Banks’ profits jump 22% to ¢4.3bn on broad income growth
By The New Finder reporter
The country’s banking industry recorded a 22.0 percent year-on-year growth in profit to GHS4.3 billion as of April 2025, according to the latest Banking Sector Development Report by the Bank of Ghana.
This marks a significant increase from the GHS3.5 billion posted in the same period of 2024.
The report attributes the improved profitability to broad-based growth across all major income lines though some indicators show signs of moderating returns due to macroeconomic influences.
Interest Income Grows Modestly
Net interest income rose by 15.5 percent to GHS9.2 billion, albeit at a slower pace than the 22.4 percent growth recorded in April 2024. The data shows that interest income increased to GHS13.9 billion from GHS12.0 billion in April 2024, reflecting a modest 15.9 percent annual growth, compared to 19.4 percent in the previous year.
The report notes that the slower growth in interest income was partly the result of lower returns on money market instruments and a drop in lending rates, owing to improving macroeconomic conditions such as a stronger cedi and declining inflation.
Rising Interest Expenses and Borrowing Costs
At the same time, interest expenses rose sharply by 16.5 percent to GHS4.7 billion, up from 14.0 percent growth in April 2024. The report attributes this increase to a rise in bank borrowings, suggesting that financial institutions are tapping into more debt to support lending and other operations.
Fees, Commissions, and Other Income Surge
A key highlight of the report is the 26.2 percent surge in net fees and commissions, up from just 12.8 percent growth in the same period last year. This underscores the growing role of non-interest income in sustaining bank profitability.
Similarly, other income streams surged by 27.8 percent to GHS2.0 billion in April 2025, a remarkable rebound from the 20.8 percent contraction recorded a year earlier.
Profitability Indicators Show Mixed Picture
Despite the headline profit increase, core profitability indicators moderated slightly. Return on equity (ROE) fell to 30.0 percent from 35.0 percent in April 2024, while return on assets (ROA) dipped to 5.0 percent, down from 5.4 percent.
Analysts interpret these figures as a sign that while banks are earning more in absolute terms, their profitability efficiency has declined slightly, possibly due to higher operating costs, including interest expenses and provisioning requirements, as well as evolving regulatory and market conditions.
Outlook: Resilience amid Moderation
The banking sector’s performance in April 2025 highlights its resilience amid post-restructuring headwinds, with most income lines showing positive growth. However, the moderation in ROE and ROA suggests banks will need to carefully manage cost structures and improve operational efficiency to maintain profitability momentum.
