Surge in Standing Deposit signals excess liquidity as borrowings from apex bank decline…
Banks’ deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) surged by 395.8 per cent year-on-year (YoY) to N198.08 trillion in the first ten months of 2025, compared to N39.95 trillion recorded in the same period last year.
This massive growth, according to financial analysts, reflects a build-up of excess liquidity in the banking system and underscores the impact of the CBN’s single-tier remuneration policy on SDF introduced last year.
Quarterly Trend Shows Sharp Liquidity Build-Up
A breakdown of the trend shows that banks’ deposits under the SDF rose 158.4 per cent quarter-on-quarter (QoQ) to N49.68 trillion in Q2 2025, up from N19.22 trillion in Q1. The momentum continued into the third quarter, with deposits reaching N77.23 trillion, representing a further 55.4 per cent increase.
By October 2025, banks placed N51.95 trillion with the CBN, the highest monthly figure so far, slightly higher than the N50.73 trillion recorded in September.
Borrowing from CBN Declines Amid Ample Liquidity
In contrast, commercial banks’ borrowing from the apex bank through the Standing Lending Facility (SLF) fell by 22.2 per cent YoY to N70.37 trillion in the first ten months of 2025, from N90.48 trillion in the corresponding period of 2024.
However, in October alone, banks’ borrowing jumped sharply by 208.9 per cent to N995.5 billion, up from N322 million in September, which had marked the lowest borrowing figure within the review period.
The decline in overall borrowing, experts say, highlights ample liquidity in the interbank market, a condition strengthened by the CBN’s liquidity management operations.
CBN Intensifies OMO Sales to Mop Up Cash
To manage the rising liquidity levels, the CBN ramped up its sale of Open Market Operations (OMO) Treasury Bills, which serve as a key monetary tool for controlling money supply.
The apex bank sold N23.49 trillion worth of OMO bills between January and October 2025, representing a 139.9 per cent increase from N9.79 trillion recorded in the same period last year.
The OMO sales are part of broader efforts to curb excess cash in circulation and maintain price stability in the economy.
