CBN Headquarters Abuja
Nigerian banks reported stronger interest income in the first quarter of 2026 as lending rates stayed near record levels and the Central Bank of Nigeria (CBN) kept monetary policy tight.
The average maximum lending rate held steady at 28.20% in March 2026, unchanged from February. The rate marked the highest level on record.
Similarly, the average prime lending rate remained flat at 19.29% for the second month running in March, after reaching 19.54% in January, its highest point in nearly two decades. The prime rate reflects lending to the most creditworthy customers, while the maximum rate shows the highest rate banks can charge borrowers.
The CBN Monetary Policy Committee voted unanimously at its 305th meeting to keep key monetary parameters unchanged, allowing previous tightening measures to work through the economy.
CBN Governor, Olayemi Cardoso said the committee acknowledged a marginal rise in inflation but viewed it as driven largely by temporary external shocks.
“The committee’s decisions were anchored on a comprehensive assessment of risks to the outlook,” Cardoso said, adding that the current policy environment remained capable of supporting disinflation over time.
Analysts linked the growth in banks’ interest income to the prevailing macroeconomic conditions and the high-interest-rate environment.
Fitch Ratings said the CBN’s tight monetary stance was necessary to contain inflationary pressures and stabilise the economy. The agency warned that rapid credit expansion and money supply growth still suggested a relatively loose monetary environment. It noted that real interest rates remained negative, limiting foreign portfolio inflows.
Investment banker and stockbroker Tajudeen Olayinka said the high-interest-rate regime was designed to attract foreign portfolio investment, strengthen foreign reserves, and stabilise the naira. He said the repricing of securities across financial markets, including banks’ loans and advances, explained the strong interest income reported by lenders.
Olayinka cautioned that the policy may be difficult to sustain long term due to rising debt-servicing costs and their inflationary impact.
“The huge debt service burden on the government and the pressure it exerts on inflation may ultimately raise sustainability concerns,” he said.
