Rates Ease, Nigerian Banks’ Placement with CBN Hits N4.1trn
As part of their efforts to drive earnings growth, Nigerian deposit money banks (DMBs) have continued to increase their bets at the Central Bank of Nigeria (CBN) Standing Deposit Facility (CBN).
The money market has been sufficiently liquid in October, keeping the short-term benchmark interest rates movement in check after September monetary policy adjustments.
Commercial banks have been leveraging on 24.50% standing deposit facility rate, boosting funds placed with the CBN to replace lower yields on treasury bills.
In the absence of funding pressures, interbank bank rates have restricted to a range, which some analysts said will also have immediate and direct impact on money market funds.
On Wednesday, interbank rates eased again, reflecting the surplus banking system funding profile in the absence of Central Bank mop up actions.
Data obtained by MarketForces Africa showed that the financial system expanded by 18.25%, and the surge pushed surplus balance to ₦4.49 trillion from N3.80 trillion the previous day.
Funding profit improved due to additional inflow ₦693.6 billion, primarily driven by increase in the CBN’s Standing Deposit Facility (SDF) window.
DMBs’ placement at the CBN SDF window expanded to ₦4.1 trillion in the absence of open market operations. Market liquidity conditions remained stronger despite the settlement of ₦313.8 billion on the Oct-2025 bond auction.
As such, average funding costs dipped slightly by 1 bps as the Open Repo Rate (OPR) stood at 24.50%, while the Overnight Lending (O/N) rate dipped by 2 bps to 24.84%.
Analysts said they anticipate funding costs to remain at a similar level, barring any funding activity. OMO Bills Auction Settlement Tightens Money Market Liquidity
