Excess Liquidity: Banks’ placements at the SDF window have reached N6trn

Depository banks (DMBs) have significantly increased their placements at the Central Bank’s Standing Deposit Facility (SDF) window, reaching N6 trillion as of Thursday.

According to several industry reports, the increase in non-performing loans in the banking sector exceeded prudential guidelines in the fourth quarter.

This was linked to a higher default rate as the apex bank withdrew forbearance.

On Friday, 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 increase in DMB 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. While this inflow was partially offset by a ₦1.01 trillion settlement related to the March 4, 2026 Treasury bill auction, liquidity conditions remained exceptionally strong at the close of the trading session.

“Despite these favorable liquidity conditions, the average cost of funding increased by four basis points to 22.14%. Money market funding costs showed mixed movements, with the Overnight rate rising by 7 basis points to 22.28%, while the Open Repo rate remained unchanged at 22.00%.

“However, market analysts are optimistic and suggest that barring any significant financing activity, we may see financing costs decline slightly against the backdrop of robust and prevailing system liquidity,” AIICO Capital Limited said.