Dr Ernest Addison, BoG Governor
The total asset base of banks in the country increased to GH¢95.1 billion in February 2018, representing an annual growth of 13.7 percent compared to 5.3 percent recorded in December 2017.
The asset growth was mainly funded by deposits which went up by 12.6 percent on a year-on-year basis.
The industry’s average Capital Adequacy Ratio (CAR) improved to 19.2 percent in February 2018, reflecting efforts by banks to recapitalize.
The Monetary Policy Committee of the Central Bank, which made this known on Monday, said the ongoing regulatory reforms in the banking sector would promote stability in the financial system and properly position it to support the economic growth agenda.
“The banking sector as a whole continues to be liquid, profitable and solvent with some modest gains in asset quality. However, there remain few vulnerabilities and the Bank of Ghana (BoG) expects banks to continue to implement their recapitalization plans in line with the new minimum capital requirement,” Dr Ernest Addison, chairman of the MPC, stated, adding that other financial soundness indicators recorded some improvements.
“Although the quality of loan portfolio remains a concern, the Non-Performing Loans (NPLs) ratio remained unchanged at 21.6 percent since December 2017 as banks continued to clean their balance sheets. However, adjusting for loan loss provision, the NPLs ratio stood at 10.9 percent in February.
According to him, growth prospects for 2018 remain positive and are expected to be supported by crude oil production, gradual recovery in the non-oil sector, and favourable business and consumer sentiments.
“The pace of growth in economic activity as reflected by the latest update in the CIEA showed some improvements, although still below potential for a number of reasons, including moderated credit growth due to high NPLs, tighter credit conditions and corrections in the balance sheets of the banking sector.
“Provisional data on government operations indicated an overall budget deficit of 6.0 percent of GDP in 2017, against the target of 6.3 percent. Total revenue and grants was 20.0 percent of GDP, below the target of 21.3 percent and total expenditures, including arrears clearance, was 26.0 percent of GDP below the budgeted estimate of 27.7 percent.”
By Samuel Boadi