CBN reset rates by 350bps, yet market is still offering banks yields above 17%
When the Central Bank of Nigeria cut its benchmark interest rate by 350 basis points in September, one of the immediate concerns for bank investors was that the lower-rate environment would eventually reduce what banks earn from loans, government securities and surplus cash placed with the CBN. The post CBN reset rates by 350bps, yet market is still offering banks yields above 17% appeared first…
The Central Bank of Nigeria (CBN) recently cut its benchmark interest rate by 350 basis points in September, but banks continue to offer yields above 17%. This discrepancy raises questions about how lower rates will impact bank interest income. Despite the CBN lowering the Monetary Policy Rate from 26.5% to 23% and recalibrating standing facilities, banks can still earn over 17% on certain CBN and government securities, while overnight liquidity with the apex bank yields 20%.
The latest Open Market Operations auction indicates that fixed-income yields may not fall as sharply as initially expected, potentially cushioning the impact of the rate cut on bank earnings.
Brief written by urgent.news from Nairametrics's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
