Deposits held by Nigerian banks with the Central Bank of Nigeria (CBN) declined sharply to ₦92.32 trillion in April 2026, following a recent reduction in the Monetary Policy Rate (MPR), according to newly released data.
The figure represents a 28.4 per cent drop from the ₦128.9 trillion recorded in March, highlighting a notable shift in how financial institutions are managing liquidity.
The decline comes after the CBN’s Monetary Policy Committee reduced the MPR to 26.5 per cent from 27 per cent. Analysts say the move has made it less attractive for banks to keep excess funds with the apex bank through the Standing Deposit Facility (SDF), which typically offers risk-free overnight returns.
With lower returns on such placements, many banks are now reconsidering their strategies. Data shows deposits had earlier risen to ₦61.11 trillion in February from ₦52.6 trillion in January, surged in March, and then fell sharply in April.
Market analysts attribute the drop to reduced yields at the central bank and a gradual shift by banks towards lending in the broader economy, where returns may be more competitive.
A report by Cordros Research noted that recent adjustments to the interest rate corridor — now set at +50 and -450 basis points around the MPR — have lowered rates on both the Standing Lending Facility and the SDF, thereby easing overall monetary conditions.
According to the firm, the policy change is expected to support increased lending to the private sector, although inflationary pressures remain a key concern.
Despite the April decline, cumulative bank deposits with the CBN stood at approximately ₦334.95 trillion in the first four months of 2026, reflecting continued reliance on low-risk instruments amid economic uncertainty.
Meanwhile, borrowing from the apex bank through the Standing Lending Facility dropped significantly to about ₦2.2 trillion during the same period — a 94.9 per cent decrease from ₦43.42 trillion recorded in the corresponding period of 2025.
Financial experts say the trend points to cautious lending behaviour by banks, largely driven by concerns over credit risk and macroeconomic instability.
Investment banker Tajudeen Olayinka explained that in uncertain economic conditions, banks tend to prioritise safer investments over aggressive lending.
He noted that lenders usually seek creditworthy borrowers, but in their absence, prefer short-term placements and the CBN window to preserve liquidity.
Olayinka also warned that global uncertainties and energy market volatility continue to influence monetary conditions, adding that high interest rates may persist and potentially slow economic growth.
Analysts further caution that while the rate cut could encourage lending, any monetary easing is likely to be gradual as the central bank balances inflation control with economic growth.
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