Banking

Nigerian banks attract more deposits having raised interest rates by 140%

Nigerian banks attract more deposits having raised interest rates by 140%

Nigerian banks seem to have awaken interest in customer deposits following their recent approach to adopt deposit rates increase by 140 percent in the first half of the year.

While the trend continues, it appears not to be unconnected with the response to the raising of interest rate on one year treasury bills to 10.1 percent Central Bank of Nigeria’s in H1 21. The treasury bills rate was 5.74 percent by the end of 2020.

However, the regulatory bank’s action had renewed interest in preference for investment in treasury bills which became more attractive than putting money in bank deposits.

This significantly limits banks’ ability to attract fixed deposits from customers, which led to moderate or lackadaisical growth in customer funds deposit in the first quarter.

Following the financial statements of 13 banks listed on the Nigerian Stock Exchange (NSE), deposits grew marginally by 6.6 percent to N34.13 trillion at the end of June 2021 from N32.02 trillion at the end of December last year.

This was a development that forced most banks to raise their deposit rates to attract deposit growth in the second quarter of 21.

In line with the recent report on deposit and lending rates in the banking industry published by the CBN, average deposit rates of the top 13 banks rose by 140 percent 5.3 percent on Friday September 17th from 2.2 percent at the end of December last year.

The banks in question are, Ecobank, First bank, Access bank, FCMB, Fidelity bank, GTBank, Stanbic IBTC, Sterling bank, UBA, Union bank, Unity bank, Wema bank and Zenith bank.

Zenith bank led the increase in deposit rate seeing its average deposit rate up by 2,450 percent to 4.75 percent in September from 0.22% in December.

Zenith bank came third in customer deposit growth with 8.1 percent growth in deposit to 5.77 trillion at the end of June from N5.34 trillion at the end of December.

GTBank came second, raising its deposit rates by 457 percent to 5.57 percent in September from 1.0 percent in December. For growth in customer’s deposit, GTBank came ninth with 4.0 percent growth in deposit to N3.63 trillion at the end of June from N3.51 trillion at the end of December.

Fidelity bank came 2nd in deposit with 16.5% growth to N1.98 trillion at the end of June from N1.7 trillion at the end of December.

Fidelity came 3rd, Access bank came 4th.

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