Nigeria’s interbank lending rates remained stable this week, reflecting the liquidity surplus that continues to shape the domestic money market. The sustained level of excess cash within the banking system has kept funding costs tight while encouraging financial institutions to increase placements with the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF).
With subdued lending appetite and declining returns on Treasury bills, banks have been redirecting idle funds to the CBN’s 24.5% interest-yielding SDF — a safer alternative to private-sector lending, which carries higher credit risk.
Analysts noted that system liquidity remained robust, climbing to ₦3.1 trillion, an increase of ₦587 billion from the previous level, according to recent investment reports. AIICO Capital Limited stated that the rise was mainly driven by a surge in deposits at the SDF window, which reached ₦2.9 trillion, while the Standing Lending Facility (SLF) window recorded ₦30.2 billion.
Similarly, Coronation Merchant Bank reported that system liquidity began last week at ₦3.12 trillion and peaked midweek at ₦4.81 trillion following inflows from the Federation Account Allocation Committee (FAAC). The figure, however, eased by ₦648.47 billion week-on-week to ₦2.47 trillion, partly due to mop-up activities from Federal Government Bond and Open Market Operations (OMO) auctions totaling ₦672.96 billion.
At the start of the new week, interbank rates held firm, with the overnight lending rate unchanged at 24.88%. Analysts described this as an indicator of stable liquidity and muted borrowing demand among commercial banks. Cowry Asset Management also reported that banks maintained higher balances at the CBN’s SDF window, adding ₦14.3 billion in just one week.
Although short-term rates remained anchored, medium-term tenors witnessed modest upward adjustments of 8, 17, and 25 basis points respectively. Overall, the overnight rate and Open Purchase Rate were steady at 24.86% and 24.50%.
Market analysts predict that funding costs will likely remain within the current range, barring significant liquidity withdrawals or an aggressive OMO intervention from the CBN.
In the Treasury Bills secondary market, yields displayed a mixed performance. Short- and mid-tenor bills — one-month, three-month, and six-month maturities — expanded by 19, 17, and 19 basis points respectively, while the 12-month tenor compressed by 9 basis points. The composite average yield on T-bills edged slightly lower by 1 basis point to 17.45%, underscoring sustained investor demand and positive sentiment across the fixed-income market.
