Mozambique’s sovereign downgrade highlighted banks’ exposure to government debt, while Nigeria’s fixed-income yields declined following its policy-rate reset. Egypt and Ghana held rates unchanged as their central banks assessed inflation risks.

Elsewhere, BANK OF AFRICA reported higher first-half profit despite rising costs, and BOAD approved new regional financing. Angola completed a sale of shares in Standard Bank de Angola, Ecobank set lending targets for 2030, and Botswana’s supervisory report showed rising loan arrears alongside modest balance-sheet growth.

1. S&P cuts Mozambique’s sovereign rating as restructuring risk rises

S&P Global Ratings lowered Mozambique’s long-term foreign-currency sovereign rating to CCC from CCC+ on 25 September, retaining a negative outlook amid intensified fiscal and foreign-exchange liquidity pressures. The agency said the likelihood of a restructuring of Mozambique’s outstanding 2031 Eurobond was rising. Sovereign debt accounts for approximately 23% of total banking-sector assets.

The downgrade highlights banks’ vulnerability to sovereign stress, given their significant holdings of government securities. Separately from the Eurobond risk, S&P warned that a broader restructuring of domestic debt could result in valuation losses or haircuts on banks’ government-security portfolios, weakening capital and creating liquidity pressures.

2. Nigeria’s fixed-income yields fall following monetary-policy reset

Nigeria’s fixed-income market repriced following the Central Bank of Nigeria’s reset of the Monetary Policy Rate to 23% from 26.5%, according to a Financial Markets Dealers Association (FMDA) report published on 28 September. Between 18 and 25 September, average Treasury-bill yields declined 96 basis points to 17.81%, while average yields on open-market-operation (OMO) securities fell 129 basis points to 18.51%. Average government-bond yields declined to 16.0% from 16.5%.

FMDA interpreted the declines as early evidence of improved monetary-policy transmission. The repricing followed a reset intended to bring the policy benchmark closer to prevailing market rates. For banks, falling yields can support valuations of existing fixed-rate securities while reducing returns available when funds are reinvested. These market movements do not establish how far the reset has passed through to customer lending rates.

3. Egypt keeps policy rates unchanged as headline inflation moderates

The Central Bank of Egypt maintained its overnight deposit, lending and main-operation rates at 19%, 20% and 19.5%, respectively, on 24 September. Annual headline inflation stood at 14.5% in August, while core inflation was 14.9%.

The hold keeps Egyptian banks operating under relatively tight monetary conditions despite the moderation in headline inflation. Inflation, exchange-rate conditions and external commodity and geopolitical risks remain central to the scope for further easing and its effect on bank funding and credit conditions.

4. Ghana holds policy rate at 14% as credit conditions ease

The Bank of Ghana maintained its Monetary Policy Rate at 14% following the Monetary Policy Committee meeting held on 23–24 September. The decision was unanimous. Headline inflation rose to 5.0% in August from 4.6% in July, although it remained below the bank’s medium-term target range of 8% ±2 percentage points.

Following earlier policy-rate reductions, easing credit conditions are already evident in bank lending. Average lending rates declined to 15.9% in August from 24.2% a year earlier, while nominal private-sector credit grew 35.5% year on year. The non-performing loan (NPL) ratio improved to 15.7% in August from 20.8% a year earlier, although the bank said credit risk remained elevated.

5. BANK OF AFRICA profit rises 10% as lending expands

BANK OF AFRICA–BMCE Group reported on 28 September a 10% increase in net income attributable to shareholders to MAD 2.5 billion ($260 million) in the first half of 2026, while consolidated net banking income increased 1% to MAD 10.5 billion ($1.1 billion). Between December 2025 and June 2026, consolidated customer loans increased 4% to MAD 243 billion ($25.2 billion), while customer deposits rose 4% to approximately MAD 287 billion ($29.8 billion).

Profit growth was supported by lower credit costs, with consolidated cost of risk declining 16% to MAD 1.4 billion ($145 million), although operating expenses increased 8% amid IT investment in Morocco, lifting the cost-to-income ratio to 44.2% from 41.5%. Gross operating income fell 3%. Adjusting for the increased ownership stake in BOA Holding, profit growth was 5%. New medium- and long-term SME loan disbursements in Morocco increased 36.1%, pointing to stronger SME activity despite modest overall revenue growth.

6. South Africa’s quarterly bulletin shows weaker activity and moderating credit growth

The South African Reserve Bank’s September Quarterly Bulletin, released on 29 September, showed that real GDP contracted 0.2% in the second quarter of 2026, following six consecutive quarters of expansion. The household debt-to-disposable-income ratio declined to 61.3%, while annual growth in bank credit to the domestic private sector moderated to 7.3% in July from 8.8% in February.

The contraction points to a weaker operating environment for banks even as household credit demand showed some resilience. Household credit growth accelerated gradually during the first seven months of the year, supported by mortgages, general loans and instalment finance, while corporate credit growth moderated.

7. BOAD approves XOF 157.5 billion in new regional financing

The West African Development Bank (BOAD) approved XOF 157.5 billion ($273 million) in new operations and interventions at its board meeting in Lomé on 24 September, supporting projects across several West African Economic and Monetary Union markets. The package covers agriculture, infrastructure, energy and private-sector financing, including a XOF 10 billion ($17 million) refinancing line for COFINA Côte d’Ivoire.

The approvals combine infrastructure and development financing with financial intermediation. The COFINA refinancing line is intended to support medium-term SME financing, financial inclusion, green projects and women entrepreneurs, while other interventions provide long-term resources through financial institutions.

8. Angola raises AOA 208.5 billion through sale of Standard Bank stake

Angola raised AOA 208.5 billion ($228 million) through the sale of a 34% state-held stake in Standard Bank de Angola, according to official results published on 28 September. The offer comprised a 24% stake allocated to Standard Bank Group and 10% offered to the public. Total demand reached AOA 403.4 billion ($442 million), with the public tranche attracting demand equivalent to approximately 3.8 times the shares offered.

Standard Bank Group’s stake rises from 51% to 75%, increasing its share of the Angolan subsidiary’s future earnings while reducing state ownership to 15%. The public tranche opens investment in the bank to a wider shareholder base. Proceeds go to the state, so the sale changes ownership rather than directly expanding the bank’s capital available for lending.

9. Ecobank sets $2.6 billion loan-portfolio targets for women-led businesses and agriculture

Ecobank announced on 24 September loan-portfolio targets totalling $2.6 billion by 2030, comprising $2 billion in outstanding loans for women entrepreneurs through its Ellevate programme and $600 million for agricultural value chains. The initiative will extend across the group’s 34 African markets and include working capital, trade loans, investment financing, development finance institution guarantees and digital financial services.

The targets give defined portfolio objectives to Ecobank’s financial-inclusion strategy, although the announcement does not disclose current outstanding balances or the additional lending required to reach them. The bank also plans to use its Single Market Trade Hub and pan-African payments infrastructure to connect businesses with regional supply chains and cross-border payments.

10. Botswana’s bank loan arrears rise despite marginal improvement in NPL ratio

Botswana’s commercial-bank past-due loans increased 24.6% to BWP 5.2 billion ($391 million) in 2025, according to the Bank of Botswana’s Banking Supervision Annual Report released on 24 September. Bank assets increased 1.8% to BWP 146.5 billion ($11.0 billion), while gross loans and advances and customer deposits both rose 3.3%, to BWP 90 billion ($6.8 billion) and BWP 110.8 billion ($8.3 billion), respectively.

The banking system remained profitable, liquid and adequately capitalised despite a challenging economic environment, with commercial-bank unimpaired capital increasing 7.4% to BWP 19.7 billion ($1.5 billion). Impaired loans remained around BWP 3 billion ($226 million), allowing the NPL ratio to ease to 3.3% from 3.4% as lending expanded. Rising arrears nevertheless indicate repayment pressure that the marginally improved NPL ratio alone does not capture.

What to watch

The South African Reserve Bank Monetary Policy Review on 6 October, the Central Bank of Kenya Monetary Policy Committee meeting on 7 October, and the Bank of Botswana Monetary Policy Committee meeting on 29 October.