Ghana’s dramatic collapse in Treasury bill yields, which has seen the 91-day rate fall from 27.7 percent at the end of 2024 to 6.45 percent as of last Friday’s auction, is reshaping the investment calculus on the Ghana Stock Exchange (GSE) and creating a specific risk for investors who may be tempted to pile into bank stocks as fixed-income returns evaporate.
The government’s Treasury bill auction on Friday, February 20, 2026, attracted strong demand, far exceeding its target. The yield on the 91-day bill fell by 215 basis points to 6.45 percent, while the 182-day bill dropped to 8.18 percent from 10.67 percent, and the 364-day bill eased to 12.93 percent. The scale and speed of the decline is without precedent in recent Ghanaian financial history, and its consequences for the banking sector are now coming into sharper focus.
Ghanaian commercial banks have historically allocated a large share of customer deposits into government securities. During the years of elevated T-bill rates, that strategy generated strong, low-risk returns and padded profitability. Market participants say the compression in real returns has accelerated capital rotation into equities, with investors less inclined to hold Treasury bills when some stocks have delivered returns approaching 200 percent. But for the banks themselves, the situation is more complicated.
As yields on government paper shrink, net interest income, the core measure of what a bank earns on its assets minus what it pays on liabilities, comes under pressure. Banks that have concentrated their earning assets in government securities now face a structural revenue problem that cannot be quickly reversed. The Ghana Reference Rate (GRR), which anchors commercial lending rates, remains above 15 percent, meaning banks may find themselves caught between falling income from government paper on one side and a lending environment where borrowers are not yet benefiting from cheaper credit on the other.
Banking and insurance counters have driven recent GSE session gains, with Republic Bank Ghana, SIC Insurance, Access Bank Ghana, and GCB Bank each posting sharp price advances in recent sessions. The price rally, however, may be running ahead of the earnings reality that will emerge in the coming quarters as full-year 2025 results are replaced by 2026 performance under the new rate environment.
Analysts at investment firm Black Star project the trend of T-bill yield compression will deepen in 2026 as real returns on government securities continue to shrink. Banks facing revenue pressure from shrinking interest income are expected to explore alternative streams, including fees, commissions, cost-of-transfer charges, and foreign exchange trading income. That shift, if it materialises as increased customer charges, may attract scrutiny from both consumers and the Bank of Ghana (BoG).
The average commercial bank lending rate declined from 30.25 percent in 2024 to 20.45 percent in 2025, improving credit conditions for the private sector, with credit to the private sector expanding by GH¢17.1 billion in 2025. A continued decline in lending rates in 2026 could ease pressure on banks by stimulating loan demand and growing interest income from a larger private-sector loan book, but the transition will take time and introduces credit risk that government paper does not carry.
Investors navigating the GSE’s extraordinary rally, which has seen the GSE Composite Index (GSE-CI) gain 38.83 percent year-to-date to close at 12,176.92 on Tuesday, are being advised to distinguish between sectors genuinely positioned to benefit from lower rates, such as consumer goods, telecommunications, and manufacturing, and those whose income models are most exposed to the very trend driving the broader market surge.
