Banks’ deposit placements with the Central Bank of Nigeria (CBN) rose steadily last week from N2.28 trillion on Wednesday to N2.55 trillion on Thursday before hitting N2.62 trillion at the close of business on Friday, October 24.
Lenders deposit excess cash at CBN’s Standing Deposit Facility (SDF), which the apex bank lends out to any banks through its Standing Lending Facility (SLF) window to meet critical overnight obligations with an Overnight interest rate as high as 24.8% as of last Friday, according to FMDQ.
Naijaonpoint’ analysis of CBN’s financial data during the week under review showed that deposit money banks (DMBs) deposited more cash with the CBN than they borrowed.
The opening balances of banks and discount houses (which reflect the amount of liquid cash the lenders reserved for banking transactions) jumped to N637.59 billion on Friday, October 24, 2025, from N522.09 billion the previous day as market liquidity soared through the week.
The massive improvement contrasted sharply with mid-week pressures that saw balances plunge to N192.65 billion on Wednesday. Dealers explained that while cash conditions improved, lending appetite in the interbank market remained subdued due to elevated benchmark rates.
A similar pattern played out earlier in the week. On Tuesday, October 21, SDF placements ballooned to N1.75 trillion from N906.09 billion the previous business day. Analysts pointed to high credit risk concerns and a preference for the safety of the regulator window rather than lending into the real sector.
While banks eagerly placed excess funds with the apex bank, borrowing from the CBN slowed as pressures in the interbank market relaxed. Standing Lending Facility (SLF) requests settled at N137.10 billion only on Friday after surging to N275 billion on Wednesday. The drop signaled a recovery in liquidity conditions and a more comfortable cash stance heading into the final week of the month.
Earlier in the week, SLF demand remained relatively high at N235 billion on October 21, slightly easing from N260.50 billion the previous day.
That mixed behavior showed that although system liquidity was strengthening, some institutions still required overnight support to rebalance their books.
No repo or reverse-repo transactions were recorded throughout the week, indicating that the regulator did not need to deploy additional liquidity-management tools beyond its standing facilities.
Liquidity movements during the review period were also driven by primary market interventions and OMO operations. The CBN returned to the market with N827 billion in OMO bill sales on October 21, after a no-sale session the previous day. The intervention remained markedly below the N2.12 trillion sold on October 17, signaling a softer sterilization posture.
Government securities issuance and repayment flows provided additional liquidity swings. On October 23, the market saw N391.59 billion in NTB and bond issuances, while redemptions of N378.00 billion the same day boosted system liquidity.
With no fresh issuance or repayments recorded on Friday, dealers said residual liquidity from Thursday’s flows helped fuel the strong cash environment.
Interest rate watchers believe sustained liquidity inflows could place mild downward pressure on interbank rates if the trend continues into the final week of October.
The previous week demonstrated a financial system flush with liquidity but still wrestling with confidence, leaving the Central Bank to keep balancing act between stability and credit expansion as year-end pressures draw near.
Key takeaways from the week’s financial system review: