Nigerian Banks Raise Lending Rates Despite Central Bank Cuts

Commercial banks in Nigeria have increased average prime lending rates across eight of 11 key economic sectors, including manufacturing, construction, and agriculture. This trend persists despite the Central Bank of Nigeria reducing the Monetary Policy Rate by 450 basis points to 23 per cent between September 2025 and September 2026.

While average deposit rates and maximum lending rates have declined, borrowing costs for preferred corporate borrowers in productive sectors have risen. Analysts from Comercio Partners and Quest Merchant Bank attribute this divergence to varying bank pricing strategies and uneven monetary policy transmission. Tunde Abioye of Quest Merchant Bank warned that these elevated rates could moderate the appetite for new borrowing.

In a separate development in India, lenders are responding to a 25 basis point repo rate hike by the Reserve Bank of India. Public sector banks, such as Bank of Baroda, have raised rates, while private lenders have not yet implemented broad-based increases.