Bank Profits Slide to GH¢7.1bn as Low Interest Rates Squeeze Earnings

Ghana’s banking sector is feeling the pinch as commercial banks’ profit after tax slipped to GH¢7.1 billion by the end of June 2026, with the prevailing low-interest-rate environment squeezing one of their biggest sources of income.

The latest figures from the Bank of Ghana’s July 2026 Monetary Policy Report show that banking-sector profit after tax fell by 1.3% year-on-year, from GH¢7.2 billion in June 2025 to GH¢7.1 billion in June 2026.

The decline marks a sharp reversal from the sector’s performance a year earlier, when profit after tax surged by 32.6%.

Low Interest Rates Take a Toll

The biggest pressure came from net interest income, a major source of earnings for commercial banks.

According to the Bank of Ghana, net interest income contracted by 3.1% in June 2026, compared with a 20.2% increase recorded during the same period in 2025.

The central bank attributed the decline largely to the prevailing low-interest-rate environment, which weakened interest income generated by banks.

The sector’s interest spread also narrowed sharply from 6.0% to 4.4%, while gross yields fell from 8.9% to 6.1%.

Rising Bad-Debt Costs Add More Pressure

While lower interest rates squeezed earnings, banks also faced a significant increase in provisions linked to depreciation, bad debts and impairment losses on financial assets.

These provisions jumped by 38.2% in June 2026, compared with a 14.8% contraction recorded a year earlier.

The development adds another layer of pressure to banks’ profitability, despite a moderation in the growth of operating expenses.

Fees and Commissions Provide Some Relief

Not all income streams weakened.

Fees and commissions grew by 18.2%, slightly higher than the 17.8% growth recorded in June 2025.

However, the stronger performance from fees and commissions was not enough to offset the decline in net interest income and the broader slowdown in major income streams.

Returns Also Take a Hit

The slowdown in profits has been reflected in the sector’s key profitability indicators.

Return on Equity (ROE) fell from 32.2% to 22.9%, while Return on Assets (ROA) dropped from 5.6% to 4.4%.

The figures point to a significant moderation in the profitability of Ghana’s banking industry compared with the strong growth recorded in 2025.

Banks Face a New Earnings Environment

The latest performance highlights the changing environment facing Ghana’s banks as interest rates decline.

While lower rates can provide relief for borrowers and businesses, they can simultaneously squeeze banks’ interest margins and reduce returns from interest-bearing assets. PwC Ghana similarly notes that lower rates can compress bank profitability because a large share of bank revenue comes from interest income.

For Ghana’s banking industry, the challenge will now be to maintain profitability, control costs and manage credit risks in an increasingly low-yield environment.

The banks are still profitable—but the era of rapidly rising earnings appears to be facing a tougher test.