Loan Borrowers to Pay More as Zenith, GTBank, Others Hike Lending Rates after CBN Action
- Nigerian borrowers are going to pay more interest on their loans as commercial banks have increased interest rates on loans
- Zenith Bank and Guaranty Trust Bank announced a 30% increase in interest charged on loans
- The development comes after the Central Bank of Nigeria (CBN) hiked the Monetary Policy Rate (MPR) by 22.75%
Legit.ng’s Pascal Oparada has reported Tech, Energy, Stocks, Investment and the Economy for over a decade.
Nigerian banks have begun increasing their lending rates after the Monetary Policy Rate (MPR) hike by the Central Bank of Nigeria (CBN).
Analysts believe the development will see existing loan facilities paying more due to the record hike by the CBN.
Source: UGC
Zenith, GTBank announce new rates
Nigeria’s largest bank by market capitalisation, Zenith Bank, increased its rate by 500 basis points to 30% from 25%, effective March 12, 2024.
The bank told its customers in a notice that it is constrained to review the interest rate on their credit facilities starting from the announced date.
Zenith Bank said:
“We crave your understanding as we continue to monitor the Market and update you accordingly."
Another commercial bank, GT Bank, also revised its lending rate by 500 basis points in response to the CBN MPR hike.
Financial experts have said more banks in Nigeria will follow suit in the coming days.
The MPR is a benchmark for lending by the bank, and the CBN sets it, meaning banks will have to increase rates when the MPR is raised and review them downwards when it is reduced,
CBN increases MPR to stabilise the economy
The apex bank raised the country's MPR by 400 basis points to 22.75% at its last MPC meeting to tighten liquidity in the economy and stabilise the foreign exchange rate.
CBN also adjusted the asymmetric corridor around the MPR to +100/-700 from +100/-300 basis points and raised the Cash Reserve Ratio from 32.5% to 45.0%, retaining the Liquidity Ratio at 30%.
The CBN recently mopped up over N5 trillion to control excess liquidity in the system.
More businesses and borrowers to shun loans
Zenith Bank said the hikes continued to impact the cost of business in the financial services industry.
BusinessDay reports that higher lending rates mean individuals and businesses will experience higher costs when borrowing from banks.
Analysts believe the development could lead to reduced borrowing and investment activities as borrowers may find it more costly to take out loans for various projects.
The hike in MPR is also meant to cushion the effects of inflation on savings, which is currently standing at about 29.90%, according to the January inflation figures released by the National Bureau of Statistics.
It may also lead to reduced disposable income by consumers and dampen consumer spending.
Access Bank sends message to customers on changes
Legit.ng reported that one of Nigeria's most capitalised commercial banks, Access Bank, has sent a crucial message to its customers on essential changes to interest rates on savings accounts.
In an email to customers seen by Legit.ng, the bank stated that the differences were due to changes in Monetary Policy Rates (MPR) by the Central Bank of Nigeria (CBN).
The development comes as the CBN is expected to release new interest rates this month, which analysts have said will be higher following soaring inflation in Nigeria.
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Source: Legit.ng
