Banks tighten lending as broad money drops to N117.78trn

From Adanna Nnamani, Abuja

Nigeria’s broad money supply slipped to N117.78 trillion in September 2025, a 1.6 per cent decline from N119.69 trillion in August, following tighter liquidity management by banks and new monetary adjustments by the Central Bank of Nigeria (CBN).

Fresh figures from the apex bank reveal that the contraction came despite the Monetary Policy Committee’s (MPC) move to ease the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent.

The adjustment, announced by CBN Governor Olayemi Cardoso after the September 22–23 meeting, was aimed at stimulating growth while keeping inflation in check.

However, net domestic assets, a key driver of money supply, fell by 2.5 per cent to N76.12 trillion from N78.10 trillion in August, suggesting that banks tightened credit amid new regulatory constraints.

The CBN had recently raised the Cash Reserve Requirement (CRR) for commercial banks to 45 per cent and imposed a 75 per cent CRR on non-TSA public deposits, moves that significantly curbed available lending funds.

Net foreign assets provided only a mild offset, inching up by 0.2 per cent to N41.66 trillion in September. While stronger than the N19.50 trillion recorded a year earlier, the monthly gain was too small to reverse the domestic squeeze.

Other indicators also pointed to a general tightening. M2, which captures cash, savings, and term deposits, dropped by 1.6 per cent to N117.77 trillion, while M1, covering cash and demand deposits, declined by 0.7 per cent to N39.11 trillion.

Despite the monthly fall, broad money supply was still 7.6 per cent higher than the N109.41 trillion recorded in September 2024, underscoring that long-term liquidity growth remains intact.

Analysts say the September figures highlight the delicate balance facing the CBN, loosening interest rates to encourage growth while enforcing strict liquidity measures to keep inflation and excess credit in check.