Report: Banks’ Deposits with CBN Declined 1.14% to N82.99tn in August
Kayode Tokede
Nigerian banks’ deposits with the Central Bank of Nigeria (CBN) declined by 1.14 per cent month-on-month to N82.99 trillion in August 2026, from N83.96 trillion recorded in July, latest data from the apex bank have revealed.
Banks deposit excess liquidity with the CBN through the Standing Deposit Facility (SDF), thereby earning interest on overnight deposits.
According to the CBN’s financial data, the N82.99 trillion recorded in August represented the third-lowest monthly SDF placement by banks so far in 2026.
The moderation in banks’ deposits with the apex bank came amid the reduction in the Monetary Policy Rate (MPR) to 26.50 per cent in February 2026 from 27 per cent in 2025, as well as changing liquidity conditions and banks’ search for attractive returns on available funds.
The Monetary Policy Committee (MPC) has so far in 2026 retained the Standing Facilities Corridor around the MPR at +50/-450 basis points.
CBN data showed that banks deposited N89.3 trillion through the SDF in June, compared with N87.13 trillion in May and N92.32 trillion in April.
Deposits reached their highest level so far this year in March, at N128.92 trillion. In February, they stood at N61.11 trillion, representing an increase of 16.18 per cent from N52.6 trillion recorded in January.
Overall, banks deposited an estimated N678.36 trillion with the CBN in the first eight months of 2026, representing an increase of about 610.58 per cent compared with N95.47 trillion recorded in the corresponding period of 2025.
THISDAY had reported that banks deposited an estimated N336.2 trillion with the CBN in 2025, representing a 777.2 per cent year-on-year increase from N38.33 trillion in 2024.
Analysts at Cordros Research, in a report following the November 24-25 MPC meeting, stated that the adjustment of the asymmetric corridor to +50/-450 basis points, from +250/-250 basis points previously, led to lower rates for the Standing Lending Facility (SLF) and SDF.
According to the analysts, the adjustment reduced the SLF rate to 27.5 per cent from 29.5 per cent and the SDF rate to 22.5 per cent from 24.5 per cent.
“The adjustment is expected to ease monetary conditions and strengthen banks’ private sector credit expansion,” they stated.
Vice-President, Highcap Securities, Mr. David Adnori, said the decline in deposits with the CBN did not necessarily suggest that banks had become less liquid.
“A drop in CBN deposits does not necessarily mean banks become less liquid. It can mean that excess liquidity was being converted into loans or securities or was absorbed by the CBN,” Adnori said.
Chief Research Officer at Investdata Consulting Limited, Mr. Ambrose Omordion, said banks remained cautious about lending due to concerns over non-performing loans (NPLs).
According to him, difficulties some customers encountered in servicing loans had encouraged banks to favour relatively safer investment options.
He said: “The interest rate in the financial sector is high, and lending to customers becomes a major challenge. This alone has contributed to banks depositing with the CBN and investing in fixed-income instruments, where the risk is relatively low, and returns are assured.
“If we see further rate cuts by the CBN, that alone may encourage banks to lend more to the real sector and reduce the volume of excess liquidity deposited with the CBN.
“However, we expect the real sector to benefit from the banks’ recapitalisation exercise, while supporting the federal government’s aspiration to build a $1 trillion economy.”
Investment banker and stockbroker, Mr. Tajudeen Olayinka, said the prevailing high interest-rate environment, credit risks and broader economic uncertainty had strengthened banks’ preference for relatively safe placements with the CBN.
“With high benchmark rates for lending and borrowing, and concerns about credit risk and economic uncertainty, banks may prefer the relative safety of the SDF. It offers them a known return rather than extending credit into uncertain territory,” he said.
Olayinka added that the sharp increase in banks’ SDF placements with the CBN reflected a deeper tension between abundant liquidity in the financial system and reluctance to expand lending.
“It captures a deeper tension between liquidity abundance and lending reluctance in the financial system. Beneath the numbers lies a complex web of caution, policy tightening and an economy grappling with uncertainty.
“Banks are not acting irrationally. They are responding to signals from an environment marked by high inflation, exchange-rate volatility and weak consumer confidence,” he added.
According to him, the prevailing tight monetary environment has continued to make relatively risk-free placements with the CBN attractive to banks.
“Faced with this reality, banks prefer to earn relatively risk-free returns by placing funds with the CBN rather than extending credit to businesses struggling under heavy input costs and uncertain demand,” Olayinka said.