Ghana’s banking industry remained profitable during the first half of 2026, although lower interest rates and rising credit-related costs put significant pressure on banks’ earnings and core income.
According to the Bank of Ghana’s July 2026 Monetary Policy Report, banks recorded GH¢7.1 billion in profit after tax (PAT) at the end of June 2026, slightly lower than the GH¢7.2 billion recorded during the same period in 2025.
The latest figures represent a 1.3% year-on-year decline in profit after tax, marking a major slowdown from the 32.6% growth recorded in June 2025. Profit before tax (PBT) also contracted by 1.5%, compared with a 32.2% increase recorded a year earlier.
Low Interest Rates Weigh on Ghana Banks
The biggest pressure on banking sector profitability came from net interest income, which declined by 3.1% in June 2026.
This was a significant reversal from the 20.2% growth recorded in June 2025. The Bank of Ghana attributed the weaker performance largely to the prevailing low interest-rate environment, which affected banks’ core interest earnings.
Despite the decline in interest income, fees and commissions provided some relief to banks. Revenue from fees and commissions increased by 18.2%, slightly above the 17.8% growth recorded during the same period in 2025.
Bad Debt and Credit Costs Increase
Ghanaian banks also experienced a substantial increase in credit-related expenses during the period under review.
Provisions for depreciation, bad debts and impairment losses on financial assets surged by 38.2%, compared with a 14.8% decline recorded in June 2025.
The sharp increase in impairment and credit costs added further pressure to banks’ overall profitability during the first half of 2026.
Bank Profitability Indicators Decline
The slowdown in earnings was reflected in key banking sector performance indicators.
The industry’s Return on Equity (ROE) dropped significantly to 22.9%, from 32.2% in June 2025.
Similarly, Return on Assets (ROA) declined to 4.4%, compared with 5.6% recorded a year earlier.
The banking industry’s interest spread also narrowed to 4.4%, down from 6.0%, while gross yields fell from 8.9% to 6.1%.
Investment Income Remains Key Revenue Source
Despite the pressure on profitability, investment income remained the largest source of earnings for Ghana’s banks.
However, its contribution to total banking industry income declined from 46.4% to 42.8% during the period.
Income generated from loans and advances also accounted for a smaller share of total income, falling from 30.1% to 28.4%.
The latest Bank of Ghana data suggest that while Ghana’s banking sector continues to maintain strong profitability, banks are facing a more challenging operating environment due to lower interest rates, narrowing interest margins and rising credit impairment costs.
Source: newsthemegh.com