Banks Daily Surplus Funds With CBN Rise to N1.36tn

Nigerian banks significantly increased their deposits of surplus funds with the Central Bank of Nigeria (CBN) in 2025, a trend that coincided with a decrease in their need for short-term borrowing from the apex bank. This shift indicates a general improvement in liquidity within the banking sector.

The CBN’s 2025 Annual Report reveals a substantial rise in daily average placements by commercial banks into the Standing Deposit Facility (SDF). These deposits climbed to ₦1.36 trillion across 247 transaction days in 2025, a nearly ninefold increase from the ₦153.87 billion observed over 248 transaction days in 2024. Consequently, the average daily interest paid by the CBN on these deposits escalated to ₦1.36 billion from ₦150 million in the preceding year.

Conversely, the demand for short-term liquidity support from the CBN’s Standing Lending Facility (SLF), utilized by eligible banks, diminished during the reporting period. The report indicates that average daily requests for this facility, including conversions from the Intraday Liquidity Facility, fell to ₦426.90 billion across 162 transaction days in 2025, down from ₦541.13 billion recorded over 240 transaction days in 2024. The average daily interest charged on these lending operations also saw a reduction, decreasing to ₦550 million from ₦660 million in 2024.

The CBN attributed this shift to enhanced liquidity conditions in the interbank market, noting that banks opted more for the deposit facility than the lending one as funding pressures abated. The bank highlighted that ongoing market reforms and increased confidence in the financial system contributed to a more stable liquidity environment, particularly in the latter half of 2025.

Open Market Operations (OMO) remained the CBN’s primary instrument for liquidity management, although the total issuance of OMO bills decreased by 18.58 per cent to ₦40.90 trillion from ₦50.23 trillion in 2024. This reduction reflects the improved liquidity situation and adjustments to the bank’s liquidity management strategy.

Money market interest rates experienced moderation throughout the year due to the improved liquidity. The Open Repos Rate declined to 22.50 per cent from 27.30 per cent in 2024, and the Nigerian Interbank Offered Rate for both call and 30-day periods also trended downwards. These movements are indicative of reduced funding pressures and a cooling inflationary environment.

These developments were accompanied by a gradual evolution in the CBN’s monetary policy stance. Following a period of tight policy, the Monetary Policy Committee lowered the Monetary Policy Rate by 50 basis points to 27.00 per cent in September 2025. Additionally, the Cash Reserve Ratio for commercial banks was reduced to 45 per cent, while a 75 per cent CRR was introduced for non-TSA public sector deposits. These measures were part of the CBN’s broader objective to uphold price stability while fostering orderly liquidity conditions within the financial system.