African Banks Reach Historic Milestone
African banks have reached a historic milestone, with their aggregate revenues exceeding $100 billion for the first time in 2025, according to a McKinsey report dated March 30.
Key Figures
- In 2024, revenues reached $99 billion and are expected to climb to $107 billion in 2025.
- Return on equity (ROE) stood at 19% last year, compared to a global average of 10%.
- However, this performance is expected to decline to 17% this year.
Drivers of Growth
The growth is driven by favorable conditions, including:
- High interest rates
- Repricing of portfolios
- Foreign exchange gains However, costs remain high, with a cost-to-asset ratio of 2.6%, twice the global average.
Leading Countries
Five countries dominate the African banking landscape, accounting for 70% of revenues:
- Egypt
- Kenya
- Morocco
- Nigeria
- South Africa South Africa leads the pack, with $26.4 billion in revenues in 2024.
Emerging Trends
Signs of catch-up are emerging, with:
- Côte d'Ivoire and Tanzania growing by over 11% per year since 2019.
- The French-speaking sub-Saharan Africa region now accounts for 8% of revenues, up from 7% in 2019.
Demographic Trends
The African population is growing at a rate of 2% per year, with the working-age population growing at 3% per year. Urbanization is rapid, and digital banking is on the rise, driving financial inclusion.
Credit and Future Challenges
Credit remains a key driver, with an expected $52 billion in revenues by 2030. Small and medium-sized enterprises (SMEs) are a crucial segment, growing at 8% per year. However, many remain excluded from formal credit. The next challenge is to grow non-credit revenues, as commissions and fees are already growing faster than interest income. Fintech companies are increasingly competing with traditional banks, and economic conditions are becoming less favorable. In Nigeria, foreign exchange gains have boosted banks, but non-performing loans are on the rise.
