The dramatic collapse in Treasury bill yields may not be good news for investors, but for the former Executive Director of Standard Chartered Bank, Alex Mould, it is being hailed as a possible turning point for Ghana’s banking sector.
Not only is the banking sector set for transformational change, but he believes it will also potentially broaden the economy.
According to the latest auction report, the 91-day Treasury bill has plunged to 6.45%, down from 8.61% just a week ago, 11.11% in early January 2026, and a towering 28.03% at the end of 2024.
The current Chief Executive of MiDA indicates that this sharp decline signals more than cheaper government borrowing. It marks what he describes as the return of “good banking.”
From Easy Profits to Real Banking
In recent years, many financial analysts have bemoaned how high T-bill rates have created an environment where banks could earn substantial returns simply by investing customer deposits in government securities.
This was easy business since it was profitable, low-risk, and predictable. In addition, it comes with less effort and stress. However, this, the experts argue that this is not traditional banking.
There is a turning point with yields now in single digits.
“Most of them invest over 50% of their deposits in GoG T-Bills, and have a small percentage of their income coming from non-interest income (fees, COT, commissions, and forex trading),” Alex Mould recounted.
Time for the Real Sector to ‘Rejoice’
According to Alex Mould, banks can no longer rely heavily on passive income from government paper.
The gradual collapse of the T-Bill rate means that the banks will be forced to return to their core mandate of lending to consumers, supporting businesses, and financing commerce and industry.
In essence, banks will have to work harder and smarter to make profit.
“Banks are in a frenzy at the moment, looking at all ways to bring in new revenue streams to augment the fall in net interest income as T-Bills slide to unprecedented lows. There will be pressure to increase fees by banks — which should be resisted by consumers and the regulator,” he narrated.
He added, “Banks will have to invest in credit to consumers, commerce, and industry; astute banking will lead to good profits, while badly managed banks will rack up non-performing loans, which will eat into their profits.”
Cheaper Debt, More Economic Activity
He further noted that lower Treasury yields also have implications for government finances. Reduced debt servicing costs create fiscal breathing room, freeing up cash for infrastructure, social programmes, and economic expansion.
If the Bank of Ghana trims its Monetary Policy Rate at its upcoming meeting, as some expect, borrowing costs could decline further. That, in turn, could filter through to commercial lending rates over time.
For businesses, this is where “good banking” becomes tangible. If credit becomes more affordable, companies can expand, invest, hire, and grow. Economic momentum builds when banks lend productively rather than parking funds in short-term government instruments.
“We wait to see what Bank of Ghana will do at the next MPR meeting in a few weeks — March 16–18. It is anticipated that at this meeting, Bank of Ghana’s MPR will go down by another 2.5% to make the MPR 13%,” he projected.
Discipline Over Dependence
Alex Mould argues that with significant liquidity still chasing government securities, particularly from banks and pension funds, interest rates may remain subdued for some time.
However, he believes the real test will come when banks increase credit to the private sector.
Well-managed banks that assess risk carefully and lend strategically could generate sustainable profits. Poorly managed institutions, on the other hand, risk accumulating non-performing loans that could erode earnings.
In this new environment, profitability will depend less on interest rate arbitrage and more on credit quality, risk management, and innovation.
A Shift in Mindset
The falling T-bill rate also changes investor behaviour. Money that once flowed easily into fixed income is already seeking alternatives, including equities and other assets. But Mould cautions that stock prices should reflect company performance, not just excess liquidity.
He maintains that Ghana is moving away from crisis-era interest rates toward a more stable, normalized financial environment.
For pensioners accustomed to high fixed-income returns, the adjustment may be painful. For the government, it offers relief. For banks, it demands adaptation.
But for Alex Mould, when banks are compelled to lend to the real economy rather than rely on government securities, the foundations of sustainable banking are restored.
And that, he believes, is what the return of “good banking” truly means.
