Ghana’s banking sector maintained strong profitability in the first half of 2026, but a decline in interest income and rising credit-related costs put pressure on banks’ earnings, according to the Bank of Ghana (BoG).
The latest BoG Monetary Policy Report shows that banks’ profit-after-tax (PAT) stood at GH¢7.1 billion at the end of June 2026, marginally lower than the GH¢7.2 billion recorded during the same period in 2025.
The 1.3 per cent decline marks a significant slowdown in the sector’s earnings momentum, following a 32.6 per cent increase in profit-after-tax recorded in June 2025.
Profit-before-tax also fell by 1.5 per cent in the period under review, compared with a 32.2 per cent growth recorded a year earlier.
The latest performance suggests that while banks continue to generate substantial profits, the prevailing low interest-rate environment is making it more difficult for them to grow income from their traditional lending activities.
The BoG identified net interest income as the major source of pressure on profitability, with the income stream declining by 3.1 per cent by June 2026.
This contrasts sharply with the 20.2 per cent growth recorded in net interest income in June 2025.
The central bank attributed the decline largely to the low interest-rate environment, which has narrowed the returns banks earn from their core lending and investment activities.
Banks, however, received some support from non-interest income, particularly fees and commissions.
Income from fees and commissions increased by 18.2 per cent during the period, slightly exceeding the 17.8 per cent growth recorded a year earlier.
At the same time, banks experienced a substantial increase in credit-related expenses, adding further pressure to their bottom lines.
Provisions for depreciation, bad debts and impairment losses on financial assets surged by 38.2 per cent, compared with a 14.8 per cent contraction recorded in June 2025.
The squeeze on earnings was also reflected in the sector’s profitability indicators.
Return on Equity (ROE), which measures the returns generated on shareholders’ funds, fell to 22.9 per cent from 32.2 per cent a year earlier.
Return on Assets (ROA) similarly declined to 4.4 per cent from 5.6 per cent.
The banking industry’s interest spread also narrowed considerably, falling to 4.4 per cent from 6.0 per cent, while gross yields dropped from 8.9 per cent to 6.1 per cent.
Despite the weaker interest margins, investment income remained the largest contributor to banks’ earnings.
However, its contribution to total income declined to 42.8 per cent from 46.4 per cent over the period.
The contribution of income from loans and advances also declined, falling from 30.1 per cent of total income in June 2025 to 28.4 per cent in June 2026.
The figures point to a changing earnings environment for Ghanaian banks, with lower interest rates affecting core income while higher impairment and credit-related costs create additional pressure.
Despite these challenges, the sector remained profitable, recording more than GH¢7 billion in profit-after-tax in the first six months of the year.
The performance will therefore be closely watched as banks navigate the low-rate environment, manage credit risks and seek to strengthen alternative sources of income in the second half of 2026.
