Lending-savings rate gap narrows by 1.62% in July

In a notable development, the disparity between the maximum lending rate and savings deposit rate within the Nigerian banking landscape dropped by 1.62% during July.

For June, the difference between the lending rate and savings deposit rate stood at 23.76%, this figure dropped to 22.14% in July, marking a 1.62% drop.

According to data sourced from the Central Bank of Nigeria (CBN), banks’ savings deposit rate saw a marginal uptick, ascending to 5.24% in July from 5.18% in the preceding month of June, and 5.13% recorded in May.

Conversely, figures culled from the apex bank’s money market indicators disclosed that the maximum lending rate experienced a minor dip, sliding to 27.38% in July from its previous position of 28.94% in June.

The CBN also provided insights into the prime lending rate, which exhibited a modest ascent to 13.98% during July, as opposed to the 13.85% observed in June.

Deposit rate for the last 12 months

Furthermore, the report shed light on a series of deposit rates for varying timeframes. Specifically, the 12-month, six-month, three-month, and one-month deposit rates and the savings deposit rate for July were reported at 7.83%, 8.54%, 7.68%, 7.15%, and 5.18% respectively.

Key decisions of the CBN leadership

During the most recent Monetary Policy Committee meeting held in July, the Acting Governor of the CBN, Folashodun Shonubi, shared key decisions.

These included a 25-basis point increase in the Monetary Policy Rate (MPR) from 18.50% to 18.75%, adjustments in the asymmetric corridor to +100/-300 basis points around the MPR, maintaining the Cash Reserve Ratio (CRR) at 32.5%, and retaining the Liquidity Ratio at 30%.

Shonubi highlighted the committee’s cautious approach to policy decisions, underscoring the collective recognition of the necessity to bolster investments as a means to drive output growth recovery.

The decision to implement a moderate rate hike was framed as a strategy to anchor inflation expectations, narrow the gap of negative real interest rates, and ultimately enhance investor confidence.

What this means

The latest data paints a picture of the banking sector’s evolving landscape, marked by shifts in lending and savings rates, as well as strategic policy adjustments to foster economic stability and growth.