Banks increase loan rates after CBN’s fourth straight hike

Deposit Money Banks (DMBs) have started reviewing upwards the interest rates on loans given to customers, in response to the fourth straight hike in the benchmark interest rate by the Central Bank of Nigeria (CBN).

The CBN on Tuesday after the two-day Monetary Policy Committee (MPC) meeting in Abuja, raised Its monetary policy rate (MPR) by 50 basis points to 26.75 percent from 26.25 percent in May 2024.

Read also: Higher interest rates signal end to cheap consumer loans

While other banks are expected to follow suit, Guaranty Trust Bank (GTBank) has announced an upward revision of interest rates on its MaxPlus loan facilities, effective August 6, 2024. The decision comes in response to prevailing conditions in the money market, which have seen a general rise in interest rates.

In a statement released by the bank, GTBank highlighted that the new interest rate on MaxPlus loan facilities will be adjusted from the existing 28.5 percent to 29 percent. The bank attributes this adjustment to the current financial climate and the necessity to align with market trends.

Customers with existing MaxPlus loan facilities are advised to take note of the revised rates and adjust their financial plans accordingly.

GTBank remains committed to providing its customers with competitive and sustainable financial solutions, despite the challenges posed by the fluctuating money market.

For more information, customers are encouraged to contact their relationship managers or visit the nearest GTBank branch.

Bismarck Rewane, managing director/CEO of Financial Derivatives Company Limited, said the CBN’s recent decision to adjust the asymmetric corridor around the Monetary Policy Rate (MPR) to +500/-100 basis points would significantly impact borrowing costs.

Uche Uwaleke, special adviser to the Chairman of the Senate Committee on Banking, Insurance, and other Financial Institutions, said with an MPR of 26.75 percent, banks will now get loans from the CBN at 31.75 percent while they will be remunerated for their excess deposits at 25.75 percent. This will further squeeze liquidity from the banking system and jerk up cost of credit with adverse consequences on output and the equities market.