African banks delivered a return on equity (ROE) of 17 per cent in 2025, well above the global average of about 10 per cent, according to a McKinsey & Company report, From potential to performance: A snapshot of African banking, published on 31 March 2026.
The figure was down from 19 per cent in 2024, as interest rates eased in many major African countries, the consultancy said. Average ROE at African banks had risen from 9 per cent in 2020 to 19 per cent in 2024. McKinsey put the size of the continent's banking market at around $107 billion in 2025, with revenues having grown from $81 billion in 2020 to $99 billion in 2024.
The sector's cost-to-income ratio stood at 49 per cent in 2024 and 2025, below the global level of 51.1 per cent, although its cost-to-asset ratio of 2.6 per cent was double the global figure of 1.3 per cent, according to the report.
NIGERIA'S RECAPITALISATION
The report highlights Nigeria, where the Central Bank of Nigeria's (CBN) March 2024 decision to raise capital requirements is driving consolidation through mergers and acquisitions, citing the merger between Unity Bank and Providus Bank as an example. Minimum capital for banks with international authorisation rises to 500 billion naira ($330 million) from 50 billion naira, and for national banks to 200 billion naira ($130 million) from 25 billion naira, with a March 2026 deadline. The CBN has also halted capital distributions for banks under forbearance.
OUTLOOK TO 2030
McKinsey forecasts Nigeria's banking market to grow at a compound annual rate of 7 per cent to about $16 billion by 2030. It projects Egypt's banking revenues before risk to grow at about 11 per cent a year to $34 billion, and South Africa's to grow at about 2 per cent a year to $30 billion. In Kenya, new regulations include higher core capital requirements for 2029.
The consultancy said that, to lock in gains as tailwinds fade, African banks could pursue a unified strategy covering financial stability, disciplined growth and future capabilities, including fortifying cyber, fraud and operational resilience, industrialising AI and strengthening data foundations.