Although there are 26 currently licensed universal banks in Ghana and others hoping to join the sector, the market is dominated by six lenders. Between them they have a 51.2% overall share when ranked by assets, although the fact that this has slid from 62% in 2007 indicates the extent to which the market is becoming more competitive.

Ghana’s top six banks include two state-owned or partially state-owned entities, the Agricultural Development Bank and GCB (formerly known as Ghana Commercial Bank), alongside four foreign-owned institutions: British banks Standard Chartered and Barclays Ghana, South Africa’s Standard Bank subsidiary Stanbic, and Togo’s Ecobank.

All six have seen strong performance over the past 12 months. Stanbic and Ecobank, which merged with The Trust Bank in January 2012, saw the largest increases in assets over the course of 2012, rising by 33% and 36%, respectively. State-owned GCB and the Agricultural Development Bank grew their operating assets by 17% and 18%, respectively, while Standard Chartered and Barclays Ghana saw more modest expansion of 14% and 5%. Overall industry assets for the 26 banks grew by GHS5.9bn ($3.03bn), to GHS25.8bn ($13.3bn), with the six largest banks contributing GHS2.85bn ($1.46bn) of this growth.

ECOBANK: Ecobank is now the biggest bank in Ghana in terms of operating assets following its merger with The Trust Bank in 2012. Its total assets stood at GHS3.43bn ($1.76bn) at the end of 2012, a growth of 61%, according to its annual report. The bank, which was incorporated in Ghana in 1990, has seen its market share rise steadily over the past 36 months from 8.2% in 2010 to 10.2% in 2011 and 12.4% in 2012. Ecobank’s loan book grew by 69% from GHS800m ($411m) to GHS1.46bn ($750.6m), and profits before tax rose by 76% year-on-year from GHS106m ($54.5m) to GHS186m ($95.6m), giving a 37% return on equity. Provisions for credit losses increased to GHS25.3m ($13m) from GHS6.1m ($3.1m), and the bank’s non-performing loan (NPL) ratio was 5.1%, with this attributed to the sudden growth of the institution’s small and medium-sized enterprise (SME) portfolio, following its acquisition of The Trust Bank, which had been heavily involved in this segment. The institution overtook GCB in 2012 to hold the largest share of industry deposits, about 13%. Deposits grew by 53%, to GHS2.46bn ($1.26bn) within the year.

GCB: Ghana Commercial Bank, which rebranded itself as GCB in 2012, was formerly the largest bank in the country, having held the top spot for several years. Its share of the total market has been declining year-on-year since 2008, when its assets accounted for 15.3% of the country’s total.

In 2012 the partly state-owned bank’s net income increased by 47% to GHS407.5m ($209.5m) and it posted the highest return on equity for the nation’s top banks of 48.3%, having increased its profits before tax by 520% to GHS192.9m ($99.2m). This performance was largely driven by growth in interest in government securities.

GCB’s share of the sector’s loans and advances improved marginally, increasing from 5% in 2011 to 7% the following year, but the bank still remains far short of its dominant 20% share in 2009. The bank, which is majority government-owned, cut operating expenses by GHS29.9m ($15.37m) during 2012, a reduction of 11.9% compared to 2011.

STANDARD CHARTERED: Standard Chartered recorded its second-highest return on equity in 2012, reaching just over 40%. The institution has consistently posted a high profit-before-tax margin – achieving 60% in 2012 – and has maintained a costto-income ratio below 50%. It has 23 branches and over 1000 employees in Ghana.

Operating income in 2012 reached a total of GHS282m ($145m), compared to GHS217m ($111.6m) in 2011, and profit before tax was GHS170m ($87.4m), compared to GHS114m ($58.6m) in 2011. Standard Chartered’s wholesale division saw revenues grow by 26% year-on-year to GHS168m ($86.4m), while its consumer division’s revenues were up 45% year-on-year.

BARCLAYS BANK GHANA: According to PwC’s 2013 banking survey, Barclays Bank Ghana’s profit-beforetax margin of 50% was the second highest of the top six banks in Ghana. The British-owned bank’s share of industry deposits in 2012 has been reduced slightly compared to previous years, easing to fourth place from its second-place position in 2010. The 2012 growth came on top of a solid year in 2011, when the bank saw profits rise by 40% in 2011 to GHS83m ($49.2m), thanks to factors such as reduced operational and loan impairment costs.

STANBIC: Stanbic has retained its position as Ghana’s fifth-largest bank by assets in 2012, with a 6.5% share, up from 5.6% in 2011. This represents the continuation of its growth trajectory, which has seen its share increase from 4.3% in 2008. The bank, which is owned by the South Africa-based Standard Chartered, which is in turn is owned by the Industrial and Commercial Bank of China, has a total of 26 branches throughout the country – an indication of the lender’s heavy focus on wholesale and corporate financing. In recent years, for example, the bank has inked deals with the Ghana Cocoa Board for $1.5bn in pre-financing for seasonal activities and closed a loan for a new cement facility worth some $20m.

AGRICULTURAL DEVELOPMENT BANK: The Agricultural Development Bank’s loan quality portfolio, measured by impairment allowance/gross loans and advances was around 5% in 2012, according to PwC’s “2013 Ghana Banking Survey”. The state-owned financial institution had not published its full annual report for 2012 at the time of writing. The bank’s total operating assets increased by 18% between 2011 and 2012, giving it a total of GHS1.35bn ($694m) and making it the country’s sixth-largest bank, with an overall share of 5.3% of sector assets.

LISTED PERFORMANCE: Three of the top six banks are listed on the Ghana Stock Exchange, namely Standard Chartered, Ecobank and GCB. GCB’s share price has gone up from a year-low of GHS2.10 ($1.08) to GHS4.60 ($2.36) in July 2013, an increase of 119%. Ecobank’s shares were trading at GHS3.00 ($1.54) at the end of December 2012 and GHS4.40 ($2.26) in July 2013, an improvement of 47%. Meanwhile, Standard Chartered was trading at GHS14.00 ($7.20) in July 2013, up from a year-low of GHS10.50 ($5.40), equivalent to an increase of 33%.

Key to the success of the country’s biggest lenders has been the high interest rates, which regularly exceed 20% on commercial loans – and often higher for non-blue-chip clients. A report by Renaissance Capital in 2013 said the high-interest-rate environment was a key factor enabling Ecobank and GCB to deliver average returns on equity over the past eight years of 39% and 22%, respectively.

The Renaissance Capital report noted that from January 2006 to June 2012 the prime lending rate has ranged between 19% and 29%. It said that although interest rates paid on savings are relatively high for sub-Saharan Africa, savings accounted for just 18% of total deposits in November 2012.

BOOSTING THE COMPETITION: Ghana’s banking sector is still dominated by a handful of heavyweights, which – considering the large number of players – leaves a smaller chunk of the market fairly fragmented among several other banks.

Foreign-owned banks make up six of the top 10 banks by capitalisation. Many of the major foreign banks – both European and African – are by and large more focused on the corporate market, where they have a natural advantage due to the size of their balance sheet, rather than on SMEs or retail banking. This has made it far more challenging for local and smaller institutions to muscle their way into the lucrative project finance sector.

However, thanks to a gradual trend towards consolidation, urged on by new foreign arrivals and heftier capital adequacy requirements, as well as an improved performance from smaller players, the hold of the six largest banks on the market is easing. The boost Ghana’s economy has gotten in recent years from strong commodity prices and the discovery of oil has made several areas of the economy more competitive – and the banking sector is no exception. “The structure of the economy is switching from non-oil to oil-producing,” Martin Ofori, the managing director of First Atlantic Bank, told OBG. “The variables that direct growth are changing here, so the banking sector must respond accordingly by changing the variables of financial intermediation.” Still, the mood is generally optimistic. Gabriel Edgal, managing director of First Atlantic Bank, told OBG, “The oil boom will definitely be a game changer for the sector. Through the Financial Interrelations Ratio Theorem, the revenue from Jubilee Fields will drive GDP growth and double the sector’s financial assets and liabilities over the coming three to five years.”