Nigerian banks have yet to raise their deposit rates, more than a month after the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR), the benchmark interest rate.
The CBN had on May 24 increased the MPR by 150 basis points to 13 percent, for the first time in six years.
Deposit money banks are expected to increase their customers’ deposit rate to a minimum of 10 percent of the monetary policy rate.
BusinessDay’s findings show that only two banks have reviewed their customers’ deposit rates.
“The banks want to take undue advantage of customers by not increasing their rates, otherwise they should have done so immediately after the CBN raised MPR,” Uju Ogubunka, president of Bank Customers Association of Nigeria, said.
Ogubunka said the development could discourage savings and pull a plug on financial inclusion.
But Judge Monye, executive director of Heritage Bank, said what the banks are doing currently is assets reprising.
Read also: Here is why savings rates are rising slowly
Fidelity Bank increased its deposit rate to 1.3 percent per annum from 1.15 percent previously.
“In line with the recent adjustment of the Monetary Policy Rate from 11.5 percent to 13 percent by the Central Bank of Nigeria, please be informed that effective June 10, 2022 the following interest rate would apply on our savings account products,” Fidelity Bank said in a notice to its customers.
United Bank for Africa has updated its savings rate offering on its website. The bank offers 2.75 percent interest rate for savings ranging from N50,000 to N90,999, and 3.5 percent for N250 million.
“Increase in savings rate will help to encourage deposit, and will increase the amount of funds that is available for lending to the real sector,” said Ayodele Akinwunmi, relationship manager at FSDH Merchant Bank.
“The increase in the savings rate was brought about as a result of the increase in the Monetary Policy Rate from 11.5 percent to 13 percent. Recall that the saving rate that banks charge to customers is tied to the MPR,” he said.
Taiwo Oyedele, head of tax and corporate advisory services at PwC, said given the rising inflation and interest rates locally and across the world, it is inevitable for banks to raise the interest rates on savings just as they have raised rates on their lending following the recent 150-basis-points upward adjustment to the MPR.
“Yields are on the rise generally, so the increase in interest rate on savings is perhaps more to help the banks keep the deposits they currently have than it is to attract more deposits,” he said.
As of April 2022, seven banks were offering between 0.75 percent and 4.20 percent average interest on deposits while 14 lenders offered 1.15 percent, data from the CBN’s website showed.
“In furtherance of the transparency and full disclosure stance of the Central Bank of Nigeria, the Monetary Policy Committee has decided that henceforth the lending rates obtainable in all Deposit Money Banks be made public to guide business decisions,” the banking sector regulator said.
The rates published on April 22, 2022 showed that the seven banks were Heritage Bank, which offers 4.20 percent interest rate on savings; Citi Bank (1.20 percent), Providus Bank (0.75 percent), Standard Chartered Bank (2.16 percent), SunTrust Bank (4.10 percent), Union Bank (0.85 percent), and Unity Bank (1.90 percent).
Other banks that offer 1.15 percent interest on deposits include Access Bank, Ecobank, FCMB, GTBank, Globus Bank, Keystone Bank, Polaris Bank, Stanbic IBTC, Sterling Bank, Titan Trust Bank, Wema Bank and Zenith Bank.
The CBN had on September 1, 2020, reviewed the banks’ minimum savings deposit rate to a minimum of 10 percent of the MPR subject to negotiation of the rates with customers.
