Excess Liquidity: Banks’ Placements at SDF Window Hit N6trn
Reflecting weak appetite for loans, deposit money banks (DMBs) significantly increased their placements at the Central Bank’s Standing Deposit Facility (SDF) window, reaching N6 trillion as of Thursday.
Unsettled macroeconomic conditions have continued to keep banks from lending, though analysts said some lenders are selectively funding certain industries.
The banking industry’s surge in nonperforming loans exceeded prudential guidelines in the fourth quarter, according to several industry reports. This was related to a higher default rate, while the Apex Bank withdrew forbearance.
Today, system liquidity opened with a robust surplus of ₦5.84 trillion, reflecting a notable increase of ₦622.34 billion from the previous session, according to AIICO Capital Limited.
This substantial growth was attributed to a ₦596.05 billion rise in DMBs’ placements at the CBN’s SDF window, which now stands at ₦5.94 trillion.
Additionally, the financial system benefited from an inflow of ₦799.13 billion from matured Treasury bills. Although this inflow was partially offset by a ₦1.01 trillion settlement related to the March 4, 2026, Treasury bills auction, liquidity conditions remained exceptionally strong at the close of the trading session.
Despite these favourable liquidity conditions, the average funding cost has risen by 4 basis points to 22.14%. Money market financing costs displayed mixed movements, with the Overnight rate climbing 7 bps to 22.28%, while the Open Repo rate remained unchanged at 22.00%.
However, market analysts are optimistic, suggesting that, barring any significant funding activities, we could see funding costs ease slightly amid the prevailing robust system liquidity. #NGX Index Surges as Nestle Nigeria, Stanbic IBTC Rally
