Banking Sector Profit Jumps 46% Within First Eight Months of 2025

October 29, 2025

Ghana's banking industry maintained strong profitability in the first eight months of 2025, with profit-after-tax rising by 46.1% to GH¢9.7 billion, compared to GH¢6.7 billion recorded during the same period in 2024.

According to the September 2025 Monetary Policy Report released by the Bank of Ghana, the sector posted gains across all income lines, demonstrating robust financial performance and continued recovery momentum. Other income surged 47.3% in August 2025, marking a significant reversal from the 2.9% contraction recorded a year earlier.

Net interest income, a key revenue driver for banks, rose 21.8% to GH¢19.2 billion, up from GH¢16.9 billion in August 2024. The increase was driven by a slowdown in interest expenses due to lower interbank lending rates, which improved banks' interest margins and overall profitability.

On a year-on-year basis, interest income increased 21.5% to GH¢29.3 billion, reflecting higher lending activity and improved asset quality. However, interest expenses also climbed to GH¢10.2 billion from GH¢8.4 billion, representing 20.9% growth, slightly below the 22.1% growth recorded in August 2024. The slower growth in interest expenses compared to interest income contributed positively to the sector's net interest margin.

The report further noted that net fees and commissions grew 13.1% in August 2025, down from 22.9% a year earlier. Despite the slower growth rate compared to the previous year, fee-based income remained a significant contributor to banks' revenue diversification efforts. Overall net operating income expanded by 28%, compared to 10.9% growth in 2024, indicating strong operational performance across the sector.

Operating expenses also increased moderately, rising 19.5% compared to 18.9% in the previous year, reflecting marginal growth in staff and administrative costs. The controlled expense growth demonstrates improved cost management by banks, with operating expenses growing at a slower pace than income, thereby boosting profitability margins.

However, provisions for depreciation, bad debts, and impairment losses contracted sharply by 46%, against a 19.2% contraction in 2024. This significant reduction was attributed to higher recoveries and write-offs, suggesting improved asset quality and better loan recovery mechanisms across the banking sector. The declining provisioning requirements indicate that banks are experiencing fewer non-performing loans and are successfully recovering previously impaired assets.

Overall, profitability indicators strengthened significantly, underscoring the industry's robust recovery and stronger balance sheet performance. Return-on-equity (ROE) increased from 31.4% in August 2024 to 32.2% in August 2025, demonstrating improved returns for shareholders. Return-on-assets (ROA) showed even more impressive improvement, rising from 4.9% to 5.6% over the same period, indicating more efficient use of assets to generate profits.

The strong performance of Ghana's banking sector comes against the backdrop of ongoing macroeconomic challenges, including inflation pressures and currency volatility. However, banks have demonstrated resilience through improved risk management, better asset quality, and diversified revenue streams.

Industry analysts attribute the sector's strong performance to several factors, including the conclusion of the Domestic Debt Exchange Programme (DDEP), which has provided greater clarity on banks' government securities holdings; improved liquidity management as interbank rates moderate; enhanced credit risk assessment leading to better loan quality; successful recovery of previously non-performing loans; and continued digital transformation driving fee-based income.

The banking sector's profitability surge also reflects the benefits of the financial sector cleanup that was undertaken in recent years, which eliminated weaker institutions and strengthened the remaining banks. The consolidation has resulted in a more stable and profitable banking industry with stronger capital buffers and improved governance structures.

The improved financial performance positions Ghanaian banks favorably to support economic growth through increased lending to businesses and households. With stronger balance sheets and higher profitability, banks have greater capacity to extend credit to productive sectors of the economy, including agriculture, manufacturing, and small and medium enterprises.

However, challenges remain for the sector, including the need to balance profitability with affordable lending rates for businesses and consumers, managing exposure to government securities amid fiscal pressures, navigating currency risks in a volatile foreign exchange environment, addressing financial inclusion gaps to reach underserved populations, and adapting to evolving regulatory requirements and technological disruptions.

The Bank of Ghana's monetary policy decisions, including interest rate adjustments, will continue to influence the banking sector's performance in the remaining months of 2025. The central bank has been working to balance inflation control with support for economic growth, and its policy stance directly affects banks' lending rates and profitability.

Looking ahead, the banking sector's sustainability will depend on maintaining asset quality, controlling operating costs, diversifying income sources beyond traditional interest income, and continuing to invest in digital banking infrastructure to improve efficiency and customer service.

The strong third-quarter performance provides a solid foundation for the sector as it heads into the final months of 2025. If current trends continue, Ghana's banking industry is on track to deliver one of its most profitable years in recent history, contributing significantly to the country's financial sector stability and economic development.

Financial market observers will be watching closely to see whether banks can maintain this momentum while ensuring that improved profitability translates into greater lending support for the real economy and better services for customers across all segments of the population.