Dr. Ernest Addison – BoG Governor
Total assets of banks operating in the country increased to GH¢97.8 billion in April 2018, representing an annual growth of 15.7 percent compared to the 30.9 percent growth recorded in April 2017.
According to the Central Bank Governor, the asset growth was mainly funded by deposits which went up by 15.7 percent on year-on-year basis.
He also said the industry’s average Capital Adequacy Ratio (CAR) improved to 18.2 percent in April 2018 against 17.4 percent last year, reflecting efforts by banks to recapitalize.
“Overall, financial soundness indicators of the banking industry measured in terms of earnings, liquidity and capital adequacy improved moderately but the quality of loan portfolio remains a concern.”
NPLs
Dr Ernest Addison said the banks’ Non-Performing Loans (NPLs) ratio increased to 23.4 percent in April 2018 from 21.6 percent in December 2017, adding that adjusting for loan loss provision, the NPLs ratio increased to 12.3 percent from 10.1 percent in December 2017.
“The rise in NPLs reflects the migration of some legacy loans to non-performing category.”
Credit extension
On private sector credit extension, he said though this was recovering, it remained subpar due to ongoing balance sheet restructuring by banks and adjustment of the monetary data to exclude the resolved banks.
“As a result, growth in credit to the private sector was 5.6 percent year-on-year in April 2018 compared with 16.1 percent a year earlier. In real terms, private sector credit contracted by 3.6 percent in April 2018 against 2.6 percent growth in the same period of 2017.
“These notwithstanding, the latest credit conditions survey showed an overall net easing in banks’ credit stance on loans to both households and enterprises. This was attributed to the improved macroeconomic environment – declining monetary policy rate and anchored expectations.”
The governor also said new advances (loan demand) in the banking sector rose by 27.6 percent year-to-date in April 2018 compared to 1.3 percent growth in the same period last year.
He said that the banking sector remains liquid and solvent, as banks strategize to implement re-capitalization plans in line with the new minimum capital requirement.
By Samuel Boadi