In the second quarter of 2026, Nigerian banks' deposits with the Central Bank of Nigeria (CBN) significantly surpassed their borrowings from the apex bank. Transactions through the Standing Deposit Facility (SDF) window reached N48.40 trillion, while borrowings through the Standing Lending Facility (SLF) totaled N7.97 trillion. This substantial gap of N40.43 trillion highlights the excess liquidity in the banking system during the period.
The CBN's Q2 2026 Economic Report also revealed a notable increase in foreign exchange inflows through the banking system. Inflows rose by 20.38% to $10.02 billion, up from $8.32 billion in the preceding quarter. This surge indicates a positive trend in foreign exchange transactions within the banking sector.
The report further disclosed that activities at the SLF window declined by 83.92%, while transactions through the SDF increased by 153.93%. This sharp shift in banks' liquidity positions during the review period reflects changes in their financial management strategies.
The applicable interest rates at the standing facilities were maintained at 32.50% for the SLF and 26.50% for the SDF. However, following the September 2026 meeting of the Monetary Policy Committee, the CBN adjusted the Standing Facilities Corridor to +50/-300 basis points around the new Monetary Policy Rate (MPR) of 23%. This adjustment sets the SDF rate at 20% and establishes a new floor for overnight market rates.
The banking sector demonstrated strong liquidity and solvency indicators during the period. The industry liquidity ratio stood at 55.03%, significantly above the 30% regulatory minimum. Additionally, the capital adequacy ratio was 13.43%, above the regulatory minimum of 10%. These indicators suggest that banks have the capacity to meet maturing obligations and support credit intermediation.
However, asset quality remained an area of concern, as the non-performing loans ratio edged up by 0.09 percentage points to 5.63%. This slight increase is above the prudential limit of 5%. Despite this, the CBN assessed overall asset quality as broadly stable.
On the foreign exchange market, inflows through banks rose to $10.02 billion, while autonomous inflows declined by 15.79% to $17.39 billion. The banking system recorded a net inflow of $195.65 million, a significant improvement from the $2.21 billion net outflow recorded in Q1 2025. Average turnover at the Nigerian Foreign Exchange Market (NFEM) increased by 8.75% to $459.04 million.
Key points
- Banks' deposits with the CBN surged to N48.40 trillion in Q2 2026.
- Foreign exchange inflows through banks rose to $10.02 billion.
- The banking sector maintained strong liquidity and solvency indicators.
