Africa's banking sector is no longer merely a story of untapped promise, it is one of the most profitable financial markets in the world, and a new McKinsey & Company report puts the numbers in sharp relief.
The March 2026 report, titled From Potential to Performance: A Snapshot of African Banking, reveals that African banks delivered a return on equity of 19 per cent in 2024, before easing to 17 per cent in 2025 as interest rates declined across major markets.
By contrast, the global banking sector held steady at a 10 per cent ROE over the same two years, itself a record-breaking performance driven by the strongest revenue-to-GDP ratio since before the 2008 financial crisis.
The global financial sector generated $5.7 trillion in revenue before risk costs in 2024, up from $4.5 trillion in 2020, with net income reaching $1.2 trillion, the highest ever recorded for any industry.
Yet even within this exceptional global context, Africa distinguished itself as the continent with the highest profitability improvement, recording a 9.7 percentage point increase in ROE between 2020 and 2024, ahead of Europe at 8.2 points and Latin America at 6.1 points.
What Is Driving the Surge
The McKinsey analysis attributes Africa's buoyant performance to a combination of elevated interest rates, strong growth in loan volumes, and substantial profits from trading and foreign exchange activities.
The continent's cost-to-income ratio also improved, reaching 49 per cent in both 2024 and 2025, compared to the global average of 51.1 per cent.
However, the report cautions that this improvement reflects top-line revenue growth rather than genuine operational efficiency gains.
Africa's cost-to-asset ratio stood at 2.6 per cent in 2024, double the global average of 1.3 per cent, suggesting that significant room remains to drive down the structural cost base of African banking institutions.
Currency Volatility Masks True Growth
On a fixed-currency basis, Africa's banking sector expanded at a compound annual growth rate of approximately 17 per cent between 2020 and 2024, far ahead of the global average of 7 per cent.
In US dollar terms, however, currency depreciation, inflation, and foreign exchange volatility compressed reported revenue growth to a more modest 5.2 per cent CAGR, lifting sector revenues from $81 billion to $99 billion over the period.
The report notes that 2025 brought some relief, with African banking revenues in dollar terms accelerating to 7 per cent growth, supported by improving macroeconomic conditions across several key markets.
A Concentrated but Expanding Market
Africa's total banking market reached approximately $107 billion in 2025. Around 70 per cent of the sector's 2024 revenue was concentrated in just five countries, South Africa, Egypt, Nigeria, Morocco, and Kenya, with South Africa alone accounting for over a quarter of continental revenues at $26.4 billion.
Despite this concentration, the report flags double-digit revenue growth in smaller markets as evidence that new frontiers are opening across the continent.
READ ALSO: Mahama says Big Push Programme is Ghana’s Biggest-ever Road Sector Investment
