Liquidity Surplus Pushes Banks’ CBN Deposits Above N6.2tn

Liquidity Surplus Pushes Banks’ CBN Deposits Above N6.2tn

Banks’ deposits at the CBN’s Standing Deposit Facility rose by N264bn in one day to N6.28tn on September 29.

The increase came as N2.43tn in OMO instruments matured, while the CBN offered N2.5tn in fresh securities to absorb excess liquidity.

Strong demand for OMO bills continues, with September subscriptions reaching N20.58tn despite declining accepted rates on longer-tenor instruments.

September 30, () – Nigerian banks’ placements with the Central Bank of Nigeria’s Standing Deposit Facility (SDF) rose to N6.28tn on Tuesday, highlighting the substantial liquidity surplus within the banking system.

CBN financial market data showed that banks’ SDF placements increased to approximately N6.278tn on September 29 from N6.014tn a day earlier, representing a rise of about N264bn.

The balance was also N379bn higher than the N5.899tn recorded on September 25, indicating that excess funds available to banks have remained elevated despite the central bank’s continued liquidity management operations.

The buildup coincided with another major Open Market Operations (OMO) auction by the CBN, which offered N2.5tn worth of securities on Tuesday.

The auction came as N2.433tn in existing OMO instruments matured and became due for repayment, leaving the fresh offer only about N66.8bn above the amount returning to investors.

The latest offer comprised N500bn of 147-day bills, N1tn of 182-day bills and N1tn of 266-day bills.

The securities are scheduled to mature between February and June 2027, extending the CBN’s liquidity-management operations into the second quarter of next year.

Excess cash remains with CBN

The rising SDF balance suggests that banks continue to hold substantial excess funds even as the CBN provides additional securities through OMO for investors to deploy their liquidity.

“The rising SDF balance suggests that banks have enough funds available for placement with the central bank, even as the CBN provides additional instruments for investors to deploy liquidity,” said Nonso Iheoma, a financial analyst and economist.

Banks’ opening balances, however, fluctuated during the period, falling to N131.82bn on September 29 from N277.74bn on September 28.

The persistent SDF accumulation comes alongside strong investor appetite for OMO securities.

Four OMO auctions conducted earlier in September attracted about N20.58tn in bids against a combined offer of N3.9tn. The CBN allotted approximately N12.823tn from those auctions.

September subscriptions have already surpassed the N18.72tn recorded in August, following the expansion of access to OMO securities to individuals, companies and non-bank financial institutions through deposit money banks.

Despite the strong demand, accepted rates on longer-tenor OMO instruments have declined. Rates fell from about 18.99 percent at the beginning of September to 17.29 percent at the September 24 auction.

The combination of elevated SDF placements and strong OMO demand points to significant liquidity within the financial system, with banks and other investors continuing to seek interest-bearing instruments even as the CBN intensifies efforts to manage excess cash.