Ghana’s banking sector experienced a notable shift in its funding structure in 2025 as deposit growth slowed, forcing banks to rely more heavily on borrowing to sustain operations and investment activities.
This development was highlighted in the January 2026 Monetary Policy Report released by the Bank of Ghana (BoG).
According to the report, deposits continued to dominate the liability structure of banks. However, their share declined during the period under review. Deposits accounted for 72.8 percent of banks’ liabilities and shareholders’ funds in December 2025, down from 75.1 percent recorded in December 2024. The decline reflects a moderation in deposit growth across the banking industry.
Deposits traditionally serve as the primary source of funding for banks. They enable financial institutions to support lending activities, invest in government securities, and manage liquidity. The slowdown in deposit growth therefore signals changing dynamics within the financial sector and may reflect broader economic adjustments during the year.
Borrowings Rise to Support Banking Operations
As deposit growth slowed, banks turned increasingly to borrowings to support their funding needs. The Bank of Ghana report revealed that the share of borrowings in banks’ liabilities increased to 8.5 percent in December 2025, up from 7.6 percent in December 2024.
The rise in borrowings suggests that banks sought alternative funding channels to maintain operational stability and meet financial obligations. Borrowings can come from a variety of sources including interbank markets, financial institutions, and international lenders.
This shift indicates that banks are diversifying their funding strategies in response to evolving economic conditions. While deposits remain the dominant funding source, the growing reliance on borrowing highlights the need for financial institutions to balance their funding mix carefully to manage risks and maintain liquidity.
Financial analysts note that borrowing can provide short term relief when deposit growth slows. However, excessive dependence on borrowed funds could expose banks to higher funding costs and potential refinancing risks if market conditions tighten.
Treasury Bills Dominate Investment Portfolios
Beyond funding structures, the Bank of Ghana report also highlighted significant changes in the investment portfolios of banks. Treasury bills emerged as the largest component of banks’ investments in 2025.
The share of treasury bills in banks’ investment portfolios increased significantly from 40.3 percent in December 2024 to 62.3 percent in December 2025. This sharp rise indicates a strong preference among banks for short term government securities.
Treasury bills are widely considered low risk investment instruments. They offer predictable returns and high liquidity, making them attractive to banks seeking stability during uncertain economic periods.
The increase in treasury bill holdings also reflects a cautious approach by banks as they navigate macroeconomic adjustments. By allocating a larger portion of their investments to government securities, banks can reduce exposure to higher risk assets while preserving capital.
Long Term Securities Decline
While treasury bills gained prominence, the share of long term securities in banks’ investment portfolios declined sharply. According to the report, long term securities fell from 59.3 percent in December 2024 to 37.2 percent in December 2025.
This decline suggests a shift in investment strategy toward shorter maturity instruments. Banks appear to prefer the flexibility offered by treasury bills rather than committing large portions of their portfolios to long term securities.
The reduction in long term securities was also consistent with the moderation in economic growth observed during the reference period. In uncertain economic environments, financial institutions often prioritize liquidity and capital preservation over long term commitments.
By focusing on shorter maturity instruments, banks are better positioned to respond quickly to changes in interest rates, monetary policy, and broader economic conditions.
Equity Investments Remain Minimal
Equity investments by banks remained negligible despite a marginal increase during the year. The share of equities in banks’ investment portfolios rose slightly from 0.4 percent in December 2024 to 0.5 percent in December 2025.
Although the increase is small, it signals a gradual improvement in banks’ exposure to equity markets. However, the extremely low proportion indicates that equities continue to play a minor role in the investment strategies of Ghanaian banks.
Banks generally maintain limited equity exposure due to the higher volatility associated with stock markets compared to fixed income securities. Regulatory considerations and risk management frameworks also influence the extent to which banks can invest in equities.
Shareholders’ Funds Strengthen
Despite the changes in deposit growth and borrowing patterns, the banking sector recorded improvements in shareholders’ funds. The share of shareholders’ funds in banks’ total funding increased from 10.8 percent in December 2024 to 13.1 percent in December 2025.
This growth indicates stronger capital buffers within the banking industry. Higher shareholders’ funds enhance the resilience of banks by providing additional capacity to absorb potential financial shocks.
The Bank of Ghana has consistently emphasized the importance of strong capital positions to support financial stability. The improvement in shareholders’ funds suggests that banks are continuing to strengthen their capital bases in line with regulatory expectations.
Other Liabilities Decline
The report also revealed a decline in the share of other liabilities within the banking sector. These liabilities decreased from 6.3 percent in December 2024 to 5.4 percent in December 2025.
The reduction may reflect adjustments in banks’ balance sheet structures as institutions streamline operations and manage financial risks more effectively.
Overall, the evolving liability structure demonstrates how banks are adapting to changing economic conditions while maintaining operational stability.
Outlook for the Banking Sector
The developments outlined in the Bank of Ghana’s Monetary Policy Report highlight a period of adjustment for Ghana’s banking sector. Slower deposit growth, increased borrowings, and shifts in investment strategies point to a more cautious and adaptive financial environment.
While deposits remain the backbone of bank funding, the increased reliance on borrowings and treasury bills shows that banks are actively responding to changing market conditions.
Going forward, the ability of banks to sustain deposit growth, manage funding costs, and maintain strong capital positions will be critical to ensuring stability within the financial system.
The Bank of Ghana is expected to continue monitoring these trends closely as part of its broader mandate to maintain financial stability and support sustainable economic growth.
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