Several commercial banks in Nigeria have raised their interest rates on deposits to an average of 7.4 percent as of May 2024. This increase comes after the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) to 24.75 percent from 22.75 percent in February 2024.
According to data released by the CBN, this adjustment marks a notable rise from the previous average deposit interest rate of 5.63 percent recorded in February 2024. The latest figures, published by the CBN, show that 18 deposit money banks (DMBs) are now offering their customers 7.4 percent interest on their deposits.
The banks are Access, Ecobank, Fidelity, First Bank of Nigeria, GTBank, Heritage, Keystone, Optimus, Polaris, Premium Trust, Providus, Standard Chartered, and Sterling Bank.
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Others include Titan TrustBank, United Bank for Africa (UBA), Unity Bank, Wema Bank and Zenith Bank. Other banks offer lower interest rates on savings. These include FCMB, which offers 1.2 percent interest rate, Globus Bank 1.4 percent, Signature Bank 6.63 percent, Stanbic IBTC 2.48 percent, SunTrust Bank 4.2 percent and Union Bank 4.95 percent.
The increase in deposit rates is a direct response to the CBN’s recent policy measures aimed at tightening monetary conditions to address inflationary pressures. The CBN’s move to raise the MPR has prompted banks to offer more attractive rates to depositors, reflecting the ongoing adjustments in the financial market.
For depositors, this means higher returns on their savings, making it a favourable time to invest in deposit accounts with participating banks. The list of these banks, as detailed by the CBN’s data, underscores the competitive landscape in Nigeria’s banking sector as institutions vie to attract more deposits.
Ayodele Akinwunmi, relationship manager corporate banking at FSDH Merchant Bank, said the savings rate is usually a minimum of 30 percent of the Monetary Policy Rate. He said it is not applicable if a customer makes more than four withdrawals from his account in a month.
Ayokunle Olubunmi, head, financial institutions ratings at Agusto Consulting, a pan-African credit rating agency, said in 2024, interest rates are going to go up and that there is going to be a demand from depositors for higher rates.
From 0.00 in June 2006, the CBN has raised its monetary policy stance to 24.75 percent as of March 2024, data from the apex bank showed.
During 294th meeting of the Monetary Policy Committee (MPC) held in Mach 25-26, 2024, Olayemi Cardoso, governor of the CBN, voted to increase MPR by 200 basis points from 22.75 per cent to 24.75 per cent, to adjust the asymmetric corridor from +100/-700 to +100/-300 around the MPR, increase Cash Reserve Requirement (CRR) for merchant banks to 14.0 per cent from 10.0 per cent, retain CRR for deposit money banks at 45 per cent, and retain liquidity ratio at 30 per cent.
“It is my view that the argument for a further hike in MPR to complement the rate hike at the last MPC meeting is valid. This increase in the MPR will help curb inflationary pressure and reduce the negative real policy rate. Most importantly it will further strengthen the anti-inflationary signal of the Central Bank of Nigeria as we transition to an inflation-targeting regime.
“This, however, is predicated on the assumption that sustained fiscal and monetary policy coordination will result in policies that address the multitude of structural factors required for long-term investment and economic growth in Nigeria,” Cardoso said in his personal statement.
