Nigerian banks may have begun repricing loans and deposit products following the Central Bank of Nigeria’s (CBN) decision to reduce the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent per annum.

The 350-basis-point reduction was announced after the CBN’s last Monetary Policy Committee (MPC) meeting, held on September 21 and 22, 2026.

The new benchmark took effect from September 22, 2026, with banks expected to adjust products linked to the MPR accordingly.

It was learnt that some of the deposit money banks have put machineries in motion to comply with the new rate.

Yesterday, Stanbic IBTC Bank informed its customers that all product offerings linked to the MPR, including loans and deposit rates, will be repriced downwards following the CBN’s decision.

In a customer communication, the bank said the repricing would take effect from September 22, 2026, in line with the reduction in the benchmark rate.

“The Central Bank of Nigeria (CBN) has recently reviewed the Monetary Policy Rate (MPR) downwards from 26.5% per annum to 23.00% per annum,” the bank stated.

“Consequently, all product offerings linked to MPR (including loans and deposit rates) will be repriced downwards in line with the decline in MPR effective from 22 September 2026.”

Analysts say the adjustment could have implications for both borrowers and depositors, although the actual impact will depend on the terms governing individual financial products.

For customers with MPR-linked loans, the reduction could result in lower applicable interest charges and, depending on the structure of the facility, reduced repayment costs.

At the same time, customers with variable-rate loans may particularly see changes where their interest rates are directly tied to the benchmark.

On the other hand, customers holding MPR-linked deposit products could experience lower interest returns following the downward adjustment. The extent and timing of any change will depend on the specific product and its pricing terms.

The latest MPR reduction represents a significant shift in the CBN’s monetary policy stance. The benchmark had stood at 26.5 per cent before the September decision, following previous adjustments aimed at influencing borrowing costs, liquidity and broader economic conditions.

The repricing by banks is part of the transmission of monetary policy through the financial system. Changes in the benchmark rate can influence the rates at which financial institutions price loans, deposits and other products.

What it means?

Providing an insight into the development, a financial analyst, Ayokunle Olubunmi in a chat with Daily Trust said the impact of the rate cut would depend largely on whether individual loan facilities are directly linked to the MPR.

“For those loans that are directly linked to the MPR, there will automatically be a reduction in the interest rate following the reduction in the MPR,” the analyst who is the Head of Financial Institutions’ Rating at Agusto and Co, said.

The analyst explained that some loan agreements are structured around the benchmark rate, with customers paying a specified margin above the MPR.

“You might have some loans where the interest rate is directly linked to the MPR. For example, the bank could tell you that the interest rate is MPR plus five per cent or MPR plus seven per cent,” he said.

However, the expert noted that the reduction may not automatically apply to loans whose pricing is not directly tied to the benchmark.

“For those loans that are not directly linked to the MPR, the offer letter may simply state that the interest rate is, for example, 20 per cent, but that it may change based on the prevailing interest rate,” the analyst said.

“In such cases, most banks might actually be reluctant to reduce the interest rates immediately. That reduction may not be automatic.”

The analyst, however, said increasing competition among banks could encourage lenders to reduce rates, particularly in the retail market.

“Given that a lot of corporates can raise money from other sources, there has been a gradual reduction in loan uptake by corporates. As a result, there is intense competition among the banks in the retail segment,” the analyst said.

The analyst added that the prevailing yield environment could decline further, potentially compressing banks’ margins.

“What we are also seeing is that the prevailing yield environment is likely to decline, and this could further compress the margins of the banks,” he stated.

Another factor is the recent capital-raising activities by several banks, which have increased the pressure to deploy fresh capital profitably.

“Many of the banks have recently completed capital-raising exercises. Their focus now is on how to generate income,” the analyst said. (Daily Trust)