Banks’ deposits with Nigeria’s central bank fall 1.14% to N82.99 trillion in August

Nigerian banks reduced their deposits with the Central Bank of Nigeria to N82.99 trillion in August, a 1.14% month-on-month decline from N83.96 trillion in July. The figures come from the central bank’s latest financial data.

Banks place excess liquidity with the CBN through its Standing Deposit Facility, earning interest on overnight deposits. August’s total was the third-lowest monthly placement recorded in 2026. Deposits stood at N89.3 trillion in June, N87.13 trillion in May and N92.32 trillion in April. They peaked at N128.92 trillion in March.

The moderation followed a reduction in the Monetary Policy Rate to 26.50% in February 2026 from 27% in 2025, alongside changing liquidity conditions and banks’ search for more attractive returns. The Monetary Policy Committee has retained the Standing Facilities Corridor at plus 50 and minus 450 basis points around the policy rate.

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The adjustment is expected to ease monetary conditions and strengthen banks’ private sector credit expansion.

Banks deposited an estimated N678.36 trillion with the CBN during the first eight months of 2026, up about 610.58% from N95.47 trillion in the same period of 2025. Cordros Research analysts said the corridor adjustment reduced the Standing Lending Facility rate to 27.5% from 29.5% and the Standing Deposit Facility rate to 22.5% from 24.5%. They said the change should ease monetary conditions and support private-sector credit expansion.

David Adnori, vice-president of Highcap Securities, said lower CBN deposits did not necessarily mean banks had become less liquid. Excess funds could instead have moved into loans or securities, or been absorbed by the central bank. Ambrose Omordion of Investdata Consulting said banks remained cautious about lending because of non-performing-loan concerns and customer difficulties in servicing loans.

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A drop in CBN deposits does not necessarily mean banks become less liquid. It can mean that excess liquidity was being converted into loans or securities or was absorbed by the CBN.