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Lending-savings rate gap narrowed by 1.62% in July

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The difference between the loan rate and the rate on savings deposits was 23.76% in June; however, it fell to 22.14% in July, representing a 1.62% decrease.

Data from the Central Bank of Nigeria (CBN) show that the rate of savings deposits in banks increased slightly in July, rising to 5.24% from 5.18% in June and 5.13% in May.

But the maximum loan rate suffered a slight decline, falling to 27.38% in July from its prior position of 28.94% in June, according to data derived from the apex bank’s money market indicators.

The CBN also shared information about the prime lending rate, which increased slightly in July to 13.98% from 13.85% in June.

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Deposit rate over the previous year

The report also provided information on various deposit rates for various periods.

The rates for deposits made for 12 months, six months, three months, and one month, and the rate for savings deposits were published for July as 7.83%, 8.54%, 7.68%, 7.15%, and 5.18%, respectively.

Important choices made by CBN leadership

The Acting Governor of the CBN, Folashodun Shonubi, discussed significant decisions at the most recent Monetary Policy Committee meeting in July.

These included keeping the Liquidity Ratio at 30% and maintaining the Cash Reserve Ratio (CRR) at 32.5% while raising the Monetary Policy Rate (MPR) by 25 basis points, from 18.50% to 18.75%. The asymmetric corridor was also adjusted to +100/-300 basis points around the MPR.

Shonubi emphasized the committee’s cautious approach to policy selection, highlighting the widespread acceptance of the need to boost investments to trigger a recovery in output growth.

A moderate rate hike was decided to stabilize inflation expectations, reduce the spread of negative real interest rates, and eventually boost investor confidence.

What it implies

The most recent data illustrates how the banking industry is changing, with changes in lending and saving rates and tactical policy changes to promote economic stability and growth.

 

 

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