African banks have crossed a landmark revenue threshold, but sustaining those gains will demand a fundamental shift in how institutions operate, McKinsey & Company warned in a report published on Monday, 30 March 2026.
Banking revenues across the continent reached approximately $99 billion in 2024 and are estimated to have risen to $107 billion in 2025. Returns on equity stood at 19 percent in 2024 and are expected to ease to 17 percent this year, compared with a global banking average of around 10 percent.
Despite the headline strength, McKinsey’s report, From Potential to Performance: A Snapshot of African Banking, cautioned that the sector’s record results have been built on conditions that will not last indefinitely.
The strong performance reflects a four-year period of favourable conditions driven by high interest rates, loan repricing, and gains from foreign exchange and trading activity. As those tailwinds moderate, the consulting firm identified six strategic priorities that will determine which institutions hold their ground and which fall behind.
Revenue diversification tops the list. Banks that have relied heavily on interest income will need to build stronger fee-based businesses in payments, advisory, and transactions to protect margins as rate cycles become less predictable.
Digital transformation is the second priority. McKinsey’s report argued that to lock in gains as tailwinds fade, African banks should industrialise artificial intelligence and strengthen data foundations, while also fortifying cyber, fraud, and operational resilience.
Cost efficiency remains a persistent weakness. African banks’ cost-to-asset ratio stands at 2.6 percent, double the global average of 1.3 percent, pointing to significant scope for operational efficiency gains. McKinsey noted that recent improvements in the cost-to-income ratio were driven mainly by strong revenues rather than genuine cost discipline.
Risk management and resilience form the fourth priority, with currency volatility, inflation, and regulatory tightening increasing pressure on balance sheets. Scale and consolidation is the fifth, with the report anticipating increased merger and acquisition activity as banks seek the size required to invest competitively in technology.
Finally, McKinsey pointed to geographic and segment expansion as a source of outsized opportunity. Small and medium-sized enterprises are expected to be the fastest-growing customer segment, expanding at an average annual rate of 8 percent between 2025 and 2030.
Despite the growth, revenues remain heavily concentrated. Egypt, Kenya, Morocco, Nigeria, and South Africa account for around 70 percent of Africa’s total banking revenues, with South Africa the largest market, generating about $26.4 billion in customer-driven revenues in 2024. This uneven distribution underscores the challenge facing smaller markets, which must work harder to attract capital and build competitive institutions.
Mayowa Kuyoro, a partner and head of McKinsey’s financial services practice in Africa, said African banking had “moved decisively from a story of potential to one of performance.” The firm’s central message, however, is that the next chapter will be harder won. Future leaders will be defined not by the markets they occupy but by the discipline with which they execute across each of the six priorities.
