Banks’ deposit with the Central Bank of Nigeria, CBN, grew by 568.7 percent, YoY, to N146.13 trillion in the first nine months of the year (9m’25) from N21.85 trillion in the corresponding period of 2024 (9m’24), reflecting the enormity of idle cash (excess liquidity) in the banking system.

The CBN has two short term lending windows for banks; the Standing Lending Facility (SLF) and Repo lending.

It lends money to banks through the SLF at interest rate of 500 basis points (bpts) above the Monetary Policy Rate (MPR), and it also lends money to banks through Repurchase (Repo) arrangement, which involves the purchase of banks’ securities with the agreement to sell back at a specific date and usually for a higher price.

On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility (SDF) and pays an interest rate of MPR minus 100 bpts.

Vanguard analysis of data by the CBN showed that banks’ deposits via the Standing Deposit Facility, SDF rose sharply by 158.4 percent quarter-on-quarter (QoQ) to N49.68 trillion in the second quarter of 2025 (Q2’25) from N19.22 trillion in Q1’25. This trend continued in Q3’25 with banks’ deposits with the apex banking rising by 55.4 percent QoQ to N77.23 trillion.

The continuous strong patronage of the SDF reflects excess liquidity in the banking system and the effect of the CBN’s shift to a single-tier remuneration structure for the SDF last year.

However, banks’ borrowings from the CBN, via the Standing Lending Facility, SLF, fell by 12.4 per cent YoY to N69.37 trillion in the first nine months of the year (9m’25) from N87.09 trillion in 9m’24.

The decline in banks’ borrowing from the CBN indicates banks depended less on the apex bank for short term liquidity needs.

Vanguard analysis showed that banks’ borrowing through the SLF rose by 61 per cent, QoQ to N50.46 trillion in Q2’25 from N9.38 trillion in Q1’ 25. In Q3’25 banks’ borrowings stood at N10.67 trillion representing a 78.8 percent QoQ increase.