Banks in Nigeria have significantly increased their deposits with the Central Bank of Nigeria (CBN), rising by a staggering 907.3% year-on-year (YoY) to N68.9 trillion in the first half of 2025 (H1’25), up from N6.84 trillion recorded in the same period of 2024 (H1’24).
The data, reflecting an era of excess liquidity in the financial system, highlights banks’ increased use of the Standing Deposit Facility (SDF), a monetary tool through which the CBN accepts overnight deposits from commercial banks and pays interest at Monetary Policy Rate (MPR) minus 100 basis points (bpts).
According to breakdowns, banks deposited N19.22 trillion in Q1 2025, up by 956% YoY from N1.82 trillion in Q1 2024. In Q2 2025, deposits surged further to N49.68 trillion, marking an 889.6% increase from N5.02 trillion in Q2 2024.
While banks increasingly park surplus funds at the CBN, the apex bank also maintains short-term lending windows for financial institutions. These include the Standing Lending Facility (SLF) — where banks borrow at MPR + 500 bpts — and Repurchase (Repo) arrangements, which involve temporary sales of securities with a buy-back clause.
Analysts interpret the rising deposits as a sign of weakened credit demand, cautious lending by banks, and tighter monetary policy conditions. The trend underscores ongoing liquidity imbalances and calls into question the effectiveness of liquidity management in stimulating productive lending within the economy.
