Banks’ deposits with CBN soar to record N50.73trn as borrowing crashes

Banks’ deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) surged to an all-time high of N50.73 trillion in September 2025, reflecting rising liquidity in the financial sector.

By contrast, banks borrowed just N322 million from the apex bank in the same month, marking a sharp 99.99% decline year-on-year from N7.86 trillion in September 2024.

The SDF allows banks to park excess liquidity with the CBN overnight for interest, while the Standing Lending Facility (SLF) provides short-term borrowing at a higher rate.

Data from the CBN showed that deposits grew by an extraordinary 992% year-on-year, rising from N4.65 trillion in September 2024 to N50.73 trillion in September 2025.

Since the beginning of 2025, banks have placed a total of N146.2 trillion with the CBN, compared to N23.12 trillion in the same period of 2024, representing a 532% increase.

The highest single-month deposit was recorded in September, followed by May 2025 with N17.54 trillion.

Meanwhile, bank borrowings from the CBN dropped to N68.43 trillion in the first nine months of 2025, down 21% from N87.08 trillion in the same period of 2024.

The Monetary Policy Committee (MPC) had steadily raised the Monetary Policy Rate (MPR) from 18.75% in 2023 to 27.50% in 2024 to curb inflation and stabilize the naira.

In September 2025, however, the CBN cut the MPR by 50 basis points to 27.0%, marking a shift toward expansionary policy after five months of sustained disinflation, with inflation easing from 21.88% in July to 20.12% in August 2025.

Under the revised framework, all SDF deposits are remunerated at MPR minus 100 basis points. With MPR now at 27%, banks earn 24.5% on deposits.

Analysts say banks’ strong preference for the SDF reflects risk aversion and excess liquidity.

Investment banker and stockbroker Tajudeen Olayinka attributed the trend to insecurity, inflation, weak productivity, low purchasing power, and limited safe investment options, which have made banks reluctant to lend.

Similarly, Ambrose Omordion, Chief Operating Officer of InvestData Consulting, explained that the SDF offers banks a safe, high-yield option while also serving as a buffer against non-performing loans.

CBN Governor Olayemi Cardoso earlier explained that removing the cap on remunerable SDF deposits was designed to deepen activity in the SDF window and improve liquidity management.

With Treasury bill yields still below inflation, analysts suggest banks will continue to favor the SDF as a secure and profitable parking ground for excess funds.