The stock market may be booming, but investors have been cautioned against investing in the stocks of banks.
Although the sharp decline in T-bill yields may be driving investors toward the stock market, it is emerging that not all stocks are positioned to benefit, as listed banks will be the most affected.
This caution is coming from the former executive banker of the Standard Chartered Bank, Alex Mould. Market watchers have observed a dramatic decline in the 91-day Treasury bill rate, which has dropped to 6.45%, down from 8.6095% just a week earlier, 11.1165% in early January 2026, and a staggering 28.0363% at the end of 2024.
While lower T-bill rates are positive for government borrowing costs and may encourage a rotation into equities, Alex Mould believes that investors should think carefully before piling into bank stocks on the Ghana Stock Exchange (GSE).
Why the Stocks of Banks Won’t Be a Good Investment Now
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The former banking executive explains that, for years, Ghanaian banks have allocated a significant share, in some cases over 50%, of their deposits into the Government of Ghana Treasury bills.
During periods of high treasury rates, the strategy delivered strong, relatively risk-free returns and boosted profitability. But that income stream is now shrinking rapidly.
He reveals that as T-bill yields fall to single digits, banks’ net interest income, which is the difference between what they earn on assets and pay on liabilities, is expected to tighten.
This means that banks that rely heavily on interest income, particularly from government securities, could see earnings pressure in 2026 compared to the strong performance posted in 2025.
“Bank stocks won’t be the best to invest in on the GSE, as their performance will deteriorate compared to 2025, since 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 explained.
This signals that when the safest investment in a bank’s portfolio suddenly pays much less, profitability comes under strain.
The GRR Factor and Lending Rates
Another layer of complexity, he reveals, is how the drop in the T-Bill rate will translate into lower lending rates.
In theory, falling T-bill rates should translate into lower borrowing costs for businesses. However, commercial lending rates in Ghana are largely tied to the Ghana Reference Rate (GRR), which depends on the policy rate of the Bank of Ghana and interbank market conditions.
However, both are currently above 15%. For him, if lending rates do not fall in tandem with T-bills, companies may not immediately benefit from cheaper credit.
Meanwhile, banks may find themselves squeezed: earning less on government securities but still operating in a relatively high policy-rate environment.
Revenue Pressures Ahead
With interest income under pressure, banks are reportedly exploring alternative revenue streams, such as including fees, commissions, cost-of-transfer charges, and foreign exchange trading income, to cushion the decline.
This frantic effort introduces potential consumer concerns. Alex Mould fears that there could be pressure to increase fees, a move that may face resistance from both customers and regulators.
Institutions with stronger non-interest income streams and more diversified loan books may weather the transition better than those heavily concentrated in government paper.
He said, “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.”
The Bottomline
The development in the T-Bill market has sparked a chain-reaction in Ghana’s financial system, which is undergoing a significant adjustment.
Pension funds and fixed-income investors are grappling with sharply lower returns. The government benefits from cheaper domestic borrowing. Businesses hope for lower lending costs.
This means that banks must rethink income strategies. The fall in T-bill rates is reshaping the investment landscape, and the experts are cautioning that investors must be meticulous in the selection of stocks to invest in.
