Ghana’s banking sector recorded a significant shift in deposit composition in October 2025, as foreign currency deposits contracted sharply following the sustained appreciation of the Ghana cedi.

Total banking deposits stood at GH¢302.0 billion at the end of October 2025, underscoring the continued expansion of the financial system. However, the foreign currency component of these deposits declined by 21.1 percent in cedi terms to GH¢71.3 billion, a reversal from the robust growth recorded during the same period in the previous year.

According to the November 2025 Banking Sector Development Report, the contraction in foreign currency deposits was largely driven by valuation effects linked to the strengthening of the local currency. As the cedi gained ground against major international currencies, the cedi value of foreign currency holdings in the banking system declined, even where the underlying foreign currency balances remained relatively stable.

Deposit Growth Moderates Sharply

The overall growth in banking sector deposits moderated considerably over the period under review. Year-on-year deposit growth slowed to 8.9 percent in October 2025, compared with a strong growth rate of 38.7 percent recorded in October 2024.

This deceleration reflects a normalization of deposit inflows after a period of elevated growth driven by inflationary pressures, currency depreciation and flight to safety within the banking system.

Despite the slowdown, the total deposit figure of GH¢302.0 billion highlights the resilience of the banking sector and continued public confidence in regulated financial institutions. Analysts note that the moderation in growth is consistent with broader macroeconomic stabilization efforts, including improved fiscal discipline and tighter monetary conditions.

Domestic Deposits Take the Lead

Domestic currency deposits emerged as the main driver of deposit growth during the period. The report indicates that growth in deposits was driven mainly by domestic deposits, reflecting increased cedi-denominated savings and transactional balances across households and businesses. The preference for local currency deposits aligns with improved currency stability and reduced incentives for dollarization within the economy.

The shift toward domestic deposits also signals growing confidence in the cedi as a store of value, following a period in which foreign currency deposits surged amid exchange rate volatility. Financial sector observers say this trend could support more effective monetary policy transmission, as a higher share of cedi deposits enhances the Bank of Ghana’s ability to influence liquidity conditions through domestic instruments.

Impact of Currency Appreciation on FX Deposits

The contraction in foreign currency deposits stands in sharp contrast to developments in the previous year. In October 2024, foreign currency deposits had grown by 39.8 percent in cedi terms, largely due to currency depreciation, which inflated the local currency value of dollar and euro holdings. In 2025, the dynamics reversed as the appreciating cedi reduced the cedi equivalent of foreign currency balances.

This development highlights the sensitivity of reported foreign currency deposits to exchange rate movements. While the decline may appear steep in nominal terms, banking sector analysts caution that it does not necessarily indicate capital flight or withdrawal of foreign currency from the system. Instead, it reflects valuation adjustments driven by macroeconomic improvements and exchange rate stability.

Shareholders’ Funds Continue to Expand

Alongside deposit developments, the banking industry’s shareholders’ funds continued to grow, although at a slower pace. Shareholders’ funds, comprising paid-up capital and reserves, increased by 41.0 percent year-on-year to GH¢53.5 billion in October 2025. This compares with a higher growth rate of 49.5 percent recorded in October 2024.

The expansion in shareholders’ funds was supported by strong profitability across the banking sector and targeted recapitalization efforts by some institutions. Improved earnings performance, driven by higher interest income and controlled operating costs, enabled banks to strengthen their capital buffers and enhance balance sheet resilience.

Profitability and Capital Strength Outlook

The slower growth in shareholders’ funds reflects a normalization trend following exceptional gains in the previous year. Nevertheless, capital levels remain robust, positioning banks to absorb shocks and support credit expansion as economic conditions improve. Regulators have consistently emphasized the importance of strong capital adequacy in sustaining financial stability and safeguarding depositor funds.

Industry watchers note that the combination of moderated deposit growth, a stronger local currency and sustained profitability points to a more stable banking environment. While rapid growth periods often come with heightened risks, the current trends suggest a gradual transition toward sustainable expansion anchored in macroeconomic stability.

Implications for the Banking Sector

The sharp decline in foreign currency deposits underscores the broader impact of exchange rate movements on banking sector indicators. As the cedi continues to stabilize, banks may experience further adjustments in the composition of deposits, with domestic currency balances playing an increasingly dominant role.

For policymakers, the data reinforces the importance of maintaining macroeconomic discipline to sustain currency stability and strengthen confidence in the financial system. For banks, the evolving deposit structure presents opportunities to deepen local currency intermediation and support economic growth through increased lending to productive sectors.