Commercial bank cash liquidity climbed to ₦5.53 trillion in May 2026. That is a 17.16% increase from ₦4.72 trillion in April. The Central Bank of Nigeria (CBN) disclosed the figure in its Monthly Economic Report. The surge was driven by maturing CBN bills, bond coupon payments, and Federation Account Allocation Committee disbursements. The banking sector’s liquidity ratio reached 69.27% in February 2026. That is more than double the regulatory minimum of 30%.
The CBN launched a recapitalisation drive in March 2024. Banks raised about ₦4.7 trillion in fresh capital. The exercise strengthened balance sheets. It also created excess liquidity. Banks prefer investing in Treasury bills and government bonds over lending to businesses. The yields are attractive. The risks are lower. This pattern is not new. In 2012, the liquidity ratio hit 68%. Banks then also favoured government securities over private credit.
The CBN offered ₦3.6 trillion in bills in May. It received ₦14.4 trillion in subscriptions. The excess demand reflected the liquidity surfeit. The CBN allotted ₦12.54 trillion. Treasury bill subscriptions reached ₦4.4 trillion, more than three times the ₦1.35 trillion offered. The 364-day bill attracted the largest share. Longer-term bonds also saw strong demand.
The liquidity is not necessarily cash. It includes Treasury bills and other liquid assets. Banks are holding these instruments because yields are high. Lending to small and medium enterprises remains weak. The cost of credit is prohibitive. Non-performing loans are rising. Banks prefer the safety of government securities.
Winners: Banks, which earn attractive yields. The Federal Government, which funds its deficit cheaply. Investors in government securities. Losers: SMEs, which cannot access credit. The real economy, which remains starved of capital. The CBN, whose easing cycle has not boosted private lending. The naira, if liquidity fuels inflation.
Bottom Line: ₦5.53 trillion in liquidity. The banks are liquid, not generous. Recapitalisation strengthened balance sheets. It did not open lending taps. Until credit reaches businesses, the economy will not grow.