FX gains, not efficiency, behind much of banking sector’s profit growth, says Dr Atuahene

Dr Richmond Atuahene, a banking and corporate governance consultant, has cautioned against attributing recent banking sector profit growth to improved operational efficiency. Speaking on Joy News' PM Express, Atuahene argued that substantial foreign exchange gains are playing a significant role in the enhanced financial performance.

He emphasized that the sustainability of such gains must be questioned, especially if the cedi continues to depreciate. Atuahene likened the situation to a "miracle," but suggested it is not a result of operational efficiency. He noted that if the gains are driven by foreign exchange changes to the extent of 60%, it is not an indicator of efficiency.

Atuahene stressed that the crucial question is not whether banks are reporting higher profits, but whether these profits stem from stronger underlying operations. He cautioned that a reversal in the cedi's fortunes could reveal weaknesses currently masked by foreign exchange gains. His concerns come as there is renewed debate over the quality and sustainability of improved financial results across Ghana's corporate sector.

The State Interests and Governance Authority's 2025 State Ownership Report revealed that state-owned enterprises (SOEs) shifted from a GH¢2.25 billion net loss in 2024 to a GH¢19.8 billion net profit in 2025, with revenue also rising from GH¢137.64 billion to GH¢176.43 billion. However, the report noted that the stronger cedi contributed significantly to the improvement, with SOEs recording GH¢11.72 billion in net foreign exchange gains in 2025 compared to a GH¢12.01 billion foreign exchange loss in 2024.

Atuahene urged similar questions be asked about the wider state enterprise sector, highlighting the scale of liabilities carried by these entities. He also pointed to the massive debt burden, with SOEs incurring a debt overhang of over GH¢700 billion. Atuahene emphasized the need for serious SOE reform, noting that this issue has persisted for years.

He pointed out that one of the ten fundamental reforms required by the PCI is to address these SOEs, which he deemed crucial. Atuahene also questioned whether reported profits by state entities accurately reflect the quality of services delivered to the public. He argued that simply producing figures and declaring profits does not provide a complete picture; one must consider the actual output, such as access to electricity and water. He asked what metrics are being used to measure these outcomes.