BoG Governor Dr. Ernest Addison sandwiched by his deputies Elsie Addo Awadzi and Dr. Maxwell Opoku-Afari
THE BANKING sector maintained its resilience through to end-April 2021, with strong growth in total assets, deposits and investments, the Bank of Ghana has said.
Total assets increased by 16.4 per cent to GH¢155.7 billion and this reflected strong growth in investments in government securities by 34.9 per cent to GH¢73.3 billion funded by deposits and loan repayments.
Total deposits recorded an annual growth of 24.2 per cent to GH¢104.9 billion on the back of the strong liquidity flows from the fiscal stimulus and payments to contractors, and to depositors and clients of defunct SDIs and SEC-licensed fund managers respectively.
Dr. Ernest Addison, Governor of the Central Bank, disclosed to journalists yesterday that overall, the impact of the pandemic on the industry’s performance was moderate, as banks remained liquid, profitable and well-capitalised. According to him, “Financial soundness indicators remained strong, underpinned by improved solvency, liquidity and profitability indicators. The industry’s Capital Adequacy Ratio of 21.8 per cent as at end-April 2021 was well above the regulatory minimum threshold of 11.5 per cent.”
He also said core liquid assets to short-term liabilities was 24.9 per cent in April 2021, relative to 30.1 per cent in April 2020 while net interest income grew by 18.4 per cent to GH¢4.1 billion, compared with the 18.8 per cent growth over the same comparative period.
“Net fees and commissions grew stronger by 26.5 per cent to GH¢917.6 million, relative to 8.8 per cent growth during same period last year, reflecting a gradual recovery in trade finance-related and other ancillary businesses of banks,” he added.
Accordingly, he said operating income rose by 16.8 per cent, marginally higher than the corresponding growth rate of 15.2 per cent a year ago. The banking sector deployed effective cost control measures which resulted in a marginal 1.7 per cent growth in operating costs over the review period, significantly lower than the 17.8 per cent growth for the same period in 2020.
Loan loss provisions, however, increased by 29.4 per cent, compared with 7.1 per cent a year ago, on account of continued elevated credit risks.
Profit before tax increased by 39.6 per cent to GH¢2.3 billion, recovering from the marginal growth of 7.5 per cent a year ago.
Non-Performing Loans (NPL) ratio increased marginally from 15.0 per cent in April 2020 to 15.5 per cent in April 2021, arising partly from the general pandemic-induced repayment challenges as well as some bank specific loan recovery challenges.
BY Samuel Boadi