In brief
Banking Sector History and Investment Outlook
- The Ghanaian banking sector is rebounding at an exceptional pace following a tumultuous seven-year period marked by the 2018 sector clean-up and recapitalisation, the COVID-19 pandemic (2020–2021), and the 2022–2023 Domestic Debt Exchange Programme (DDEP) — all of which severely tested the sector’s stability and wiped off millions of cedis of market capitalisation.
- Despite these shocks, listed banks have shown remarkable resilience, strengthening balance sheets, rebuilding capital buffers, and restoring profitability. However, for much of the turbulent phases share prices lagged far behind improving fundamentals, as investor sentiment remained massively subdued, leaving valuations deeply depressed at the start of 2025. This low base, combined with strong corporate earnings, improving investor sentiment, and a more stable macroeconomic environment, has fueled an extraordinary rally, with Ghanaian banks returning an average of ≃134.1% year-to-date.
- From a macroeconomic perspective, 2025 has been Ghana’s strongest year in over a decade. The cedi has appreciated by roughly 35.0% against the dollar, inflation has fallen to 8.0%—within the Bank of Ghana’s (BoG) target range—and GDP growth is rebounding toward pre-pandemic levels. As monetary conditions ease, credit growth and funding costs are improving, setting the stage for sustained asset and earnings expansion across the sector.
- Despite this year’s exceptional rally, we believe the industry’s long-term growth potential — supported by solid fundamentals and a strengthening macroeconomic backdrop — makes valuations compelling, particularly over the next 12 months. The sector currently trades at a median P/B of 0.92x, below the 1.1x level recorded in 2017, even as profitability and balance sheet strength have improved significantly. This valuation disconnect presents meaningful upside potential as sentiment and fundamentals continue to normalise.
- However, risks persist. Net interest margin (NIM) compression and external pressures such as FX volatility and fiscal slippage could weigh on performance in the near term. Nonetheless, the sector’s ongoing digitalisation, policy reforms, and earnings diversification continue to reinforce a constructive medium-term view.
Our Call: Overweight GCB and EGH. Underweight SCB
- We are particularly bullish on Ghana Commercial Bank (GCB) and Ecobank Ghana (EGH) — the two largest banks by assets and deposits — as they offer the most captivating opportunities in the near to medium term. Both institutions continue to demonstrate robust earnings momentum, sustained loan book expansion, and material undervaluation versus peers and long-term historical multiples. Supported by improving credit conditions, solid capitalisation, and industry-leading returns, we see upside potential of 15–30% for these two stocks over the next 12 months
- Conversely, we recommend reducing exposure to Standard Chartered Bank Ghana which is overvalued relative to future earnings, which have taken a substantial hit in recent years due to its contracting loan book.
- In our view, SCB offers limited upside in a normalising rate environment, while GCB and EGH are better positioned to capture the sector’s ongoing recovery and have the potential to re-rate accordingly.
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