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AfricaJune 30 2011

Takeovers loom as Ghanaian banks reach inflection point

Ghana’s banks have benefited from a booming economy over the past 18 months, but they may have to start adapting to lower interest rates by expanding their capital markets services and offering more sophisticated products – or risk being bought out in a wave of consolidation.
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Takeovers loom as Ghanaian banks reach inflection pointGhana's banks are keen to make the most of the country's economic performance

Ghanaian banks have been busy exploiting the country’s stellar economic performance. The major lenders managed to make returns on equity (ROEs) of 30% to 35% in the few years before 2009. Earnings dropped that year as the country's economy slowed, falling victim to the global downturn. But as growth revived in 2010, with the real gross domestic product (GDP) expanding 7.7%, so did banks’ profitability. With the economy expected to grow another 13% this year, they should be in for more good times.

Much of the current growth in GDP is a result of Ghana becoming an oil exporter in December, following the discovery of the huge offshore Jubilee field in 2007. This has greatly excited bankers, who say that plenty of additional business will now come their way. “We expect that banking revenues will grow significantly as a result of the oil,” says Benjamin Dabrah, managing director of Barclays Bank of Ghana.

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