• African banking revenue surpasses $100 billion, with strong profitability
• Growth driven more by favorable conditions than operational efficiency
• Sector remains highly concentrated despite emerging secondary markets

Africa’s banking sector has crossed a historic threshold, with aggregate revenues exceeding $100 billion for the first time, according to a report published March 30 by McKinsey & Company. The milestone reflects four years of exceptionally favorable macro-financial conditions, but also highlights persistent structural imbalances in a sector entering a more mature phase.

Returns that outperform global peers

Banking revenues reached $99 billion in 2024 and are projected to rise to $107 billion in 2025, growing at a pace that outstrips most global financial markets. Profitability stands out even more sharply. Return on equity reached 19% in 2024, compared with a global average of around 10%, and is expected to ease slightly to 17% in 2025 while remaining well above global levels.

In constant currency terms, revenue growth averaged close to 17% annually between 2020 and 2024, far exceeding global benchmarks. In nominal dollar terms, however, growth was more modest at around 5.2% per year, reflecting the impact of exchange rate volatility across several key markets.

McKinsey notes that these strong returns are largely driven by favorable external factors—higher interest rates, rapid repricing of loan books, and foreign exchange gains—rather than improvements in operational efficiency. African banks’ cost-to-assets ratio stands at 2.6%, double the global average of 1.3%. In other words, performance has been achieved despite structural cost pressures, not because of improved cost control.

A highly concentrated profit landscape

Behind the headline figures, the sector remains deeply uneven. Five markets—Egypt, Kenya, Morocco, Nigeria, and South Africa—account for around 70% of total banking revenues on the continent. South Africa leads with about $26.4 billion in customer-driven revenues in 2024.

This concentration reflects the maturity of a handful of financial ecosystems while underscoring the relative underdevelopment of other regions, particularly francophone sub-Saharan Africa and landlocked economies.

Still, early signs of rebalancing are emerging. Côte d’Ivoire and Tanzania recorded average annual growth of more than 11% between 2019 and 2024, suggesting that the next wave of expansion may come from outside the traditional core markets. Francophone sub-Saharan Africa, treated as a single block in the report, now accounts for 8% of total banking revenues, up from 7% in 2019—a modest gain that points to gradual catch-up.

Strong structural drivers

The sector’s performance is underpinned by solid demographic and macroeconomic fundamentals. Africa’s population grew by more than 2% annually between 2020 and 2025, while the working-age population expanded by nearly 3% per year, creating a large and growing base of potential banking customers. Rapid urbanization, rising adoption of digital banking services, and expanding financial inclusion are also translating into tangible revenue growth.

Lending remains the primary revenue driver. McKinsey projects that income from financing activities will reach $52 billion by 2030, with small and medium-sized enterprises representing the fastest-growing segment, expected to expand at an average annual rate of 8% between 2025 and 2030. Yet much of this potential remains untapped, as most African SMEs still lack access to formal credit due to limited banking histories.

The next challenge: diversification

"African banking has ​moved decisively from a story of potential to one of performance," said Mayowa Kuyoro, partner and head of financial services at McKinsey Africa. He added, however, that the next phase of competition will depend on banks’ ability to build digital capabilities and develop revenue streams beyond traditional lending.

That shift is already underway. Between 2020 and 2024, fee and commission income grew 1.8 percentage points faster than interest income, even in a high-rate environment. This structural move toward non-interest revenue reflects the expansion of digital payments, the growth of insurance and wealth platforms, and increasing competition from fintech players.

Recent performance has also been supported by temporary factors that are beginning to fade. In Nigeria, the liberalization of the foreign exchange market in 2023 generated more than $1.7 billion in foreign exchange gains for the five largest banks in a single year—equivalent to about 40% of their total operating income. However, this windfall came with rising risks. Between 2022 and 2024, loans considered at risk of default increased by 57% annually.

Fiacre E. Kakpo