Bank Loans interest in Nigeria has been raised to 30 per cent based on recent report.

According to the Central Bank of Nigeria (CBN), Banks’ loans to customers were priced between 15.01 per cent and 30.70 per cent in the first quarter of 2020.

The lenders however refused to pay more interest on customers’ deposits within the period, the CBN’s economic report for the quarter showed.

Release during the weekend, the report indicated that average prime and maximum lending rates rose by 0.02 percentage point and 0.47 percentage point, respectively, to 15.01 per cent and 30.70 per cent, in the review period, above their levels in the preceding quarter.

The average prime and maximum lending rates stood at 29.98 per cent and 14.99 per cent respectively in the fourth quarter of 2019.

The rising lending rates, analysts said, have led to upward pressure on market rates and cost of production for the manufacturing sector. The CBN observed despite the rise in lending rates, banks were paying less deposit interest to depositors.

The average term deposit rate fell by 1.46 percentage points to 6.27 per cent. The spread between the average term deposit and average maximum lending rates widened by 1.93 percentage points to 24.43 percentage points.

The spread gap indicated that customers are paying 24.43 per cent higher fee than they are getting from banks. However, the Monetary Policy Rate (MPR), which is the benchmark interest rate at which the CBN lends to the commercial banks, is currently at 12.5 per cent.

Despite the rise in lending rates, CBN Governor, Godwin Emefiele said aggregate domestic credit (net) grew by 5.16 per cent in June 2020 compared with 7.47 per cent in May 2020.

The total gross credit in Nigeria rose by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020. These credits were largely recorded in manufacturing, consumer credit, general commerce, and information and communication and agriculture, which are productive sectors of the economy.

The CBN said the rise in interest rate reflected the liquidity condition in the system, explains that the inflation rate of 12.26 per cent for March 2020 resulted in negative real rates for deposits, but positive real rates for the prime and maximum lending rates.

“With the headline inflation at 12.26 per cent in March 2020, all deposit rates remained negative in real terms, while prime and maximum lending rates were positive in real term,” the report said.

Continuing, the report showed that money market rates were generally stable and moved in tandem with the level of liquidity in the first quarter of 2020. Daily interbank call and Open Buy Back (OBB)-discountable securities traded in the Nigerian Inter- Bank financial transactions- rates ranged from five per cent to 7.24 per cent and 1.77 per cent to 21.02 per cent, respectively.

Average interbank and OBB rates were 10.68 per cent and 12.08 per cent, respectively. Other rates, such as the 7-day and 30-day The Nigerian Inter-bank Offered Rate (NIBOR), traded at averages of 11.74 per cent and 9.81 percent, respectively.