…seen rising to $107bn in 2025
African banking revenues have neared the $100 billion mark for the first time, with returns on equity outpacing the global average, McKinsey said, highlighting the sector’s growing economic importance and concentration in a handful of markets.
In a new report, the global consulting firm said banking revenues across the continent rose to $99 billion in 2024 from $83.4 billion in 2020 and are projected to reach $107 billion in 2025.
ROE climbed from 9.0 percent in 2020 to 19.0 percent in 2024, before moderating to 17.0 percent last year as interest rates began to ease across major African economies. This remains well above the global average ROE of around 10 percent over the same period.
The strong performance has been driven by elevated interest rates, loan growth, and sizable gains from foreign exchange and trading activities, reflecting favourable operating conditions over the past four years.
Cost efficiency also showed marginal improvement, with the cost-to-income ratio declining to 49 percent in 2024 and 2025, compared with the global average of 51.1 percent. However, McKinsey noted that the improvement was largely due to robust revenue growth rather than meaningful cost optimisation.
At 2.6 percent, African banks’ cost-to-asset ratio remains double the global average of 1.3 percent, pointing to significant scope for operational efficiency gains.
Despite strong momentum, structural challenges persist. Gaps in financial access, infrastructure deficits, trust issues, and macroeconomic volatility continue to constrain the sector’s full potential.
The report highlights that roughly 70 percent of Africa’s banking revenues in 2024 were generated by just five markets—Egypt, Kenya, Morocco, Nigeria, and South Africa—with South Africa alone accounting for more than a quarter of the total at $26.4 billion.
While these markets are expected to remain dominant, double-digit growth in smaller economies suggests emerging frontiers for expansion.
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“African banking has moved decisively from a story of potential to one of performance,” said Mayowa Kuyoro, partner and head of McKinsey’s financial services practice in Africa.
On a constant-currency basis, banking revenues expanded at an annual rate of about 17 percent between 2020 and 2024, significantly outpacing global growth. However, in US dollar terms, growth was more moderate at 5.2 percent annually, reflecting currency volatility across several markets.
Expansion has been supported by rising financial inclusion, rapid digital adoption, and strong demographic trends. Africa’s population grew by more than 2 percent annually between 2020 and 2025, with the working-age population increasing by nearly 3 percent each year.
Lending remains the largest revenue pool and is expected to reach about $52 billion by 2030, while Small and Medium-sized Enterprises (SMEs) are projected to be the fastest-growing segment.
“The next phase of competition will be defined by how banks scale digital capabilities and diversify revenue streams beyond traditional lending,” Kuyoro said.
Retail and corporate banking accounted for roughly 88 percent of total revenues in 2024, at $48.9 billion and $38.1 billion respectively. Retail is expected to retain its lead, contributing about half of total revenues by 2030, while the SME segment is forecast to grow at an annual rate of around 8 percent.
Historically underserved due to limited credit data and weak financial records, SMEs are increasingly becoming bankable as digital payments, mobile money, and alternative data sources improve credit assessment capabilities.
This shift is already reshaping lending models. For instance, one Egyptian bank has launched a fully digital SME platform offering near-instant loan approvals and funding within 24 hours.
Looking ahead, McKinsey identified key priorities for sustaining growth, including strengthening financial resilience, driving disciplined expansion, and investing in future capabilities such as artificial intelligence, data infrastructure, and cybersecurity.