Nigeria’s Banking System Liquidity Surges to ₦5.53tn in May as CBN Steps Up Cash Withdrawal

Nigeria’s banking system recorded a sharp increase in liquidity in May 2026, with average net liquidity rising to ₦5.53tn from ₦4.72tn in April, as inflows from maturing Central Bank of Nigeria bills, bond coupons and federal allocations boosted cash available in the financial system.

The increase represented a 17.16 per cent month-on-month rise, according to the CBN’s May 2026 Monthly Economic Report.

The report attributed the surge largely to proceeds from maturing CBN bills, coupon payments on bonds and disbursements by the Federation Account Allocation Committee. Cash Reserve Ratio requirements and foreign exchange transactions also influenced conditions in the banking system, helping to keep short-term interest rates stable.

To absorb the excess liquidity, the apex bank increased its Open Market Operations through the issuance of CBN bills. It offered ₦3.6tn worth of bills, but investor subscriptions reached ₦14.4tn, reflecting strong demand for the securities.

The CBN eventually allotted ₦12.54tn, with stop rates ranging from 19.97 per cent to 21.90 per cent. The bank said the high level of subscriptions reflected excess liquidity in the system and the attractive returns offered by the instruments.

“Overall, the liquidity operations of the Bank resulted in net withdrawal from the banking system,” the CBN stated.

Meanwhile, the Federal Government continued its domestic borrowing programme through Nigerian Treasury Bills and Federal Government of Nigeria bonds. Treasury bill subscriptions reached ₦4.4tn in May against an initial offer of ₦1.35tn, with the 364-day instrument attracting the largest share of investor interest.

The government also offered 10-year and 20-year FGN bonds, attracting ₦800bn in subscriptions against an offer of ₦600bn. Stop rates for the bonds stood between 17.00 per cent and 17.04 per cent, while the CBN said the oversubscription reflected attractive yields and sustained investor confidence in government securities.