Lending rates will continue to fall as loans are mostly at variable rates.
According to Fitch Ratings, the banking sector’s Net Interest Margin (NIM) declined sharply to 11.4% in August 2025 from 14.8% in January 2025, and recent and future MPR cuts will put further pressure on profitability in 2025-2026.
These trends mark the end of a period of particularly wide NIMs, driven by the heightened interest rates that accompanied the sovereign debt restructuring launched in December 2022.
According to the UK-based firm, wide NIMs have supported a recovery in the banking sector’s capital from the sovereign default, with the vast majority of banks likely to be capital-compliant when forbearance relating to losses on cedi government bonds expires at end-2025.
Fitch expects loan growth to increase significantly in the near term due to the lower yields on sovereign securities, the recovery in capitalisation, and cash reserve ratio requirements that incentivise higher loan/deposit ratios.
It explained that the conclusion of the sovereign debt restructuring, increasing real Gross Domestic Product growth, and lower inflation and interest rates will also help to stimulate loan growth following several years of particularly challenging economic conditions.
Net loans represented just 19% of banking sector assets at half-year 2025, providing scope to extend more credit as the economic environment improves. However, increased loan growth will not be sufficient to offset the negative impact of sharply lower interest rates on NIMs.
Meanwhile, Ghanaian banks’ non-performing loan ratios are likely to decrease significantly to comply with new BoG regulations from end-2026.
Fitch expects banks to accelerate write-offs to reduce these ratios to below 15% by end-2026 to avoid restrictions on dividends and bonus payments. This is likely to lead to increased loan impairment charges, compounding the impact of narrower NIMs on profitability in 2025-2026.
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