NAIRAMETRICS
Some economists have expressed concerns about Nigerian banks’ large net interest margin, alluding to the trend as making access to finance beyond the reach of small businesses.
Net interest margin is the difference between the lending rate and the deposit rate. The lending rate is the rate charged by banks on loans to the private sector and the deposit interest rate is the rate offered by commercial banks on three-month deposits.
Speaking, the chief executive of the Center for the Promotion of Private Enterprise, Dr. Muda Yusuf, noted that the spread between deposits and lending rates are sometimes as high as 20%, which is one of the highest globally.
He also said the tenure of funds in the banking system is extremely short. “Over 80% of funds are of one year tenure or less, which explains the high level of assets and liability tenure mismatch in the banking system,” he said.
