Banks’ deposits with CBN soar 1,578% to N53.5trn

In clear demonstration of excess liquidity in the banking system, banks’ deposit with the Central Bank of Nigeria, CBN, rose sharply by 1,578 percent year-on-year, YoY,  to N53.5 trillion in the first five months of the year (5M’25) from N3.19 trillion in the corresponding period of 2024 (5M’24).

The CBN has two short term lending windows for banks namely the   Standing Lending Facility (SLF) and Repo lending.

It lends money to banks through the SLF at interest rate of 500 basis points (bpts) above the Monetary Policy Rate (MPR), and it also lends money to banks through Repurchase (Repo) arrangement, which involves the purchase of banks’ securities with the agreement to sell back at a specific date and usually for a higher price.

On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility (SDF) and pays an interest rate of MPR minus 100  bpts .

Trend analysis showed that banks deposited N19.22 trillion in the first quarter of 2025,  Q1’25, representing 956 per cent, YoY from N1.82 trillion in Q1’24.

Banks’ deposits in the SDF rose to N16.75 trillion in April, up by 3,793 per cent, YoY  from N428.98 billion in April 2024.

In May 2025, the deposits grew by 1,761  percent, YoY  to N17.55 trillion from N943.1 billion in May 2024. 

In the five months to May (5M’25), banks’ borrowing through the SLF rose by 6.8 per cent YoY to N57.98 trillion from N54.29 trillion in 5M’24. 

In Q1’25,  banks’ borrowing through the SLF rose   by 61 per cent, YoY to N50.46 trillion from N31.25 trillion   in Q1’ 24.

In April 2025 banks borrowed N4.5 trillion, representing 170 per cent decline YoY  from  N12.17 trillion in April 2024.

In May 2025 banks’  borrowing from CBN dropped  again by 81 per cent, YoY to N2.02 trillion from N10.87 trillion. 

The strong patronage of  the SDF reflects excess liquidity in the banking system and the  effect of the CBN’s shift to a single-tier remuneration structure for the SDF last year. 

The policy stipulated that  all SDF deposits are remunerated at the Monetary Policy Rate (MPR) minus 100 basis points and with the current MPR at 27.5 per cent, this resulted in an SDF rate of 26.5 per cent.