Nigerian Banks intensify competition for deposits, raise interest rates by 140%

The development appears to be a response to the raising of interest rate on one-year treasury bills (TBs) to 10.1 per cent Central Bank of Nigeria’s (CBN) in H1’21. The TB rate was 5.74 per cent at the end of last year. 

The apex bank’s action had sparked renewed preference for investment in treasury bills which became more attractive than putting money in bank deposits. 

Consequently, the development constrained banks’ ability to attract fixed deposits from customers, resulting  in the moderate growth in customers’ deposits  in the H1’21. According to the financial statements of the 13 banks listed on the Nigerian Stock Exchange (NSE), customers’ deposits grew marginally by  6.6 per cent to N34.13 trillion at the end of June this year from N32.02 trillion at the end of December last year. 

This development prompted most of the banks to jerk up the deposit rates so as to enhance deposit growth in the second half of the year (H2’21).

According to the latest 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 per cent to 5.3 per cent on Friday September 17th from 2.2 per cent at the end of December last year. 

The 13 banks are Access Bank, Ecobank, FirstBank, FCMB, Fidelity Bank, GTBank, Stanbic IBTC, Sterling Bank, UBA, Union Bank, Unity Bank, Wema Bank and Zenith Bank. 

Leading the increase in deposit rates is Zenith Bank which jerked up its average deposit rate by 2,450 per cent to 4.75 per cent in September from 0.22 per cent in December. 

In terms of growth in customers’ deposit, Zenith Bank came third, with 8.1 per cent growth in deposit to N5.77 trillion at the end of June from N5.34 trillion at the end of December.

GTBank came second, raising its deposit rates by 457 per cent to 5.57 per cent in September from 1.0 per cent in December.  In terms of growth in customers’ deposit, GTBank came ninth with 4.0 per cent growth in deposit to N3.63 trillion at the end of June from N3.51 trillion at the end of December.

In the third position is Fidelity Bank which raised the deposit rate by 450 per cent to 5.5 per cent from 1.0 per cent during the nine months period. 

In terms of growth in customers’ deposits, Fidelity bank came 2nd with 16.5 per cent growth in deposit to N1.98 trillion at the end of June from N1.7 trillion at the end of December.

Following the trend above Access Bank which raised its average deposit rate to 9.52 per cent in September from 1.93 per cent in December, indicating a 393 per cent increase took fourth position. Wema Bank on its part raised its average deposit rate to 4.94 per cent from 1.47 per cent, indicating a 236 per cent increase during the nine months period. 

In terms of growth in customers’ deposits, Wema Bank occupied the 11th position with 0.05 per cent growth in deposit to N808.9 billion at the end of June from N804.9 billion at the end of December.

Stanbic IBTC came 6th as it raised its deposit rate to 5.52 per cent in September from 1.86 per cent in December, indicating a 197 per cent increase. 

Stanbic IBTC recorded the highest growth in customers’ deposits with 16.9    per cent growth in deposit to N958.4 billion at the end of June from N819.9 billion at the end of December.

Ecobank occupied the 7th position. The bank raised its deposit rate to 9.67 per cent from 3.5 per cent, indicating 176 per cent during the nine months period. 

Union Bank also intensified its quest for customers’ deposits by raising its average deposit rate to 8.28 per cent from 4.28 per cent, indicating a 93 per cent increase during the nine months period. 

In terms of growth in customers’ deposits, Union Bank occupied the 10th position with 3.6 per cent growth in deposit to N1.17 trillion at the end of June from N1.13 trillion at the end of December.

Sterling Bank, on its part, raised its deposit rates to 9.77 per cent in January from 7.15 per cent in December, indicating a 37 per cent increase. 

In terms of growth in customers’ deposits, Sterling Bank occupied the eight position with 6.7  per cent growth in deposit to N1.02 trillion at the end of June from N951 billion at the end of December.

Despite slashing average deposit rate by 33 per cent to 1.0 per cent in September from 1.5 per cent in December, UBA recorded the fourth highest growth in customers’ deposit, with 7.4 per cent growth in deposit to N6.09 trillion at the end of June from N5.68 trillion at the end of December.

Though FBN Holdco retained its average deposit rates at 0.15 per cent during the nine months period, the bank group was able to record 4.1 per cent growth in customers’ deposits to N5.1 trillion in June from N4.89 trillion at the end of December.