TGB Regional Banking Monitor: Sub-Saharan Africa

Coverage: Q2 2025 · Information to 3 October 2025

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TGB Quarterly Regional Banking Monitor · 3 October 2025

Central banks in South Africa, Kenya, Ghana and the West African Economic and Monetary Union cut policy rates between April and September 2025 and Nigeria cut by 50bp in September, while Ghanaian bank capital strengthened but non-performing loans stayed high in Kenya and Ghana.

The desk view

Policy easing spread across sub-Saharan Africa in the second quarter of 2025 and continued into the third. The Central Bank of Kenya cut three times between April and August, to 9.50%, the South African Reserve Bank took its policy rate to 7% from 1 August, the BCEAO cut to 3.25% in June, and the Bank of Ghana removed 650bp in two moves to 21.5%. The Central Bank of Nigeria held at 27.50% in May and July before cutting to 27.00% in September. Capital positions are solid: South African banks' total capital adequacy ratio averaged 17.22% between January and March 2025, Kenyan banks' total capital ratio was 19.6% in December 2024, and Ghana's ratio without regulatory reliefs reached 17.3% in August 2025. Asset quality is the weak point, with gross non-performing loan ratios of 17.6% in Kenya in June and 20.8% in Ghana in August.

27.00%

Central Bank of Nigeria MPR after the September 2025 cut

21.5%

Bank of Ghana policy rate after the 17 September 2025 cut

17.6%

Kenya's gross NPL ratio, April and June 2025

17.22%

South African banks' total capital adequacy ratio, January to March 2025 average

The regional picture

The International Monetary Fund's April 2025 Regional Economic Outlook estimated that regional growth averaged 4.0% in 2024 and cut its 2025 forecast for sub-Saharan Africa by 0.4 percentage points to 3.8%. It judged that the region's banks remained generally well capitalised, liquid and profitable. It warned, however, that reliance on domestic public debt had raised banks' exposure to sovereign risk in low-income and fragile countries.

Falling inflation gave most of the region's central banks room to ease. Kenyan inflation was 4.1% in July 2025, below the mid-point of the 5±2.5% target range, and South African headline inflation was 3% in June. Ghana's headline inflation fell from 18.4% in May to 11.5% in August 2025, and inflation in the West African Economic and Monetary Union (WAEMU) was 0.6% in the second quarter of 2025.

Policy decisions, April to September 2025

Decision date	Central bank	Decision	Policy rate after decision
8 April 2025	Central Bank of Kenya	Cut 75bp	10.00%
19–20 May 2025	Central Bank of Nigeria	Hold	27.50%
23 May 2025	Bank of Ghana	Hold	28.0%
29 May 2025	South African Reserve Bank	Cut 25bp	7.25%
4 June 2025	BCEAO (WAEMU)	Cut 25bp	3.25%
10 June 2025	Central Bank of Kenya	Cut 25bp	9.75%
21–22 July 2025	Central Bank of Nigeria	Hold	27.50%
30 July 2025	Bank of Ghana	Cut 300bp	25.0%
31 July 2025	South African Reserve Bank	Cut 25bp	7%
12 August 2025	Central Bank of Kenya	Cut 25bp	9.50%
17 September 2025	Bank of Ghana	Cut 350bp	21.5%
17 September 2025	BCEAO (WAEMU)	Hold	3.25%
18 September 2025	South African Reserve Bank	Hold	7%
22–23 September 2025	Central Bank of Nigeria	Cut 50bp	27.00%

Policy rate after the last decision to 23 September 2025, %

Source: Central Bank of Nigeria, Monetary Policy Committee: key decisions, 23 September 2025; Bank of Ghana, Monetary Policy Committee press release, September 2025, 17 September 2025; Central Bank of Kenya, Press release: Monetary Policy Committee meeting of August 12, 2025, 12 August 2025; South African Reserve Bank, Statement of the Monetary Policy Committee, September 2025, 18 September 2025; Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO), Réunion ordinaire du Comité de Politique Monétaire de la BCEAO tenue le 17 septembre 2025, 17 September 2025.

South Africa: easing towards a 3% objective

The South African Reserve Bank's Monetary Policy Committee (MPC) cut the policy rate by 25bp on 29 May 2025, effective from 30 May, with five members in favour and one preferring a 50bp cut. On 31 July it cut by a further 25bp to 7%, effective from 1 August, in a unanimous decision. The same statement said the MPC now preferred inflation to settle at 3% and would aim for the bottom of the 3-6% target range. On 18 September the MPC held the rate at 7%, with four members voting to hold and two for a 25bp cut, and noted that it had reduced rates by 125bp since September 2024. It expected headline inflation to average 3.4% in 2025. Credit is responding: real growth in loans and advances to the private sector was 2.9% in July 2025, the highest rate since October 2019.

The SARB's June 2025 Financial Stability Review shows a well-capitalised and profitable system. The sector's total capital adequacy ratio averaged 17.22% between January and March 2025, against 17.19% in 2024, while the common equity tier 1 ratio eased to 13.23% from 13.29%. Impaired advances held at 5.3% of gross loans, and the smoothed return on equity rose to 15.56% from 15.17%. The countercyclical capital buffer rose from 0% to 1% on 1 January 2025, and banks have until 31 December 2025 to build it.

South African banking sector indicators, %

Indicator	2023	2024	2025 (January to March)
Total capital adequacy ratio	17.36	17.19	17.22
Common equity tier 1 ratio	13.43	13.29	13.23
Impaired advances to gross loans	5.2	5.3	5.3
Return on equity (smoothed)	14.84	15.17	15.56
Return on assets (smoothed)	1.11	1.13	1.16
Liquidity coverage ratio	150.6	148.8	148.8

Source: South African Reserve Bank, Financial Stability Review, First edition 2025, 30 June 2025.

First-half 2025 results at two of the largest groups show solid returns. Absa's headline earnings rose 17% as its credit loss ratio improved to 100bp from 123bp, and Standard Bank's Africa Regions franchise earned R9.7 billion, 41% of group headline earnings.

Two large South African banking groups, first half of 2025

Group	Headline earnings	Return on equity	Other indicators
Absa Group	R11.9 billion (+17%)	14.8% (from 14.0%)	CET1 12.5% (12.7%); credit loss ratio 100bp (123bp)
Standard Bank Group	R24 billion	19.1%	Cost-to-income 49.4% (49.7%); Africa Regions 41% of earnings

Source: Absa Group, Absa Group delivered 17% headline earnings growth driven by lower impairments and pre-provision profit growth (media statement), 18 August 2025; Standard Bank Group, Standard Bank Group announces strong returns, increased dividends, 14 August 2025.

Nigeria: a delayed cut and new capital

The Central Bank of Nigeria (CBN) held its Monetary Policy Rate at 27.50% in May and July 2025, then cut it by 50bp to 27.00% on 22–23 September and changed the standing facilities corridor from +500/-100bp to +250/-250bp. It also lowered the cash reserve ratio for commercial banks to 45% but introduced a 75% ratio on non-TSA public sector deposits.

Central Bank of Nigeria policy settings, 2025

Setting	May and July 2025 meetings	22–23 September 2025 meeting
Monetary Policy Rate	27.50%	27.00%
Standing facilities corridor	+500/-100bp	+250/-250bp
Cash reserve ratio, deposit money (commercial) banks	50.00%	45%
Cash reserve ratio, merchant banks	16%	16.00%
Liquidity ratio	30.00%	30.00%

Source: Central Bank of Nigeria, Monetary Policy Committee: key decisions, 23 September 2025.

Recapitalisation is under way. On 29 August 2025 Guaranty Trust Holding Company (GTCO) raised the paid-up capital of its banking subsidiary, GTBank, to ₦504 billion, which it said ensures compliance with the CBN's new minimum capital requirement for banks with international authorisation. GTCO's audited first-half 2025 results showed profit before tax of ₦600.9 billion, down 40% year on year, a fall the group linked to ₦493.01 billion of fair value gains in the first half of 2024 that did not recur. Its capital adequacy ratio was 36.2%, and its group Stage 3 loan ratio fell to 4.5% from 5.2% in December 2024. Net loans grew 20.5% in the six months to June 2025.

Kenya: cheaper credit, stubborn arrears

The Central Bank of Kenya (CBK) cut the Central Bank Rate by 75bp to 10.00% on 8 April 2025, and narrowed the interest rate corridor around it from ±150bp to ±75bp. It cut by 25bp to 9.75% on 10 June and by 25bp to 9.50% on 12 August.

Transmission to lending has been slow but visible. Average commercial bank lending rates fell from 17.2% in November 2024 to 15.2% in July 2025. Growth in lending to the private sector recovered from -2.9% in January 2025 to 3.3% in July. In August the MPC was briefed on a proposed revised Risk-Based Credit Pricing model, which it expects to improve the transmission of policy decisions to lending rates.

Asset quality has not improved. The gross non-performing loan ratio rose from 17.2% in February 2025 to 17.6% in April, and stayed at 17.6% in June. Between April and June, non-performing loans rose in trade and in tourism, restaurants and hotels. The CBK said that the banking sector remained stable and resilient, with strong liquidity and capital adequacy ratios. Its Bank Supervision Annual Report 2024, issued in August 2025, put the sector's total capital to risk-weighted assets ratio at 19.6% in December 2024, against 18.6% a year earlier and a minimum of 14.5%, and its core capital ratio at 17.3%, against a minimum of 10.5%.

Kenya: credit, lending rates and asset quality, %

Month	Private-sector credit growth	Average lending rate	Gross NPL ratio
January 2025	-2.9	Not available	Not available
February 2025	Not available	Not available	17.2
April 2025	0.4	15.7	17.6
May 2025	2.0	15.4	Not available
June 2025	2.2	15.3	17.6
July 2025	3.3	15.2	Not available

Source: Central Bank of Kenya, Press release: Monetary Policy Committee meeting of June 10, 2025, 10 June 2025; Central Bank of Kenya, Press release: Monetary Policy Committee meeting of August 12, 2025, 12 August 2025.

Ghana: deep cuts as capital rebuilds

The Bank of Ghana's Monetary Policy Committee cut the Monetary Policy Rate by 300bp to 25.0% on 30 July 2025 and by a further 350bp to 21.5% on 17 September, both by majority decision. Average lending rates fell from 26.6% at the end of July to 24.2% at the end of August.

Bank capital has been rebuilt quickly. The industry capital adequacy ratio without regulatory reliefs rose to 17.3% in August 2025 from 10.3% a year earlier, and stood at 18.3% including reliefs. Credit risk remains the main weakness. The non-performing loan ratio was 20.8% in August 2025, down from 24.3% a year earlier, and the central bank described elevated credit risk as a major concern. From 1 October 2025 the single-currency net open position limit for banks changes from ±5% to between 0% and -10%.

Ghana banking sector indicators, %

Indicator	June 2024	June 2025	August 2025
Capital adequacy ratio (with reliefs)	14.3	19.7	18.3
Capital adequacy ratio (without reliefs)	10.6	18.2	17.3
Non-performing loan ratio	24.2	23.1	20.8
NPL ratio excluding loss category	10.8	8.5	6.8
Annual growth in total assets	33.3	18.9	22.4
Annual growth in advances	15.6	6.1	9.9

Source: Bank of Ghana, Summary of Economic and Financial Data, July 2025, 29 July 2025; Bank of Ghana, Summary of Economic and Financial Data, September 2025, 16 September 2025.

WAEMU and pan-African groups

The BCEAO cut its main policy rate from 3.50% to 3.25%, and its marginal lending rate from 5.50% to 5.25%, from 16 June 2025, and left the banks' reserve requirement at 3.0%. It kept both rates unchanged on 17 September. Credit to the WAEMU economy grew 5.0% year on year at the end of March 2025, after 4.5% at the end of December 2024. In September the BCEAO projected growth of 6.6% in credit to the economy in 2025, down from the 8.3% it had projected in June for the end of 2025.

Ecobank's first-half 2025 results show how returns differ across the region. The group's profit before tax rose 23% to $398 million and its return on tangible equity was 30.5%. Its Nigerian business earned a return on equity of 6.5%, against 26.7% to 36.9% in its other three African regions.

Ecobank regional segments, first half of 2025

Region	Revenue, $ million	Profit before tax, $ million	Return on equity
UEMOA (WAEMU)	361	176	26.7%
Nigeria	74	9	6.5%
Anglophone West Africa	322	175	30.2%
Central, Eastern and Southern Africa	392	207	36.9%

Source: Ecobank Transnational Incorporated (via Ghana Stock Exchange), Ecobank Group reported profit before tax of $398 million, EPS of 0.79 US cents on net revenue of $1.1 billion for 1H 2025 (unaudited), 29 July 2025.

Cross-country comparison

Sub-Saharan Africa monitor: policy rates and bank indicators (reference dates in brackets)

Market	Policy rate after last decision	Change, April to September 2025	Capital	Asset quality
South Africa	7%	-50bp	Total capital adequacy 17.22% (January to March 2025)	Impaired advances 5.3% (January to March 2025)
Nigeria	27.00%	-50bp	Not available	Not available
Kenya	9.50%	-125bp	Total capital 19.6% (December 2024)	Gross NPL 17.6% (June 2025)
Ghana	21.5%	-650bp	17.3% without reliefs (August 2025)	NPL 20.8% (August 2025)
WAEMU	3.25%	-25bp	Not available	Not available

All five authorities eased between April and September 2025, but on very different scales, from 25bp in the WAEMU to 650bp in Ghana. Where system data exist, capital looks adequate, while the non-performing loan ratios of 17.6% in Kenya and 20.8% in Ghana are far above the 5.3% impaired-advances ratio of South African banks, although the measures are defined differently.

Outlook risks

In Kenya, the test is whether lower lending rates and the proposed credit pricing model lift private credit enough to offset a non-performing loan ratio of 17.6%. In Ghana, faster disinflation has allowed rapid easing, but the central bank still names elevated credit risk as a major concern. In Nigeria, the September cut and the lower cash reserve ratio for commercial banks coincide with recapitalisation under the CBN's new minimum capital requirements; GTBank said in August that it now meets the requirement for banks with international authorisation. In South Africa, the MPC's preference for 3% inflation and its split vote in September leave the timing of further cuts open. For the region as a whole, the IMF's concern about banks' exposure to sovereign risk remains relevant wherever governments rely on domestic borrowing.

What to watch

October 2025: the CBK Monetary Policy Committee's next meeting, after cuts in April, June and August.
17–19 November 2025: Bank of Ghana MPC meeting, with the decision announced on 19 November.
20 November 2025: next South African Reserve Bank MPC statement.
31 December 2025: deadline for South African banks to implement the 1% countercyclical capital buffer.

TGB Regional Banking Monitor: Sub-Saharan Africa — Q2 2025