Nigerian banks suffered an 11% reduction in new loans as customers resisted the upward review of maximum lending rates to 30.73 per cent.
According to the February economic report of the Central Bank of Nigeria, CBN, banks’ lending to non prime customers fell to N301.69 billion in February from N334.21 billion in January.
This development, according to the CBN, was due to the decision of banks to raise their average maximum lending rates. As a result, the average maximum lending rate of the industry rose by 3.08 percentage points to 30.73 per cent in February from 27.65 per cent in January.
The upward review of interest rate according to the CBN, discouraged bank customers from demanding for new loans. Hence new loans to non prime customers fell to N301.69 billion in February from N334.21 billion in January, translating to 11% decline.
The CBN stated: “The average term deposit rate fell by 0.33 percentage points, to 3.41 per cent, from 3.74 per cent in January 2022.
“In contrast, maximum and prime lending rates increased by 3.08 percentage points and 0.10 percentage points, to 30.73 per cent and 11.78 per cent, respectively, from 27.65 per cent and 11.68 per cent in January 2022.
“This culminated in a wider spread between maximum lending and an average term deposit rate of 27.32 percentage points in the month under review.
“The increase in maximum lending rate discouraged borrowers as they sought to ring-fence against unprecedented supply shocks, elevated prices, and higher risk premia, leading to decreased demand for a loan, as the value of transactions in the segment decreased to N301.69 billion, from N334.21 billion in the preceding month.
“However, the value of transactions in the prime lending segment increased to N23, 819.00 billion, from N23, 000.57 billion, in the preceding month.”
- Naira sinks to N615/$ as foreign investors worry over dollar scarcity
- (Video) e-Naira: Youths in dancing competition in market awareness Campaign
- Why Marriage Helps People Generate More Wealth
- How to earn 10% interest on your Small Savings
- EXCLUSIVE! 5 Locations for Quality Children’s Clothes at Good Price in Lagos
- How I turned my “small” travel blog to a 6-figure business-Female Blogpreneur
- 10 Lucrative Side Hustles to Support your Business
Leave a Reply