Banks increase loan rates after CBN’s fourth straight hike

Nigerian banks are reviewing interest on loans following the hike in rates of money market instruments

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.

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.

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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.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.