Nigerian banks lift prime rates in 8 sectors despite CBN cuts

Nigerian banks raised average prime lending rates in 8 of 11 sectors between August 2025 and October 2026, a Vanguard analysis of CBN interest-rate schedules published Nov. 2 said.

This matters for credit conditions because the Central Bank of Nigeria cut its Monetary Policy Rate, the benchmark rate, by 450 basis points over 13 months to 23% in September 2026.

Prime rates are discounted lending rates banks quote to stronger corporate clients. Vanguard said the increases ranged from 0.33 percentage point in finance and insurance to 1.33 percentage points in agriculture, forestry and fishing.

Tunde Abioye, head of equity research at Quest Merchant Bank, told Vanguard the divergence did not necessarily mean monetary easing had stopped working. “What the data may be showing is a lagged and uneven transmission of monetary easing across sectors rather than an outright failure of the easing cycle to lower borrowing costs.”

Nnamdi Nwizu, co-founder of Comercio Partners, told Vanguard that bank-level data suggested the shift was not broad-based. “Of the 174 comparable bank-sector prime lending rate observations across the seven identified sectors, 65 recorded reductions, 79 remained unchanged and only 30 recorded increases.”

The Vanguard analysis said average prime lending rates rose to 24.77% from 23.44% in agriculture, forestry and fishing, and to 26.40% from 25.25% in construction. Manufacturing increased to 24.36% from 23.79%, while real estate moved to 26.57% from 25.82%.

Government borrowing rates increased to 26.49% from 25.52%, according to the report. Human health and social work rose to 26.96% from 26.11%, education to 26.85% from 26.33%, and finance and insurance to 25.88% from 25.55%.

The pattern was not uniform. Vanguard said prime lending rates declined by 0.66 percentage point in arts, entertainment and recreation, by 0.24 percentage point in oil and gas, and by 0.08 percentage point in information and communication.

Maximum lending rates, the highest quoted loan rates in the CBN schedules, moved in the opposite direction across most sectors. Vanguard said the average maximum rate across 10 sectors fell by 1.20 percentage points to 32.58% from 33.78%.

Deposit rates also declined over the same period, according to the report. Average savings deposit rates fell to 6.61% in October 2026 from 7.81% in August 2025, while average time-deposit rates dropped to 12.28% from 14.52%.

The CBN’s latest 350-basis-point cut followed easing inflation. Vanguard said inflation slowed to 15.39% in August 2026 from 15.93% in May 2026, then fell to 14.63% in September.

Nwizu told Vanguard it was too early to judge the full effect of the September move because the October lending-rate observation came 17 days after the CBN’s Sept. 22 adjustment. He also cited a June 2026 IMF study that found Nigerian lending rates respond more quickly to tightening than to easing.

Abioye told Vanguard that elevated rates for prime borrowers could weigh on discretionary expansion, capital expenditure and long-term investment. Nwizu said high borrowing costs could affect manufacturing, agriculture and real estate, while adding that the pressures were not uniform across the banking system.

Source: news report, Vanguard via AllAfrica, Nov. 2, 2026