The mandatory reserves of Stanbic IBTC Holdings Plc, First City Monument Bank (FCMB), and three other Nigerian banks with the Central Bank of Nigeria (CBN) rose to N6.9 trillion in 2025, underscoring the continued squeeze from the apex bank’s tight monetary stance.
The reserves, according to the lenders’ unaudited results for the year ended December 31, 2025, represent a 6.5 per cent increase from the N6.5 trillion reported in 2024.
Some other banks include Wema Bank Plc and Sterling Financial Holdings Company Plc.
At the heart of the surge is the Cash Reserve Ratio (CRR) policy, a monetary tool the CBN has leaned on heavily in its bid to rein in inflation and mop up excess liquidity from the banking system.
Mandatory reserves are portions of customers’ deposits that banks are required to keep with the CBN. These funds are sterilised, unavailable for daily operations, and excluded from cash and cash equivalents in financial statements.
A breakdown of the figures reveals divergent trends among the lenders.
First Holdco posted N4.1 trillion in mandatory reserve deposits in 2025, up 9.5 per cent from N3.7 trillion in 2024, reflecting the scale of its deposit base and the tightening liquidity environment.
Stanbic IBTC’s reserves rose sharply by 48 per cent to N1.06 trillion from N717.04 billion in the previous year, signalling a significant expansion in deposits and regulatory requirements.
In contrast, FCMB Group reported N1.02 trillion in mandatory reserves, a 17 per cent decline from N1.24 trillion in 2024.
Sterling Financial Holdings closed the year with N718.6 billion in restricted deposits, down 7.5 per cent from N777.09 billion.
Wema Bank recorded N19.67 billion in mandatory reserves in 2025, representing a 28.9 per cent drop from N27.67 billion in 2024.
In its unaudited statement, Wema clarified that the figure was reported net of N19.67 billion under the Differentiated Cash Reserve Requirement (DCRR) Scheme, compared to N27.67 billion in 2024.
Under the DCRR framework, Deposit Money Banks can apply to release part of their CRR balances to fund new (greenfield) or expansion (brownfield) projects in key real-sector segments, such as agriculture and manufacturing.
The initiative is designed to channel credit into productive sectors even within a restrictive monetary regime.
The CBN’s Monetary Policy Committee (MPC) has adjusted the CRR multiple times in the past two years as it sought to contain inflation and stabilise the foreign exchange market.
In 2025, the MPC reduced the CRR for Deposit Money Banks to 45 per cent from 50 per cent, the level it had closed at in 2024, while retaining the Merchant Banks’ ratio at 16 per cent. It also introduced a 75 per cent CRR on non-Treasury Single Account (non-TSA) public sector deposits.
The aggressive use of the CRR marks a shift from September 2022, when the ratio stood at 27.5 per cent. It was first raised to 32.5 per cent under the previous CBN leadership.
However, the sharpest increases came under the current administration. At the February 2024 MPC meeting, the first under Governor Olayemi Cardoso, the CRR was hiked to 45 per cent, before climbing further to 50 per cent in August 2024. Merchant Banks’ CRR was also raised from 10 per cent to 14 per cent in March 2024.
These measures were introduced amid rising inflation and pressure on the naira. Although inflation moderated to 15.15 per cent in December 2025 following the National Bureau of Statistics’ rebasing exercise, policymakers remain cautious about underlying price pressures.
While the CBN views the CRR as a necessary brake on inflation, banks and shareholders see it as a mounting cost.
With the CRR at 45 per cent, nearly half of customer deposits are locked with the CBN, earning no interest. Yet banks continue to pay interest on the full deposit base.
The result is a structural squeeze on margins.
“As it stands, we are paying interest on 100 per cent of deposits but only have access to 55 per cent to lend out,” an executive director at a Tier-2 bank told THISDAY, capturing the industry’s frustration.
Chairman of the Progressive Shareholders Association of Nigeria, Boniface Okezie, echoed similar concerns. He noted that shareholders had repeatedly urged the CBN to consider paying interest on mandatory reserves to ease the pressure on earnings and dividend payouts.
“The funds deposited by banks with the CBN are not used. If these funds are with banks, it will certainly enhance their earnings and returns to shareholders. It will create more banking expansion,” he said.
Okezie suggested that even a modest three per cent interest rate on mandatory reserves could support lending to the real sector and strengthen banks’ capacity to reward investors.
Kayode Tokede
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