Capital Adequacy Ratio of Ghana’s Bankng Sector Ranked Third Weakest in SSA
Ghana’s banking sector remains under pressure with a Capital Adequacy Ratio (CAR) of just 14%, placing it among the weakest in Sub-Saharan Africa (SSA), according to Fitch Solutions’ latest report.
In its analysis titled “US Tariffs Increase Risks for SSA Banks”, Fitch ranks Ghana’s CAR as the third-lowest among SSA’s top 10 banking jurisdictions, signalling continued fragility in the country’s financial sector. The report attributes the weakened fundamentals to the government’s Domestic Debt Exchange Programme (DDEP) and a persistently tight monetary environment.
While Ghana’s minimum regulatory capital threshold is set at 13%, the Bank of Ghana has temporarily lowered this requirement to 10% as part of regulatory forbearance measures introduced in the wake of the DDEP. Nevertheless, Fitch’s findings suggest that the sector remains precariously capitalised, raising concerns over its ability to absorb further shocks.
Meanwhile, the rating firm anticipates a gradual easing in interest rates across most SSA economies in 2025, a development it argues could improve loan quality and support balance sheet recovery. Fitch also notes that robust bank profitability—driven by recent years of steep rate hikes—has created a financial buffer for institutions navigating ongoing volatility.
Still, the report cautions that shifting global monetary dynamics, compounded by new US tariffs, poses fresh challenges. “If interest rates remain elevated for longer than we currently expect, this could adversely impact loan quality and growth,” the report said, warning that such conditions could constrain credit extension as businesses and households adopt a more cautious stance.
High net interest margins—exceeding 50% in all major SSA markets except Nigeria—have provided a temporary lift to earnings, but Fitch warns that these gains may be eroded by sluggish lending and rising provisioning for non-performing loans (NPLs). Ghana’s NPL ratio currently stands at 21.8%, the highest among SSA’s top banking sectors.
A sharper-than-expected drop in rates, driven by global growth concerns, could also undercut profitability, further complicating banks’ operating landscape.
Fitch concludes that policy uncertainty is clouding strategic decision-making across SSA’s financial sector, with far-reaching implications for asset quality, credit growth and fee-based revenues.
