Commercial banks in Nigeria significantly increased their deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF), recording a 395.8% year-on-year (YoY) surge to N198.08 trillion in the first ten months of 2025, up from N39.95 trillion in the same period of 2024. This sharp rise points to substantial excess liquidity within the banking sector, according to recent data.
A quarterly breakdown reveals a 158.4% increase in SDF deposits from N19.22 trillion in the first quarter of 2025 (Q1’25) to N49.68 trillion in Q2’25. The upward trend continued into Q3’25, with deposits reaching N77.23 trillion, a 55.4% rise. October 2025 saw the highest monthly deposit at N51.95 trillion, up 2.4% from N50.73 trillion in September.
The robust growth in SDF deposits is largely attributed to the CBN’s adoption of a single-tier remuneration structure for the facility in 2024. Under this framework, the CBN accepts deposits from banks at an interest rate of 100 basis points below the Monetary Policy Rate (MPR), incentivizing banks to park excess funds with the regulator.
In contrast, banks’ borrowings through the CBN’s Standing Lending Facility (SLF) and Repurchase (Repo) arrangements declined significantly. Total borrowings via the SLF dropped 22.2% YoY to N70.37 trillion in the first ten months of 2025, down from N90.48 trillion in 2024. However, October 2025 saw a notable spike in borrowings, soaring 208.9% to N995.5 billion from a low of N322 million in September, the smallest amount borrowed during the period.
The CBN operates two lending windows for banks: the SLF, which provides funds at an interest rate 500 basis points above the MPR, and Repo lending, where the CBN purchases banks’ securities with an agreement to sell them back at a higher price on a specified date. The divergence between rising deposits and declining borrowings underscores the banking system’s liquidity dynamics and the CBN’s efforts to manage monetary policy effectively.
