The equities market is poised for another bullish year in 2025 with banking stocks leading the charge, analysts at Databank Brokerage Limited forecast in their latest market outlook.

In its 2025 projections, dubbed ‘Charting the Course for Sustainable Growth’, the Ghana Stock Exchange Composite Index (GSE-CI) – which tracks the performance of listed stocks – is projected to close the year with as high as 50 percent gain, supported by strong earnings growth, improving macroeconomic fundamentals, and renewed investor confidence across key segments.

“We expect the ongoing rally in equities to continue into 2025, driven by more favourable market conditions and continued recovery in corporate earnings. From a technical analysis viewpoint, we forecast the GSE Composite Index to close 2025 at 6,850 points, marking an annual gain of 45% (±500bps),” the report read in part.

“We expect this performance to be broad-based across the various sectors, particularly banking, telecommunications and fast-moving consumer goods (FMCG),” it continued.

The index recorded a 43.66 percent increase in 2021 and a 12.38 percent loss in 2022, followed by a 28.08 percent recovery last year.

Banking stocks to drive market gains

The banking sector – which rebounded in 2024 following the Domestic Debt Exchange Programme (DDEP) horrors – is expected to sustain its strong performance in 2025. The analysts noted that banks are expected to benefit from attractive yields on short-term government securities, boosting interest income and driving earnings growth.

The sector is also expected to see increased lending as economic conditions improve, supported by the Bank of Ghana’s (BoG) new cash reserve requirements.

Dividend payouts, which returned to the market in 2024, are projected to further bolster investor interest in bank stocks. Standard Chartered Bank’s (SCB) 2023 dividend payment has set the tone and other banks are expected to follow suit in 2025.

“Barring a significant downturn, we expect the banking sector to do well in 2025 – supported by strong earnings growth, probable return of dividend payout and favourable economic conditions,” the report stated.

Banking stocks showed significant recovery in 2024, with the Financial Stock Index closing the year up 15 percent. Among the notable gainers were GCB Bank – which rose 76.5 percent – and Access Bank, up 27 percent.

Despite this growth, valuations remain attractive – with banks trading well below their book values and presenting compelling entry opportunities for investors, the analysts added.

The banking sector demonstrated a strong financial performance in the first nine months of 2024, with key metrics highlighting significant operational improvements and strategic resilience, according to preliminary financial reports.

Banks recorded a 33 percent year-on-year growth in after-tax profits for the first nine months of 2024, driven by a 54 percent increase in non-funded income and improved asset quality.

Data from the central bank last week showed that total assets surged 42.4 percent to GH¢367.2billion, but despite these positive developments credit risk remained a notable concern. The non-performing loans (NPL) ratio escalated to 22.7 percent, compared to 18.3 percent in the corresponding period last year,

Non-banking stocks to maintain momentum

Beyond banking, the equities market is expected to see broad-based growth across the telecommunications, consumer goods and industrial sectors. Market leader MTN is expected to remain a top performer, benefitting from its data and mobile money services.

Databank’s analysts project continued growth in these areas, with the potential rollout of 5G services driving further gains. “We believe MTNGH still presents a good entry opportunity, trading at an attractive discount with forward P/E of 5.3x,” the report noted.

The FMCG sector is also set to perform well, led by companies such as Unilever Ghana, Guinness Ghana Breweries, and Fan Milk.

Guinness is expected to benefit from price hikes and improved local content in its production, while Fan Milk is banking on new product lines and cost-saving initiatives.

TotalEnergies is projected to deliver an 18 percent upside in 2025, driven by aggressive marketing strategies and a recovery in the mining sector. The company’s ability to navigate market challenges – including OPEC+ production cuts – will be crucial, the analysts said.

2024 in review

The bullish outlook for 2025 builds on a strong 2024, which was fuelled by a recovery of financial stocks and robust investor interest in the telecommunications and FMCG sectors. During the year, the Accra bourse’s market capitalisation crossed the GH¢100billion mark for the first time.

MTN has led the market rally in 2024, supported by a 36 percent increase in profit after tax in the second quarter. The FMCG sector also shone, with Unilever Ghana achieving a 103.45 percent gain while Guinness and Fan Milk posted returns of 38.24 percent and 7.69 percent respectively.

Additionally, the sole listed Exchange Traded Fund (ETF) – NewGold – surged 88.97 percent as investors turned to the gold-backed security as an hedge against the cedi’s sharp depreciation.

Consequently, foreign investors demonstrated a revived interest in the Ghanaian stock market during third quarter-2024, albeit at a slower pace, recording a net buy position of GH¢1.5billion.

While the outlook for 2025 is positive, analysts cautioned that political and economic uncertainties – particularly the transition to a new administration post-2024 elections – could dampen short-term growth. However, they remain optimistic about the market’s resilience.