FBN HOLDINGS PLC A total of seven banks generated N570.43 billion from loans granted to customers in the first half (H1) of 2022 amidst the hike in the Monetary Policy Rate (MPR), THISDAY findings has revealed.
THISDAY investigation revealed that the seven banks had generated N457.95 billion in interest income from loans granted to customers in H1 2021.
The
The CBN said it increased the MPR in response to global inflationary pressures, which had continued to hurt economies around the world.
The hike was the first time in two and a half years that the policy-setting committee of the CBN will increase the MPR, which measures the interest rate.
According to analysts, the hike in MPR has resulted in a rise in the prime lending rate, and other lending rates by banks to the public.
The prime lending rate in the banking sector hit 12.29 per cent in June, the highest in 17 months, whilst the maximum lending rate dropped to 27.61 per cent in
Prime lending rates are the interest rate that commercial banks charge their most creditworthy customers, generally large corporations.
With the exclusion of
Specifically,
For ETI, its interest income from loans to customers rose by 16.3 percent to N168.7billion in H1 2022 from N145.08billion in H1 2021 as
Other banks,
Commenting on banks reaping robust interest income from customer's deposit, the Vice President,
"An increase in the MPR by the MPC will result in an increase in the price (interest rate) you pay for borrowing and vice versa.
"Banks responded to this hike by jacking up their lending rate as well. The consequence of this is that borrowers would have to pay more when they borrow from the bank."
He added that the recent decision by the MPC to hold MPR at 14 percent, implies that businesses looking to borrow from banks to fund their operations would only be able to get loan facilities from banks at rates above 14per cent
"That is, the cost of borrowing would still remain on the high side. At MPR as high as 14per cent, businesses would continue to face high cost of borrowing and limited funds for local production," he added.
Speaking, analysts at Vetiva research stated: "We expect cost pressures and FX liquidity issues to persist throughout the year and this may dampen the anticipated price stability as industry players may have to pass the increased cost to consumers.
"Also, the recent hike in interest rates by the CBN will make borrowings more expensive and may weigh on investments in the real estate sector.
"Although the rising interest rate may affect demand, the ongoing construction activities by the public and private sectors would support cement demand through the remainder of the year."
Analysts at
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