Ghana Banks’ Profits to Fall as Rate Cuts Squeeze Margins
TLDR
- Ghanaian banks are facing a sharp decline in profitability as steep interest rate cuts compress net interest margins (NIMs)
- The sector’s returns are expected to weaken over 2025–2026 but will remain high relative to peers in sub-Saharan Africa
- The Bank of Ghana has eased monetary policy following a sharp fall in inflation, which dropped to 9.4% in September — its lowest in four years
Ghanaian banks are facing a sharp decline in profitability as steep interest rate cuts compress net interest margins (NIMs), according to Fitch Ratings. The sector’s returns are expected to weaken over 2025–2026 but will remain high relative to peers in sub-Saharan Africa.
The Bank of Ghana has eased monetary policy following a sharp fall in inflation, which dropped to 9.4% in September — its lowest in four years — from 11.5% in August. The policy rate has been cut by 650 basis points since July to 21.5%. Money-market yields have also fallen, with 91-day Treasury-bill rates down to 10.2% from 25.1% a year earlier.
The sector’s NIM slid to 11.4% in August from 14.8% in January and is expected to fall further as lending rates adjust downward. While lower rates are set to spur credit growth, they will not fully offset the loss of margin income.
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Points clés à retenir
Fitch said the shift marks the end of an exceptional period of wide margins that followed Ghana’s 2022 sovereign debt restructuring. Those high yields had allowed banks to rebuild capital buffers. With yields now declining and liquidity ample, most banks are expected to meet regulatory capital ratios once forbearance on bond losses expires at the end of 2025. Loan growth should pick up as lower yields on government securities and a stronger macroeconomic backdrop push banks to lend more. Net loans accounted for only 19 % of total sector assets in mid-2025, leaving room for expansion. However, Fitch warned that higher loan write-offs could weigh further on profits as lenders comply with new Bank of Ghana rules requiring non-performing loan ratios below 15 % by end-2026. The agency expects temporary earnings pressure as banks clean up balance sheets, even as lower inflation and rising GDP create a more stable environment for medium-term growth.
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