CBN Report: Nigerian Banks’ Cash Liquidity Surges to N5.53 Trillion in One Month
- Nigeria’s banking system liquidity rose by 17.16% to N5.53 trillion in May 2026 from N4.72 trillion in April
- The CBN offered N3.6 trillion in OMO bills, but investors subscribed to N14.4 trillion as the apex bank moved to mop up excess cash
- Government securities also attracted strong demand, with NTBs receiving N4.4 trillion in subscriptions and FGN bonds attracting N800 billion
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Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
Nigeria’s banking system recorded a sharp increase in cash liquidity in May 2026, even as millions of households and businesses continued to grapple with economic pressures and rising living costs.
The average net liquidity in the banking system rose to N5.53 trillion in May, representing a 17.16% increase from the N4.72 trillion recorded in April 2026.
Source: UGC
The latest figures were contained in the Central Bank of Nigeria’s (CBN) Monthly Economic Report for May 2026.
According to the apex bank, the surge was largely driven by inflows from matured CBN bills, bond coupon payments and allocations to states and other tiers of government through the Federation Account Allocation Committee (FAAC).
The banking system’s liquidity position was also influenced by Cash Reserve Ratio (CRR) maintenance and foreign exchange-related activities, which helped keep short-term interest rates relatively stable during the period.
CBN moves to mop up excess cash
With the banking system awash with liquidity, the CBN intensified its Open Market Operations (OMO) to withdraw some of the excess funds.
The apex bank offered N3.6 trillion worth of CBN bills to investors during the month. However, demand far exceeded the amount on offer, with subscriptions reaching an astonishing N14.4 trillion.
The CBN eventually allotted N12.54 trillion, with stop rates ranging from 19.97% to 21.90%.
The regulator said the unusually high level of subscriptions reflected the large amount of liquidity in the financial system, as well as investors' attraction to the returns available on the securities.
CBN noted:
“The higher-than-expected subscription reflected liquidity surfeit and attractive returns. Overall, the liquidity operations of the Bank resulted in net withdrawal from the banking system.”
Investors pour billions into government securities
Meanwhile, the Federal Government continued to attract strong investor demand as it pushed ahead with its domestic borrowing programme through Nigerian Treasury Bills (NTBs) and Federal Government of Nigeria (FGN) bonds.
The report showed that subscriptions for NTBs jumped to N4.4 trillion in May, significantly higher than the N1.35 trillion initially offered.
The 364-day Treasury Bill remained the most sought-after instrument among investors during the period.
Source: UGC
Long-term government securities also recorded strong demand, with the Federal Government's 10-year and 20-year bonds attracting N800 billion in subscriptions, compared with the N600 billion offered.
Stop rates on the bonds remained within a narrow range of 17.00% to 17.04%.
The CBN attributed the strong demand for government securities to the attractive returns available to investors and what it described as sustained confidence in the domestic debt market.
CBN cuts interest rate to 23%
Meanwhile, Legit.ng earlier reported CBN's record 350-basis-point interest rate cut, which brought the benchmark rate to 23% as inflation eased for a third consecutive month.
The decision marks the largest single rate reduction in the bank’s history and could lower borrowing costs, though commercial banks’ reserve requirements remain unchanged.
Source: Legit.ng
