CBN’s Tight CRR Policy May Be Costing Nigerian Banks Trillions, Chapel Hill Denham Warns - Tekedia

Chapel Hill Denham says Nigeria’s 50% cash reserve ratio is weighing on bank profitability by forcing lenders to park half of deposits at the central bank without interest.

The firm estimates the policy could shave about N2.5 trillion off annual earnings and reduce banks’ ability to extend credit to the private sector.

It argues Nigerian banks remain discounted by investors because of regulatory and macroeconomic risks, including inflation control and foreign-exchange volatility.

The report suggests the tight reserve rule may help curb inflation and support the naira, but at the cost of slower lending and weaker economic growth.