accordance with a recent monetary policy change by the Central Bank of Nigeria (CBN), 19 deposit money banks are now providing their clients with an interest rate of 8.18 percent on their deposits.

Commercial banks are required to offer a minimum interest rate of 30% of the Monetary Policy Rate (MPR) on consumer deposits.

To counteract growing inflation, BusinessDay reported that the CBN increased the MPR, also known as the benchmark interest rate, by 50 basis points to 27.25 per cent in September 2024. Consequently, the interest rate of 8.18 per cent is equivalent to 30 per cent of this new MPR.

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The CBN's Monetary Policy Committee (MPC) required all Deposit Money Banks (DMBs) to make their lending rates publicly available in an effort to promote openness and educated financial decision-making.

19 banks changed interest rates

According to the most recent data, 19 banks have changed their deposit interest rates to the required 8.18% as of November 1, 2024.

The banks adhering to this rate include Access Bank, Citi Bank, Ecobank, Fidelity, First Bank of Nigeria, Keystone Bank, Optimus, Polaris, Premium Trust, Providus, and Signature Bank. Others are Standard Chartered Bank, Sterling Bank, TitanTrust, United Bank for Africa (UBA), Union Bank, Unity Bank, Wema Bank, and Zenith Bank.

However, five banks are providing rates that are lower than the norm. CBN data shows that Globus Bank offers a 1.40 percent savings rate, FCMB offers a 1.15 percent rate, GTBank and SunTrust Bank pay an 8 percent rate, while Stanbic IBTC offers a 2.73 percent interest.

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What the rate hike means to customers

According to FSDH Merchant Bank's Ayodele Akinwunmi, a relationship manager in corporate banking, the savings deposit rate is normally set at a minimum of 30% of the MPR. However, if customers withdraw more than four times in a month, the rate is no longer applicable.

Increased returns from higher deposit rates enable savers to see more substantial long-term growth in their funds. Analysts pointed out that higher interest rates help counteract the effects of inflation, allowing savings to hold onto more of their value in an inflationary environment where money's purchasing power decreases.

Since June 2006 when the MPR stood at 0.00, the CBN has steadily increased its MPR, reaching 27.25 per cent by September 2024. This trend was underscored during the 297th MPC meeting held on September 23–24, 2024.

The CBN governor, Olayemi Cardoso, voted during the meeting to increase the MPR from 26.75 per cent to 27.25 per cent, a 50 basis point increase.

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He also supported keeping the liquidity ratio at 30 per cent, raising the cash reserve requirement (CRR) for merchant banks by 200 basis points to 16 per cent, raising the CRR for DMBs by 500 basis points to 50 per cent, and keeping the asymmetric corridor around the MPR at -100/+500 basis points.

Despite the recent slowdown in headline inflation and worries about restrictive monetary policies impeding economic recovery, Governor Cardoso contended that it would be premature to hold or lower the policy rate.

“In my judgment, while previous hikes have effectively altered the inflation trajectory, maintaining a tight stance is necessary to safeguard these gains against potential reversals,” he stated.

CBN releases banks' interest rates

Legit.ng reported that the Nigerian banking industry pays its customers an average interest rate of 7.88% on savings in their bank accounts.

The figures, published by the Central Bank of Nigeria, varied across banks, with the Coronation Bank offering the highest rate.

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Checks by Legit.ng showed that the lowest rate banks offered customers was 1.15% interest on deposits as of November 1, 2024.

Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng

Source: Legit.ng