Dr. Ernest Addison
The banking sector’s performance continued to improve, with assets growing at 38.7% at end-August 2024, compared to 19.6% in August 2023.
Both pre-tax and after-tax profits were higher in the first eight months of 2024 relative to the same period last year.
The Bank of Ghana, which disclosed this recently, said on solvency, the Capital Adequacy Ratio (CAR) of the industry stood at 10.3% in August 2024, higher than the 7.5% recorded in August 2023.
With reliefs, CAR was13.8% in August 2024, compared to 14.2% in August 2023. Liquidity and efficiency ratios also improved during the first eight months of the year, highlighting that broadly, key financial soundness indicators are improving in the banking sector and remaining positive.
Despite these improvements, the Non-Performing Loans (NPLs) ratio was 24.3% in August 2024, up from 20.0% in August 2023, reflecting increased defaults from large borrowers and highlighting that elevated credit risk remains the primary concern for the sector’s outlook.
Commodities
On the international commodities market, trends in the prices of Ghana’s major export commodities were mixed.
From the beginning of the year to August 2024, crude oil prices declined by 2.1% to settle at an average price of US$78.92 per barrel, due to slowing demand in China and the U.S.
Cocoa prices eased to US$7,409.50 per tonne in August, after climbing to an all-time high of US$10,116.86 per tonne in April 2024. In contrast, gold prices rose by 21.3% on year to-date to an average price of US$2,469.39 per fine ounce on the back of geopolitical tensions and expectations of rate cuts by the U.S. Federal Reserve.
The external payment position was strong in the first eight months. The trade balance recorded a provisional surplus of US$2.78 billion, higher than the surplus of US$1.66 billion recorded in the corresponding period of 2023.
The surplus was primarily driven by an increase in gold and crude oil exports.
Total exports went up by 22.3% to US$12.92 billion. Notably, gold exports rose by 62.2% to US$7.27 billion, while crude oil exports went up by 16.7% to US$2.77 billion.
In contrast, cocoa exports both beans and products fell by 42.7% to US$917.8 million in August 2024, mainly due to challenges posed by extreme weather conditions.
Imports
The total imports bill increased by 14.0% to US$10.14 billion over the same period.
Of the total, oil imports increased by 3.6% to US$3.0 billion, while non-oil imports went up by 19.0 percent to US$7.1 billion.
The strong buildup in international reserves continued into August 2024.
Reserves
Gross International Reserves increased by US$1.58 billion to US$7.50 billion at end-August 2024, equivalent to 3.4 months of import cover. Net International Reserves also increased by US$1.73 billion to US$4.92 billion at end-August 2024.
The higher build-up in Gross International Reserves was largely on account of the strong performance of the domestic gold purchase programme.
After coming under pressure in May and June, the exchange rate has generally stabilised in recent times. This was mainly driven by the still tight monetary policy stance and improved forex liquidity support.
By Samuel Boadi