Ghana’s banking industry remained profitable in the first half of 2026, but earnings came under significant pressure as the low interest-rate environment weighed heavily on banks’ core income, according to the Bank of Ghana’s July 2026 Monetary Policy Report .
The industry’s profit-after-tax fell marginally to GH¢7.1 billion at end-June 2026, from GH¢7.2 billion a year earlier—a 1.3% contraction that marks a sharp reversal from the 32.6% growth recorded in June 2025 . Profit-before-tax also declined by 1.5%, compared with a 32.2% expansion a year earlier .
Interest income under pressure
The biggest drag on profitability came from net interest income, which contracted by 3.1%—reversing a 20.2% growth recorded in June 2025 . The Bank of Ghana attributed the slowdown largely to the prevailing low interest-rate environment, which has reduced returns from loans and other interest-generating investments .
The Ghana Reference Rate, the benchmark used by commercial banks to price cedi-denominated loans, declined to 10.18% in September 2026 from 23.80% a year earlier—a 57% drop within 12 months . Average lending rates have fallen from around 27% a year ago to about 15%, providing relief to borrowers but squeezing banks’ interest income .
Investment income remained banks’ largest source of earnings, although its contribution to total income fell to 42.8% from 46.4% . Income from loans and advances also declined as a share of total income, from 30.1% to 28.4% .
Fee income provides some relief
Despite the pressure on interest income, banks recorded stronger growth in income from fees and commissions, which increased by 18.2%—slightly above the 17.8% growth recorded a year earlier . The increase provided some support to banks’ overall earnings but was not enough to offset the decline in net interest income .
Banks also exercised greater control over their operating expenses during the period, with operating expenses increasing by 6%—significantly lower than the 21.4% growth recorded a year earlier . The slower increase helped cushion some of the pressure on profitability.
Rising provisions weigh on bottom line
The sector faced a significant increase in provisions for bad debts and impairment-related costs. Provisions for depreciation, bad debts, and impairment losses on financial assets surged by 38.2%, compared with a 14.8% contraction in June 2025 .
The sharp rise indicates increased pressure from credit-related and other financial losses, further weighing on banks’ bottom-line performance . However, industry-wide data shows the non-performing loan ratio has declined to 16.1% from 23.1% a year earlier , suggesting the increase in provisions may reflect a more conservative provisioning stance rather than deteriorating asset quality.
Profitability indicators weaken
The moderation in profitability was reflected in key performance indicators. Return on Equity fell sharply to 22.9% from 32.2%, while Return on Assets declined to 4.4% from 5.6% . The industry’s interest spread narrowed to 4.4% from 6.0%, while gross yields dropped to 6.1% from 8.9% .
Individual bank performance varies
Despite the industry-wide pressure, some banks have demonstrated resilience. GCB Bank reported a profit after tax of GH¢1.23 billion for the first half of 2026—a 46.4% increase over the corresponding period last year . The bank weathered the lower interest rate environment by reducing funding costs and significantly expanding income from fees, commissions, and trading activities . Net fee and commission income nearly doubled, increasing by 98% to GH¢658.7 million .
Private sector credit expands
The lower interest rate environment has encouraged increased lending to the private sector. Private-sector credit expanded 41.2% year-on-year in June 2026, compared with growth of 8.6% in June 2025 . Total bank advances increased to GH¢124.3 billion in June 2026 from GH¢89.7 billion a year earlier, representing growth of 38.6% .
Bank of Ghana Governor Dr Johnson Pandit Asiama has urged banks to increase financing to the productive sectors as monetary conditions improve, with particular attention to small and medium-sized enterprises and agriculture . However, agriculture and manufacturing continue to receive relatively small portions of private-sector credit despite their role in government’s industrialisation and export programmes .
Outlook
The latest performance suggests Ghana’s banking sector is moving from the strong profit growth recorded in 2025 to a period of more moderate earnings . While banks continued to generate significant profits, the combination of lower interest income and higher provisions limited overall growth .
The Bank of Ghana expects the banking sector to remain stable, with the outlook depending on banks continuing to follow strict lending rules and managing risks effectively . Credit to businesses and households is likely to increase in the coming months, especially as monetary policy eases, which could support economic growth across the country .
