Banks’ deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) skyrocketed by 395.8% year-on-year (YoY) to N198.08 trillion in the first ten months of 2025 (10m’25), up from N39.95 trillion in the same period of 2024 (10m’24), highlighting excess liquidity in the banking system.

Quarterly trends showed a sharp rise in SDF deposits: Q2’25 deposits surged 158.4% quarter-on-quarter (QoQ) to N49.68 trillion from N19.22 trillion in Q1’25, while Q3’25 deposits climbed to N77.23 trillion, a 55.4% increase. In October alone, banks deposited N51.95 trillion, up 2.4% from September’s N50.73 trillion, marking the highest monthly total in the period.

The sustained growth in SDF deposits reflects the CBN’s 2024 shift to a single-tier remuneration structure for the facility.

CBN’s Lending and Deposit Framework

The CBN offers short-term lending facilities for banks through:

• Standing Lending Facility (SLF): Loans at 500 basis points above the Monetary Policy Rate (MPR)
• Repurchase (Repo) Arrangement: Purchase of banks’ securities with an agreement to sell back at a higher price

Conversely, the CBN accepts deposits via the SDF, paying an interest rate of MPR minus 100 basis points.

While deposits surged, banks’ borrowings from the SLF declined 22.2% YoY to N70.37 trillion in 10m’25, down from N90.48 trillion in 10m’24, reflecting tight liquidity in the interbank money market. Notably, in October, borrowing rose sharply by 208.9% to N995.5 billion, up from September’s N322 million—the lowest value in the review period.

Liquidity Management through OMO Sales

The CBN also mopped up liquidity via Open Market Operations (OMO), selling N23.49 trillion in OMO Treasury Bills in 10m’25, up 139.9% from N9.79 trillion in 10m’24.

The trends underscore a persistent liquidity surplus in the banking system, with banks increasingly parking funds at the apex bank rather than relying on short-term borrowings.