African banks are sustaining some of the highest returns in global finance as rising profitability spreads across major markets. The gains reflect deeper financial penetration but increasingly point to a system that must now convert earnings strength into long-term efficiency, digital scale, and broader credit access.
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African banks are generating higher returns than their peers in North America, Europe, Asia, and the Middle East as financial systems across the continent become more deeply embedded in economic activity.
The trend is strengthening Africa’s position within global finance and creating a larger pool of capital for lending, payments, business expansion, and financial inclusion.
“African banking has moved decisively from a story of potential to one of performance,” said Mayowa Kuyoro, partner and head of McKinsey’s financial services practice in Africa.
According to McKinsey’s latest African banking review, African banks generated a return on equity of 19% in 2024, the highest of any major banking region in the world. Latin America followed at 16.3%, while the Middle East recorded 13.6%. Europe posted 10.9%, North America 10.3%, Asia excluding China 9.3%, and China 8.7%.
The gap is significant. Africa’s banking sector produced returns nearly double the global average of 10.1% and almost nine percentage points above North America, home to some of the world’s largest financial institutions.
The improvement story is even more striking.
According to McKinsey, African banking improved return on equity by 9.7 percentage points between 2020 and 2024, the largest increase recorded by any region globally. Europe registered the second-largest improvement at 8.2 percentage points, followed by the Middle East at 6.9 percentage points and Latin America at 6.1 percentage points.
The numbers suggest African banking is becoming one of the strongest-performing segments of the global financial industry.
On a constant-currency basis, African banking revenues expanded at 17.3% annually between 2020 and 2024, according to McKinsey. That was faster than Latin America at 16.3%, the Middle East at 14.5%, Asia excluding China at 8.9%, Europe at 8%, North America at 5.4%, and China at 4.6%.
Recent earnings reports suggest the profitability trend has continued into 2026 across several of the continent’s largest banking markets.
In South Africa, Standard Bank reported an 11% increase in headline earnings for 2025, supported by stronger fee income, trading revenues, and lower credit impairments. Capitec, one of the country’s fastest-growing lenders, recorded a 23% rise in annual profit as interest income continued to expand.
In East Africa, Kenya’s KCB Group reported a 15% increase in first-quarter pretax profit in 2026, while Equity Group posted a 52% jump in full-year 2025 pretax earnings, reflecting continued growth in lending, transaction volumes, and digital financial services.
The results indicate that strong banking performance is being sustained across multiple markets even as economic conditions remain uneven and currency volatility persists in several countries.
At the continental level, the milestone is becoming increasingly visible. According to McKinsey, African banking revenues surpassed US$100 billion for the first time in 2025, reaching an estimated US$107 billion.
The figures suggest that banking is increasingly becoming one of the sectors helping to drive that expansion by mobilizing capital, supporting payments, and extending financial services to a growing customer base.
The growth trend in the continent’s banking sector is mainly happening in some of the continent’s biggest economies.
In Egypt, banking revenues reached US$18 billion in 2024 as financial inclusion expanded rapidly and digital payment platforms attracted millions of users. More than three-quarters of eligible Egyptians now have access to formal financial services, according to the report.
In Kenya, banks are increasingly using transaction data generated through mobile money platforms to support lending and customer acquisition. Six of the country’s largest banks recorded returns on equity above the continental average in 2024.
Nigeria’s banking sector has remained profitable despite major currency reforms and macroeconomic volatility, while Morocco continues to improve efficiency and digital service delivery across a highly concentrated banking market.
Beyond the largest economies, countries such as Tanzania and Côte d’Ivoire are recording some of the fastest banking growth rates on the continent, indicating that financial deepening is spreading beyond traditional banking centres.
The expansion is also changing the role banks play in African economies.
According to McKinsey, Africa was one of the few major regions where financial sector revenues increased as a share of GDP between 2020 and 2024. The continent recorded a 0.4 percentage-point gain during the period, while North America, China, and the Middle East all experienced declines.
The data suggests banking is becoming more deeply integrated into economic activity across the continent.
At the same time, banks are becoming less dependent on traditional lending.
Fee income from payments, cards, insurance, and transaction services grew faster than interest income between 2020 and 2024. Payments in particular have emerged as one of the fastest-growing business lines as digital finance expands across African markets.
Recent developments indicate that governments, regulators, and development institutions are attempting to build on this momentum.
On June 1, the African Development Bank announced a US$125 million investment in ATIDI (African Trade and Investment Development Insurance) to help unlock institutional capital held by African pension funds, insurers, and sovereign investment vehicles.
Across several markets, regulators are raising capital requirements and encouraging consolidation to create larger and more resilient banking institutions capable of financing economic growth.
Yet the report also highlights a challenge that could determine whether current performance can be sustained.
While African banks lead the world in profitability growth, they remain less efficient than many global peers.
The continent’s cost-to-asset ratio stood at 2.6% in 2024, double the global average of 1.3%. The figure has barely changed since 2020 despite four years of strong earnings growth.
This means much of the recent profitability surge has been supported by favorable conditions, including high interest rates and foreign-exchange gains, rather than major improvements in operating efficiency.
“The next phase of competition will be defined by how banks scale digital capabilities and build revenue streams beyond traditional lending,” said Mayowa Kuyoro, partner and head of McKinsey’s financial services practice in Africa.
McKinsey expects African banking ROE to ease from 19% in 2024 to 17% in 2025, suggesting that the exceptional conditions that boosted recent earnings may not persist indefinitely.
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Useful links for editors:https://www.mckinsey.com/industries/financial-services/our-insights/from-potential-to-performance-a-snapshot-of-african-banking#/download/%2F~%2Fmedia%2Fmckinsey%2Findustries%2Ffinancial%20services%2Four%20insights%2Ffrom%20potential%20to%20performance%20a%20snapshot%20of%20african%20banking%2Ffrom-potential-to-performance-a-snapshot-of-african-banking.pdf%3FshouldIndex%3Dfalse,https://www.reuters.com/world/africa/african-banks-outpace-global-peers-returns-revenues-top-100-billion-mckinsey-2026-03-31/
