Bank Deposits with CBN Drop to N92.32trn After Interest Rate Cut as Liquidity Strategy Shifts

Bank deposits with the Central Bank of Nigeria (CBN) dropped sharply to N92.32 trillion in April 2026, following the Monetary Policy Committee’s decision to reduce the Monetary Policy Rate (MPR) to 26.50% from 27%. This represents a significant 28.4% decline compared to the N128.9 trillion recorded in March 2026, according to fresh CBN financial data.

The figures show a volatile trend in recent months. In February 2026, deposits had risen to N61.11 trillion, marking a 16.18% increase from January’s N52.6 trillion. However, the latest decline suggests a shift in how banks are managing excess liquidity amid changing interest rate conditions.

Banks and merchant banks typically place surplus cash in the CBN’s Standing Deposit Facility (SDF), which offers risk-free overnight returns. But analysts say the recent reduction in the MPR has made this option slightly less attractive, encouraging banks to reassess where they park their funds.

Financial experts link the movement to the lower opportunity cost of lending in the broader economy versus holding funds at the CBN. Cordros Research noted that adjustments to the interest rate corridor are aimed at easing monetary conditions and encouraging private sector lending, even as inflation remains in double digits.

Despite the drop in deposits, broader CBN data shows that banks placed an estimated N334.95 trillion with the apex bank in the first four months of 2026, while borrowing through the Standing Lending Facility fell sharply. Analysts warn that while liquidity remains high, uncertainty in the business environment and persistent inflation could continue shaping cautious banking behaviour in the months ahead.

source: This day