Commercial banks’ deposits with the Central Bank of Nigeria (CBN) skyrocketed by 568.7% year-on-year, climbing to N146.13 trillion in the first nine months of 2025, compared to N21.85 trillion in the same period of 2024. This significant increase highlights a high level of liquidity within Nigeria’s banking sector.
Data reveals a sharp quarterly uptrend in deposits made through the CBN’s Standing Deposit Facility (SDF). In Q2 2025, deposits surged by 158.4% to N49.68 trillion from N19.22 trillion in Q1 2025. The momentum continued into Q3, with deposits reaching N77.23 trillion, a 55.4% increase from the previous quarter. September 2025 recorded the highest monthly deposit at N50.73 trillion.
The sustained growth in SDF deposits is attributed to excess liquidity in the banking system and the CBN’s adoption of a single-tier remuneration structure for the SDF in 2024. Under this framework, the CBN accepts deposits from banks at an interest rate of the Monetary Policy Rate (MPR) minus 100 basis points.
In a recent development, the CBN’s Monetary Policy Committee reduced the MPR by 50 basis points to 27% last week, signaling a shift in monetary policy. The CBN facilitates short-term lending to banks through two mechanisms: the Standing Lending Facility (SLF), which offers loans at 500 basis points above the MPR, and Repurchase (Repo) agreements, where the CBN purchases bank securities with a commitment to resell them at a later date, typically at a higher price.
In contrast to the deposit surge, banks’ borrowings through the SLF declined by 12.4% year-on-year, dropping to N69.37 trillion in the first nine months of 2025 from N87.09 trillion in the same period of 2024.
This trend underscores the banking sector’s strong liquidity position and the evolving dynamics of monetary policy in Nigeria.
