- Republic Bank Ghana Profit Falls 24% as Weaker Interest Income Offsets Loan Growth
Republic Bank Ghana PLC reported a decline in nine-month earnings despite expanding its loan book, growing deposits and strengthening its capital adequacy ratio, highlighting the pressure that lower interest income and rising operating costs are placing on banking profitability.
Group profit after tax fell by 24.19 per cent to GH¢153.42 million in the nine months ended September 2026, from GH¢202.38 million in the corresponding period of 2025. Profit before tax declined by 27.39 per cent to GH¢224.04 million, while earnings attributable to the bank’s controlling shareholders fell to GH¢146.06 million from GH¢193.19 million.
At the separate bank level, profit after tax dropped by 32.75 per cent to GH¢118.77 million. Basic earnings per share consequently declined to 13.94 pesewas from 20.73 pesewas, while group earnings per share fell to 17.14 pesewas from 22.68 pesewas.
The results point to a bank that is expanding its balance sheet but generating lower immediate returns from that growth. Republic Bank increased loans and investment assets and maintained regulatory buffers, but its income did not keep pace with the enlarged asset base and operating costs.
Group interest income declined by 18.24 per cent to GH¢761.74 million from GH¢931.70 million. Interest expense also fell, dropping by 27.55 per cent to GH¢281.36 million, but the reduction was insufficient to prevent net interest income from contracting.
Group net interest income decreased by 11.59 per cent to GH¢480.38 million from GH¢543.36 million. This suggests that declining asset yields, changes in the composition of interest-earning assets or repricing across the market reduced the income generated from the bank’s core intermediation business.
The pressure on interest earnings is particularly notable because loans and advances expanded strongly. A larger loan book would ordinarily be expected to support higher interest income. The divergence suggests that the timing of loan growth, declining lending rates or the performance of other interest-earning assets may have limited the income benefit during the reporting period.
Non-interest income offered some protection. Group net fee and commission income rose by 26.01 per cent to GH¢148.14 million from GH¢117.56 million. Fee and commission income reached GH¢152.75 million, while the associated expense remained controlled at GH¢4.61 million.
Net trading income increased by 9.48 per cent to GH¢49.45 million. Net income from investments measured at fair value through profit or loss also increased modestly to GH¢10.29 million.
Other income lines weakened. Other operating income fell to GH¢7.55 million from GH¢16.58 million, while other income declined to GH¢11.61 million from GH¢17.63 million. These reductions, combined with weaker net interest income, pulled total group operating income down by 5.65 per cent to GH¢707.41 million.
Costs moved in the opposite direction. Group personnel expenses increased by 9.15 per cent to GH¢252.71 million. Depreciation and amortisation rose by 11.34 per cent to GH¢47.35 million, while other operating expenses increased by 3 per cent to GH¢155.61 million.
Together with lease expenses, these costs produced an implied cost-to-income ratio of approximately 64.94 per cent, compared with about 56.85 per cent a year earlier. The deterioration means Republic Bank spent almost 65 pesewas in operating costs for every cedi of operating income before impairment and tax.
That narrowing operating margin is one of the most important signals in the results. Fee growth demonstrates that the bank can broaden revenue beyond interest income, but the increase was not large enough to offset the combined effect of weaker interest earnings and higher costs.
Credit impairment added further pressure. Net impairment losses on financial assets increased by 59.91 per cent to GH¢23.99 million from GH¢15 million. The absolute charge remains manageable relative to the size of the loan portfolio, but its direction deserves attention as the bank accelerates credit growth.
Republic Bank’s net loans and advances to customers increased by 29.04 per cent to GH¢4.03 billion from GH¢3.12 billion. The GH¢906.35 million increase indicates a material expansion in financing to customers and represents one of the strongest elements of the balance-sheet performance.
The reported non-performing loan ratio improved to 11.60 per cent from 16.49 per cent. This 4.89-percentage-point decline suggests that loan growth, recoveries, restructuring, write-offs or improved borrower performance reduced the proportion of impaired credit.
However, an NPL ratio above 11 per cent remains substantial. The decline is encouraging, but the quality of the newly originated loans will determine whether the improvement is sustainable. Credit growth can temporarily reduce an NPL ratio by enlarging its denominator before the newer loans have seasoned sufficiently to reveal repayment problems.
Customer deposits at group level increased by 13.80 per cent to GH¢7.02 billion from GH¢6.17 billion. That growth signals continuing customer confidence and provided an important source of funding for the expanding loan book.
Loans represented approximately 57.35 per cent of customer deposits, up from about 50.57 per cent a year earlier. The higher loan-to-deposit ratio shows that Republic Bank is deploying more of its funding into customer credit, which can support future earnings but reduces the share held in immediately liquid form.
Borrowings rose much faster than deposits, increasing by 54.59 per cent to GH¢2.77 billion from GH¢1.79 billion. The bank received GH¢1.92 billion in new borrowing during the nine-month period and repaid GH¢113.47 million, producing GH¢1.64 billion of net financing cash.
This increased reliance on borrowing deserves scrutiny. Borrowed funds can support faster asset growth, but they may be more expensive or less stable than customer deposits. Their value to shareholders will depend on whether Republic Bank can invest them at spreads sufficient to cover interest costs, credit losses and operating expenses.
Group total assets increased by 19.07 per cent to GH¢11.71 billion. Beyond loan growth, pledged assets rose by 56.50 per cent to GH¢2.80 billion, while investment securities more than tripled to GH¢905.71 million from GH¢272.19 million.
Cash and cash equivalents declined by 14.16 per cent to GH¢3.45 billion. The regulatory liquidity ratio also fell to 104.86 per cent from 121.23 per cent. Although the ratio remained above 100 per cent and the bank recorded no statutory liquidity breach, the decline reflects the increased deployment of liquid resources into loans, pledged assets and securities.
Cash-flow performance reinforces this interpretation. The group recorded a net operating cash outflow of GH¢1.33 billion, improving from a GH¢1.71 billion outflow in 2025 but still indicating significant cash absorption. During the period, customer deposits decreased by GH¢1.27 billion relative to the beginning of the year, even though their September balance remained above the year-earlier level.
Financing inflows covered much of the operating and investment cash requirement. Net investing cash outflow reached GH¢2.91 billion, driven mainly by purchases of investment securities. Cash consequently declined by GH¢2.61 billion during the nine months before exchange-rate effects.
Capital measures were more reassuring. Republic Bank’s capital adequacy ratio strengthened to 17.83 per cent from 16.75 per cent, while the leverage ratio improved to 7.21 per cent from 6.32 per cent. Group equity increased by 15.61 per cent to GH¢1.45 billion.
The improved capital ratios give the bank room to absorb risk and support lending, although this capacity must be considered alongside the increased borrowings and still-elevated NPL ratio. Contingent liabilities also rose to GH¢157.66 million from GH¢116.02 million.
Republic Bank paid GH¢42.60 million in dividends during the period. The distribution reduced retained earnings available for internal capital formation but remained below reported profit, allowing equity to continue expanding.
The outlook therefore rests on three connected tests. The first is whether loan growth can restore net interest income as recently originated facilities begin contributing for a full period. The second is whether management can improve operating efficiency after the cost-to-income ratio moved close to 65 per cent. The third is whether the falling NPL ratio can be sustained without a sharper increase in impairment charges.
Republic Bank enters the final quarter with stronger capital, a larger loan portfolio and growing fee income. Yet falling profit, lower liquidity and greater dependence on borrowing show that growth alone is not enough. The bank must now demonstrate that the additional assets can generate durable margins, cash and credit quality without weakening the buffers that make expansion sustainable.
