Coverage: weekly note · Information to 7 April 2025
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TGB Weekly Research Note · 7 April 2025
Bank capital ratios held up through 2024, but Ghana's headline still rests on regulatory reliefs and Nigeria's end-2023 recovery came as banks booked currency revaluation gains.
The desk view
Bank capital in the region's two most stressed large systems survived 2024, but on terms that flatter the headline. In Ghana the capital adequacy ratio with reliefs edged up to 14.0% in December 2024, while the ratio without reliefs rose to 11.3% from 8.3%, still short of the 13% banks have pledged to reach without forbearance by 2025. In Nigeria the aggregate ratio recovered to 13.3% at end-2023 as most banks booked FX valuation gains. Kenya's ratio stood at 19.4% in December 2024, well above its 14.5% minimum. Our reading is that 2025 is the real test, as reliefs unwind in Ghana and Nigerian banks raise fresh capital.
Ghana rebuilt capital, but the headline still leans on reliefs
The Bank of Ghana described the sector in January 2025 as profitable, well capitalised and liquid, with assets up 33.8% in 2024. The capital adequacy ratio (CAR) with reliefs rose marginally to 14.0% in December 2024 from 13.9% a year earlier. The more informative measure is the ratio without reliefs, which rose to 11.3% from 8.3%, a gain of 3.0 percentage points. By end-February 2025 it had reached 12.1%, against 14.4% with reliefs.
Profits rose in 2024, although growth slowed. The IMF reported that by mid-2024 about two-thirds of banks complied with capital standards without reliefs, helped by capital injections that included GHS 4.9 billion from the Ghana Financial Stability Fund. The Bank of Ghana has also suspended dividend payments for all banks until further notice.
Under the recapitalisation plans agreed after the domestic debt exchange, banks with shortfalls pledged to close at least one-third of the gap each year to reach a 13% CAR without forbearance by 2025, and all banks were to have a positive CAR by end-2024. On the December 2024 figure the system remained 1.7 percentage points short of that level without reliefs.
Ghana bank capital adequacy ratio, %
Source: Bank of Ghana, MPC Press Release – January 2025 (press briefing for the 122nd Monetary Policy Committee meetings), 31 January 2025; Bank of Ghana, Monetary Policy Committee (MPC) Press Release, March 28, 2025, 28 March 2025.
Asset quality is the weak flank. The NPL ratio rose to 21.8% in December 2024 from 20.6% a year earlier, and stood at 22.6% in February 2025, against 24.6% a year earlier. The Bank of Ghana said in March 2025 that credit risks remain elevated and that it will closely monitor undercapitalised banks.
Nigeria's naira reset lifted capital before testing it
Nigeria's pressure came through the exchange rate. After the official foreign exchange windows were unified in June 2023, the naira depreciated by around 100% against the dollar, from 461 per dollar in May 2023 to 900 at end-2023, and depreciated by another 40% in January and February 2024. The IMF reported that most commercial banks booked profits thanks to FX valuation gains and that the system CAR improved to 13.3% at end-2023. That compared with 11.2% in the second quarter of 2023. The minimum CAR is 15% for banks with international operations and 10% for others.
The same shock exposed weaker balance sheets. Three banks unable to meet capital requirements were placed under a special supervisory regime, and the Central Bank of Nigeria's January 2024 stress test found that four banks would face a shortfall under a sharp rise in rates and a further 50% depreciation. Those banks were asked to build buffers, including from FX gains.
The CBN has raised minimum paid-up capital for commercial, merchant and non-interest banks, giving them two years to comply. COVID-era forbearance, including light loan classification rules, was still in place in 2024, and the IMF said it should be phased out. At bank level, GTCO closed the year with a CAR of 39.3% and said it had provided for all its forbearance loans ahead of the June 2025 timeline while fully accruing for the windfall tax.
Kenya and South Africa kept wider buffers
Kenya's total CAR was 19.4% in December 2024, against a statutory minimum of 14.5%, although gross NPLs were 16.4%. In South Africa the total CAR averaged 17.21% in 2024 to August and the CET1 ratio 13.31%, close to 2023 levels, ahead of the countercyclical buffer rising to 1% on 1 January 2025.
Bank capital adequacy, selected African systems
| System | Capital adequacy ratio | Period | Minimum or target |
|---|---|---|---|
| Ghana, with reliefs | 14.0% | December 2024 | 13% without forbearance by 2025 |
| Ghana, without reliefs | 11.3% | December 2024 | 13% without forbearance by 2025 |
| Nigeria | 13.3% | End-2023 | 15% international, 10% other |
| Kenya | 19.4% | December 2024 | 14.5% |
| South Africa | 17.21% | 2024 average to August | Not stated |
Source: Bank of Ghana, MPC Press Release – January 2025 (press briefing for the 122nd Monetary Policy Committee meetings), 31 January 2025; International Monetary Fund, Ghana: Third Review Under the Arrangement Under the Extended Credit Facility, Request for Modification of Performance Criteria, and Financing Assurances Review (IMF Country Report No. 24/334), 10 December 2024; International Monetary Fund, Nigeria: 2024 Article IV Consultation – Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Nigeria (IMF Country Report No. 24/102), 9 May 2024; Central Bank of Kenya, Monetary Policy Committee Meeting Background Information, February 2025, 6 February 2025; South African Reserve Bank, Financial Stability Review, Second Edition 2024, 28 November 2024.
What 2025 will test
The common thread is that headline resilience in the stressed systems was partly accounting-driven. In Ghana, forbearance on debt exchange losses is being lifted by one-third a year through end-2025, and a schedule for removing other reliefs, including those lowering minimum CARs, begins at end-June 2025. Banks that missed the end-2024 recapitalisation milestones face measures proportional to the breach under an end-March 2025 structural benchmark. In Nigeria, the recapitalisation window and the end of forbearance will show how durable the improvement that came with FX valuation gains proves to be. For investors, Ghana's ratio without reliefs and Nigeria's fresh equity are better guides than the headline.
What to watch
- End-June 2025: Ghana begins its schedule for lifting temporary forbearances, including lower minimum CARs
- June 2025: timeline for Nigerian banks' forbearance loans, cited in GTCO's 2024 results
- End-2025: Ghanaian banks to reach a 13% CAR without forbearance
Primary sources: Bank of Ghana, MPC Press Release – January 2025 (press briefing for the 122nd Monetary Policy Committee meetings), 31 January 2025; International Monetary Fund, Nigeria: 2024 Article IV Consultation – Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Nigeria (IMF Country Report No. 24/102), 9 May 2024; Central Bank of Kenya, Monetary Policy Committee Meeting Background Information, February 2025, 6 February 2025; International Monetary Fund, Ghana: Third Review Under the Arrangement Under the Extended Credit Facility, Request for Modification of Performance Criteria, and Financing Assurances Review (IMF Country Report No. 24/334), 10 December 2024; Bank of Ghana, Monetary Policy Committee (MPC) Press Release, March 28, 2025, 28 March 2025; Guaranty Trust Holding Company Plc (GTCO), GTCO Plc Releases 2024 Full Year Audited Results…Pays Shareholders Record Dividend of N8.03k for 2024 Financial Year, 31 March 2025; South African Reserve Bank, Financial Stability Review, Second Edition 2024, 28 November 2024.