Deposits by Nigerian banks with the Central Bank of Nigeria (CBN) fell sharply to ₦92.32 trillion in April 2026, following a recent reduction in the Monetary Policy Rate (MPR), fresh data has shown.
Figures released by the apex bank indicate a 28.4 per cent decline from ₦128.9 trillion recorded in March, signalling a significant shift in liquidity management by financial institutions.
The drop comes after the Monetary Policy Committee lowered the MPR to 26.5 per cent from 27 per cent, a move analysts say has reduced the attractiveness of parking excess funds with the central bank through its Standing Deposit Facility (SDF).
Banks typically utilise the SDF window to earn risk-free overnight returns on surplus liquidity. However, with declining rates, many lenders appear to be reassessing their strategies.
Data trends show deposits had earlier climbed to ₦61.11 trillion in February, up from ₦52.6 trillion in January, before surging in March and then declining sharply in April.
Analysts attribute the latest drop to a combination of lower returns at the central bank and a gradual shift towards lending opportunities in the broader economy, where yields may now be comparatively more attractive.
A report by Cordros Research noted that adjustments to the interest rate corridor — now set at +50 and -450 basis points around the MPR — effectively reduced rates on both the Standing Lending Facility and the SDF, easing overall monetary conditions.
The firm said the policy shift is expected to “strengthen banks’ private sector credit expansion,” even as inflationary pressures remain a concern.
Despite the recent dip, cumulative deposits by banks at the CBN reached an estimated ₦334.95 trillion within the first four months of 2026, reflecting continued preference for low-risk instruments amid economic uncertainties.
Conversely, borrowing from the apex bank through the Standing Lending Facility dropped sharply to about ₦2.2 trillion in the same period, a 94.9 per cent decline compared to ₦43.42 trillion recorded in the corresponding period of 2025.
Financial experts say the trend underscores cautious lending behaviour among banks, driven by concerns over credit risk and macroeconomic instability.
Investment banker Tajudeen Olayinka explained that in uncertain conditions, banks tend to prioritise safety over aggressive lending.
“When there is so much uncertainty in the business environment, banks look for viable opportunities in prime borrowers… In the absence of these, they resort to short-term placements and the CBN window to hold liquidity,” he said.
He added that global tensions and energy market volatility continue to shape monetary conditions, warning that high interest rates may persist and could weigh on economic growth.
Analysts also cautioned that while the rate cut may encourage lending, the pace of easing will likely remain gradual as the central bank balances inflation control with growth objectives.
