Banks record N255.02bn negative opening balance in Q1 2025

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13 hours ago

NIGERIAN banks recorded a negative opening balance of N255.02 billion in the first quarter of 2025, revealing growing liquidity challenges and financial pressures within the sector amid a volatile economic environment.

According to data from the Central Bank of Nigeria (CBN), the average opening position of banks between January and March 2025 stood at a negative N255.02 billion, signaling tighter cash conditions across the financial system. This development points to a growing strain on banks’ short-term liquidity buffers and raises concerns about their ability to meet daily funding obligations without resorting to the CBN’s lending window.

Analysts attribute the deficit to a combination of factors, including high cash reserve requirements, sluggish credit repayment from the private sector, and increased pressure from monetary tightening policies aimed at curbing inflation. Additionally, foreign exchange volatility and continued naira depreciation have heightened operational costs for banks, further impacting liquidity levels.

“This negative opening balance is a red flag,” said financial analyst Dapo Akinwale in an earlier response. “It suggests that banks are under pressure and may be increasingly reliant on CBN’s standing lending facility to meet short-term obligations, which is not sustainable in the long term.”

The liquidity shortfall also comes at a time when banks are ramping up investments in digital infrastructure and expanding agent networks to boost financial inclusion. While these long-term strategies may strengthen competitiveness, they have contributed to near-term cash flow constraints.

Experts are calling for a more flexible regulatory environment, better debt recovery mechanisms, and possible liquidity support to safeguard the sector’s stability. As Nigeria continues to battle inflation and economic uncertainty, the health of its banking system remains a key concern for policymakers and investors alike.