Despite ₦58 Trillion Deposits, Nigerian Banks Face Profit Crisis After CBN Rate Cut

Nigerian banks are holding record levels of cash yet profits are tightening. The latest report from the Central Bank of Nigeria (CBN) shows that the country’s financial institutions are sitting on more than ₦58 trillion in deposits with the apex bank, even as lending to the real economy weakens.
The CBN’s Monetary Policy Committee (MPC) cut the Monetary Policy Rate (MPR) slightly from 27.5% to 27% in September 2025. It was meant to ease credit costs for borrowers and support economic growth. But instead, the move triggered a surge in bank placements at the CBN, as banks chose safer profits from the CBN over risky loans to the public
Central bank report shows deposits in the Standing Deposit Facility (SDF) climbed from ₦26.5 trillion before the rate cut to over ₦58.1 trillion afterward. Liquidity in the banking system also doubled, from ₦2.1 trillion to ₦5.7 trillion in a single week.
While this shows the system is flush with cash, it also highlights a deeper concern: banks are choosing to park funds at the CBN instead of lending to businesses and households. Analysts warn that this “safe play” strategy could weigh heavily on banks’ profit margins if it continues.
Earlier this year, the cost of borrowing was already sky-high. The average maximum lending rate jumped from 29.79% in January to 30.5% in February 2025. High loan rates have discouraged many small and medium enterprises from borrowing, stifling credit growth.
The CBN, on its part, has asked banks to raise more capital to stay strong against economic shocks. But with non-performing loans creeping up to 5.6%, above the regulatory limit, that’s another headache for lenders already under pressure.
For now, the industry faces a paradox: too much liquidity, but too little profit. Until interest rates drop further and loan demand rebounds, Nigerian banks may continue to post large balance sheets but slimmer earnings.

Key Data Snapshot (September 2025)