Nigerian commercial banks have significantly boosted their deposits with the Central Bank of Nigeria (CBN), reaching N68.9 trillion in the first half of 2025 (H1’25), a remarkable 907.3% year-on-year (YoY) increase from N6.84 trillion in H1’24. This surge highlights substantial liquidity within the banking system, driven by the CBN’s monetary policies aimed at managing inflation and stabilizing the economy.
The CBN’s Standing Deposit Facility (SDF) recorded N19.22 trillion in deposits in Q1’25, a 956% YoY rise from N1.82 trillion in Q1’24, and N49.68 trillion in Q2’25, up 889.6% from N5.02 trillion in Q2’24. This growth is attributed to the CBN’s 2024 adoption of a single-tier SDF remuneration structure, which offers an attractive 26.5% interest rate (the Monetary Policy Rate of 27.5% minus 100 basis points). This policy has encouraged banks to deposit excess liquidity with the CBN, reflecting confidence in the apex bank’s liquidity management framework.
In contrast, bank borrowings through the CBN’s Standing Lending Facility (SLF) grew modestly by 3.04% YoY to N59.84 trillion in H1’25 from N58.07 trillion in H1’24. Q1’25 borrowings surged 61% to N50.46 trillion from N31.25 trillion in Q1’24, but Q2’25 saw a sharp 65% decline to N9.38 trillion from N26.82 trillion in Q2’24. The CBN also employed Open Market Operations (OMO) to mop up liquidity, selling N8.05 trillion in Treasury Bills in H1’25, a 27.3% increase from N6.32 trillion in H1’24.
Interbank lending costs have eased, with the average interest rate for collateralized Open Buy Back (OBB) lending dropping to 27% by June 2025, down from 29% in June 2024. The CBN’s high Cash Reserve Ratios—50% for commercial banks and 16% for merchant banks—continue to shape liquidity dynamics, balancing inflation control with financial stability. Analysts note that the significant deposit growth reflects banks’ cautious approach amid economic uncertainties, while the CBN’s policies aim to curb speculative pressures on the naira and maintain macroeconomic stability. This trend underscores Nigeria’s evolving financial landscape, with the CBN playing a pivotal role in managing liquidity and fostering economic resilience.
