Profits in a time of pain

By Prof. Samuel Lartey

[email protected]

www.pefghana.org

In an economy still recalibrating after the shocks of debt restructuring, currency volatility, and inflationary pressure, the financial performance of banks in Ghana presents a striking paradox. On Wednesday, March 25, 2026, GCB Bank PLC announced a record Profit Before Tax of GH¢3.17 billion for the 2025 financial year, representing a remarkable 67.4 percent year on year growth.

At a glance, this is a story of resilience, strong leadership, and disciplined execution. Yet beneath the surface lies a more complex and uncomfortable narrative. While banks report record profits, many businesses and households remain constrained, disengaged, and financially fatigued. The question that emerges is simple but profound. Who is truly benefiting from the growth of Ghana’s banking sector?

The Anatomy of Bank Profitability in Ghana

The performance of GCB Bank reflects broader trends across the banking industry. With customer deposits rising by 19.7 percent to GH¢41.3 billion and total assets expanding by 23 percent to GH¢52.6 billion, the bank has effectively leveraged liquidity into profitability. Its capital adequacy ratio of 18.0 percent remains comfortably above the regulatory minimum set by the Bank of Ghana.

Across the sector, several forces have driven this surge in profitability:

1. High Interest Rate Environment

Ghana’s monetary policy tightening, with policy rates remaining elevated through much of 2023 to 2025, translated into higher lending rates. Banks widened their net interest margins, earning more on loans and government securities.

2. Investment in Government Securities

Following the Domestic Debt Exchange Programme, banks restructured their exposure but continued to rely heavily on government instruments. These securities, despite restructuring losses, still provided relatively stable returns compared to private sector lending.

3. Fee and Commission Growth

Digital banking expansion, transaction fees, and service charges have become increasingly important income streams. Banks have monetised customer activity even when credit growth is constrained.

4. Operational Efficiency and Cost Discipline

Technology adoption and branch rationalisation have reduced operating costs. Many banks have become leaner, more efficient, and less reliant on physical infrastructure.

The Customer Reality: Strain, Disengagement, and Shrinking Opportunity

While banks celebrate profitability, customers tell a different story.

Small and medium enterprises, which form the backbone of Ghana’s economy, continue to face borrowing rates that often exceed 30 percent. For many entrepreneurs, access to credit has become both expensive and restrictive. Households, already grappling with inflation that peaked above 50 percent in 2022 and remains elevated relative to historical norms, find savings returns insufficient to preserve real value.

The aftermath of the Domestic Debt Exchange Programme has also reshaped trust. Institutional investors, pension funds, and individual bondholders absorbed significant losses or restructuring terms that extended maturities and reduced coupons. This experience has altered risk perception and weakened confidence in long term financial instruments.

The result is a subtle but important shift. Customers are disengaging. Some are reducing their reliance on banks, turning instead to informal finance, fintech platforms, or internal capital recycling within business networks.

A System Under Tension: Profit Without Inclusion

This divergence between bank performance and customer well-being highlights a structural imbalance.

Banks, by necessity, are risk managers. In times of uncertainty, they retreat to safer assets such as government securities and high-quality corporate bonds. However, this risk aversion can inadvertently starve the broader economy of credit.

Globally, similar patterns have emerged. In the aftermath of the COVID-19 pandemic and subsequent monetary tightening by central banks such as the Federal Reserve, commercial banks in both advanced and emerging markets reported strong profits driven by higher interest margins. Yet, credit conditions tightened, particularly for small businesses.

In Ghana, the situation is compounded by currency depreciation, fiscal consolidation under IMF programmes, and lingering sovereign risk concerns. Banks are profitable, but they are also cautious. Customers need support, but they are also riskier in a volatile environment.

The GCB Case: Leadership, Strategy, and the Bigger Question

The leadership of GCB Bank, under Managing Director Farihan Alhassan, has emphasised that its results are the outcome of deliberate strategy and disciplined execution. This is undeniably true. The bank’s growth in deposits, expansion of its balance sheet, and strong capital position reflect sound management.

Yet, the broader question remains. Can a bank be truly successful if its customers are not thriving?

Sustainable banking goes beyond profitability metrics. It requires aligning financial performance with economic impact. This means supporting businesses not only in good times but also during periods of stress. It means designing products that balance risk with accessibility. It means rebuilding trust after systemic shocks.

Bridging the Gap: What Must Change

To address this imbalance, several shifts are necessary:

Repricing Risk More Inclusively

Banks must develop more nuanced credit assessment models that allow viable small businesses to access funding at reasonable rates.

Deepening Financial Innovation

Digital lending, supply chain financing, and data-driven credit scoring can unlock new segments without significantly increasing risk.

Restoring Trust in Financial Instruments

Clear communication, transparency, and investor protection mechanisms are essential in rebuilding confidence after the debt exchange experience.

Strengthening Customer Centricity

Banks must move from transactional relationships to partnership models, where customer growth is seen as a driver of long term profitability.

Conclusion

The story of Ghana’s banking sector in 2025 and 2026 is not simply one of success or failure. It is a story of contrast. On one side are record profits, strong capital buffers, and operational efficiency. On the other are constrained businesses, cautious households, and a gradual erosion of trust.

GCB Bank and its peers have demonstrated that they can navigate complexity and deliver impressive financial results. The next challenge is more demanding. It is to ensure that this success is shared more broadly across the economy.

Because in the end, the strength of a bank is not measured only by the size of its profits, but by the prosperity of the people and businesses it serves.

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