Keypoints:
- Fitch sees banks recovering after debt exchange
- Cedi surge and profits boost capital strength
- Six lenders may still need fresh support
MOST Ghanaian banks are on track to meet capital requirements when regulatory relief measures expire at the end of 2025, Fitch Ratings has said. The agency noted that a mix of profitability, muted lending growth and selective capital injections have reinforced the industry since the 2023 domestic debt exchange programme (DDEP).
‘The vast majority of Ghanaian banks will be capital-compliant once regulatory forbearance relating to the treatment of Ghana’s domestic default expires at end-2025,’ Fitch said in its latest sector assessment.
The Bank of Ghana introduced temporary measures after the debt restructuring, including eliminating the 3 percent capital conservation buffer and allowing lenders to spread losses from cedi-denominated government bonds over four years. Fitch said this approach ‘helped preserve confidence in the banking sector’ despite steep losses.
Recovery after debt exchange
The DDEP, launched in December 2022, forced banks to swap higher-yielding sovereign bonds for lower-interest instruments, hitting capital hard. Relief was only extended to cedi-denominated bonds, while Eurobond losses restructured in October 2024 were excluded due to banks’ limited exposure.
Despite the initial damage, Fitch reported that the sector has rebounded strongly. ‘The banking sector’s capitalisation has recovered considerably since the DDEP,’ it said, estimating that tangible common equity improved to 10.3 percent in Q1 2025 from 7.4 percent at end-2022.
Profitability has been underpinned by treasury bill yields, which were not included in the restructuring, alongside slow credit expansion. A more than 40 percent appreciation of the cedi since late 2024 has also reduced the weight of foreign-currency assets, lifting solvency.
Capital ratios climb
According to Fitch, the sector’s capital adequacy ratio excluding forbearance rose from 8.7 percent in February 2024 to 18.2 percent by mid-2025. ‘This indicates that the vast majority of banks will be comfortably compliant when the remaining 25 percent of losses on cedi government bonds is phased into regulatory capital at end-2025,’ the agency said.
Some government-owned lenders have already received injections, while private banks have generally not needed shareholder support.
Six banks face challenges
Fitch cautioned that six banks remain vulnerable: ‘Six banks are unlikely to achieve capital compliance through internal capital generation alone.’ It suggested they may require external capital, mergers, acquisitions, or extended forbearance to reach compliance.
Two of the undercapitalised lenders are state-owned and have already received state support. Fitch expects further injections before or soon after the compliance deadline.
Outlook for 2025
Overall, Fitch concluded that the sector is on firmer ground heading into 2025, but with caveats for weaker lenders. ‘The sector’s resilience will depend on continued profitability, stable credit growth, and timely capital support where required,’ the agency said.
