Johnson Asiama, BoG Governor
Banks operating in the country wrote off GH¢1.05 billion as bad debt within the first eight months of 2025, representing a 46% decline compared to the GH¢1.95 billion recorded over the same period in 2024, according to the Bank of Ghana’s August 2025 Domestic Money Banks Income Statement.
The central bank attributed the improvement to a broad-based strengthening in asset quality across all economic sectors, despite lingering credit risks in the financial system.
The report noted that the decline in bad debts reflects improved loan recovery efforts and better risk management within the banking industry.
During the review period, interest expenses of domestic banks reached GH¢10.11 billion, marking a 20.9% year-on-year increase. This was largely driven by higher deposit rates and funding costs amid a competitive financial environment.
The Non-Performing Loans (NPL) ratio, a key measure of banking sector health, dropped from 24.3% in August 2024 to 20.8% in August 2025, indicating improved loan performance, the central bank said.
According to BoG, when adjusted for fully provisioned loan losses, the ratio improved further, from 10.6% to 6.8%, reflecting a lower proportion of substandard and doubtful loans.
It stated, “The improvement in asset quality was broad-based, with a decrease in non-performing loans in all economic sectors.”
The regulator added that the contraction in the NPL stock, alongside steady loan growth, contributed to the industry’s positive performance.
The total NPL stock fell by 6.1% year-on-year, from GH¢21.1 billion in August 2024 to GH¢19.8 billion by August 2025, it added.
This contraction, the report noted, was supported by increased write-offs and the appreciation of the Ghana cedi, which reduced the domestic value of foreign-currency-denominated bad loans.
Despite the overall improvement, the private sector continued to dominate the NPL portfolio, accounting for 97.4% of total bad loans in August 2025, up from 96.0% a year earlier.
In contrast, the public sector’s share declined to 2.6%, from 4.0% in August 2024.
A Business Desk Report