Lenders and other financial institutions across the continent are now more concerned about sustaining their profit levels than issues such as political instability and competition, as emerging risks force increased spending and compliance costs.

A survey of financial industry firms by the African Financial Summit (AFIS) and consultancy Deloitte reveals that for the first time, banks have this year cited “pressure on profitability” as a major concern, cited by 46 percent of polled institutions.

It has surpassed traditional issues such as political instability, toughening regulations, increased competition, and talent shortages, indicating a real perceived threat to profits for one of the continent’s most profitable sector.

“It reflects the industry’s fear that heavy cyber and compliance spending, higher refinancing costs, and intensified competition could crowd out growth initiatives, including geographic expansion, digital projects, and portfolio risk management,” says the Africa Financial Industry Barometer, which contains the findings.

Microfinance institutions, insurers and lenders are the most concerned with profitability this year, with 100 percent, 88 percent, and 85 percent respectively indicating financial performance as a leading strategy for them this year.

Expansion and growth initiatives are no longer a top priority for the continent’s financial firms. Other than financial performance, the top priorities are now improving customer experience, digital transformation, risk management, talent retention, and social impact.

The survey shows that the firms’ profitability and financial performance concerns are justified by their perceived exposure to risks arising from cyber threats, loan defaults, and resulting regulatory pressures.

Cyber risksAt least 58 percent perceive a high or very high exposure to cyber risks this year, while 35 percent sense medium to extreme exposure to credit risks, and over a third feel the same about regulatory issues which could raise their compliance costs.

But these concerns are not just perceived, they are real and increasingly impacting companies across sectors.

In Kenya, for instance, cyber threats increased exponentially over the last year, with financial-sector companies being the most targeted. In the three months to December 2025, cyber incidents reported in the country rose by almost five times to hit 4.6 billion, a record rate.

Rising default rates and overreliance on government deposits have also instigated key regulatory reforms that will demand increased compliance costs for the financial industry players, especially banks.

Away from the industry, external observers also expect the continent’s financial industry to face profitability pressures this year.

In its latest outlook for the banking sectors in Kenya, Nigeria, and South Africa, American rating firm Moody’s said lenders in all three countries are expected to face profitability pressures this year, as returns on government securities dwindle.“Profitability will soften from the 2025 peak but remain solid: margins will narrow as government-security yields fall, partly offset by lower funding costs and a shift toward higher-yielding loans,” Moody’s said in its assessment of the Kenyan banking industry.

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