Nigerian Banks Increase CBN Placements To ₦4.1 Trillion Amid Stable Interest Rates

Nigerian deposit money banks (DMBs) have ramped up their placements with the Central Bank of Nigeria (CBN) through its Standing Deposit Facility (SDF), a move analysts say reflects efforts to enhance earnings amid improved market liquidity.

In October, liquidity in the money market remained robust, helping to stabilise short-term benchmark interest rates after the September monetary policy adjustments.

Commercial banks have increasingly channelled excess funds into the CBN’s deposit window, taking advantage of the 24.50% standing deposit facility rate, which offers higher returns compared to yields on treasury bills.

Analysts noted that with minimal funding pressures in the system, interbank rates have been confined within a tight range — a situation expected to influence returns on money market funds in the short term.

On Wednesday, interbank lending rates fell again, underscoring a healthy funding position across the banking sector in the absence of CBN liquidity mop-ups.

Fresh data revealed that total system liquidity expanded by 18.25%, pushing the surplus balance to ₦4.49 trillion from ₦3.80 trillion the previous day. The rise was largely supported by an additional ₦693.6 billion inflow, primarily driven by the SDF window.

In the absence of open market operations, DMBs’ total placement with the CBN climbed to ₦4.1 trillion, indicating strong liquidity levels despite the settlement of ₦313.8 billion related to the October 2025 bond auction.

Consequently, the average funding cost declined marginally by one basis point, with the Open Repo Rate (OPR) holding at 24.50%, while the Overnight Lending (O/N) rate dipped slightly by two basis points to 24.84%.

Market analysts predict that funding costs will likely remain steady in the near term, barring any liquidity intervention or major funding activities by the CBN.