Economy
CBN Loans N8.2 Trillion to Banks in 17-Day Period
New data from the Central Bank of Nigeria (CBN) reveals that commercial and merchant banks borrowed N8.2 trillion from the apex bank in the first 17 days of 2025. This move aims to address the liquidity crisis and boost lending to the real sector of the Nigerian economy.
According to the CBN, the borrowing was necessary due to low cash deposits by bank customers, attributed to high spending during the festive period, which created cash scarcity in banks. Notably, the N8.2 trillion borrowed is lower than the N8.2 trillion borrowed during the corresponding period in 2024.
In 2024, banks and merchant banks borrowed an estimated N131.42 trillion, a 636.6% increase over the N17.84 billion borrowed in 2023. The data also shows that banks and merchant banks’ deposits in CBN stood at N6.69 trillion, as they sought to lend to the real sector.
Banks access lending from the CBN through the Standing Lending Facility (SLF) window and deposit excess liquidity using the Standing Deposit Facility (SDF). The CBN provides the SLF as a short-term lending window for banks and merchant banks to access liquidity for day-to-day operations.
In 2024, banks borrowed from the CBN at an interest rate of 32.50%, with the asymmetric corridor around the Monetary Policy Rate (MPR) set at +500/-100 basis points. Dr. Omolara Duke, Director of the Financial Markets Department, CBN, had stated that banks could borrow at a rate of 31.75% when the MPR was at 26.75%.
Banks can access the SLF through the Scripless Securities Settlement System (S4) within specified operating hours. Additionally, authorised dealers can access the Intraday Lending Facility (ILF) at no cost, provided it is repaid on the same day.
The CBN’s liquidity support to banks is aimed at ensuring the stability of the financial system and promoting economic growth. The apex bank’s actions are also guided by its monetary policy objectives, which include maintaining price stability and promoting employment.
In 2024, the CBN’s liquidity support to banks peaked in March, with banks borrowing N21.74 trillion. The lowest amount borrowed was in January 2024, at N2.9 trillion.
The CBN’s data on banks’ borrowing also showed that the apex bank’s lending rate has been adjusted periodically to reflect changes in the monetary policy rate. For instance, when the MPR was increased to 26.75% in 2024, the CBN’s lending rate was adjusted to 31.75%.
The CBN’s liquidity support to banks has been a crucial factor in maintaining the stability of the financial system, especially during periods of economic uncertainty. As the Nigerian economy continues to evolve, the CBN’s role in providing liquidity support to banks will remain critical in promoting economic growth and stability.
The naira depreciated to N1, 615 per dollar in the parallel market from N1,610 per dollar on Monday.
Likewise, the Naira depreciated to N1,602 per dollar in the Nigerian Foreign Exchange Market (NFEM).
Data published by the Central Bank of Nigeria, CBN, showed that the indicative exchange rate for the naira rose to N1,602 per dollar from N1,596 per dollar on Monday, indicating N6 depreciation for the naira.
Consequently, the margin between the parallel market and NFEM rate narrowed to N13 per dollar from N14 per dollar on Monday.
The Nigerian stock market opened the week on a bullish note on Monday, gaining N228 billion on the Nigerian Exchange Ltd.
Market capitalisation rose by N228 billion or 0.34 per cent and closed at N66.693 trillion compared to Friday’s figure of N66.465 trillion.
Similarly, the All-Share Index (ASI) climbed by 363.57 points or 0.34 per cent, reaching 106,116.18 from 105,752.61 recorded earlier.
The Nigerian stock market opened the week on a bullish note on Monday, gaining N228 billion on the Nigerian Exchange Ltd.
Market capitalisation rose by N228 billion or 0.34 per cent and closed at N66.693 trillion compared to Friday’s figure of N66.465 trillion.
Similarly, the All-Share Index (ASI) climbed by 363.57 points or 0.34 per cent, reaching 106,116.18 from 105,752.61 recorded earlier.
The positive trend was driven by strong buying interest in medium and large-cap stocks including International Breweries, Legend Internet Plc, Cadbury Nigeria, Fidson and more.
In spite of the upward trend, the market breadth closed positively, with 47 gainers and 16 losers.
International Breweries led the gainers’ chart, rising by 10 per cent to close at N8.47 per share.
Legend Internet Plc followed, appreciating by 9.97 per cent to settle at N7.50 per share.
Cadbury Nigeria gained by 9.96 per cent, and end the day at N29.25, while Fidson rose by 9.95 per cent to close at N20.45 per share.
Eterna also advanced by 9.90 per cent to close at N43.85 per share.
On the losers’ chart, Livestock Feeds dropped by 10 per cent, closing at N8.55 per share.
Aradel Holdings declined by 9.86 per cent to end the session at N448.00 per share
Tripple Gee fell by 9.60 per cent to close at N1.79, while John Holt Plc shed 7.94 per cent to close at N5.80 per share.
Linkage Assurance lost by 6.15 per cent, and finished the day at N1.22 per share.
A total of 500.59 million shares worth N12.110 billion were traded in 17,637 transactions.
This is compared to Friday’s 428.08 million shares worth N20.174 billion, exchanged across 14,284 transactions.
Access Corporation led the activity chart with 60.867 million shares traded, which was worth N1.45 billion.
Fidelity Bank followed with 56.105 million shares valued at N1.13 billion while the United Bank for Africa sold 34.53 million shares worth N1.174 billion.
Guarantee Trust Holding Company transacted 33.49 million shares valued at N2.181 billion and the Nigerian Breweries traded 28.336 million shares, amounting to N1.15 billion.
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