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.
 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.){kind=link}