Dr Ernest Addison, Governor, BoG
A new report by the Central Bank has revealed that 97.5 percent of banks’ Non-Performing Loans (NPLs) in April, this year were attributed to players in the country’s private sector.
This represents a 12 percent increase from the 86.9 percent recorded in the same period last year.
Of this, indigenous enterprises accounted for 78.9 percent.
The report said the private sector contributed to the high NPLs despite the fact that its share of credit offered by banks dropped from 86.6 percent to 86.3 percent between April 2016 and the same period in 2017.
Touching on the proportion of banks’ non-performing loans that were traced to the public sector, it said that dropped to 2.5 percent in April 2017 from 13.1 percent in April last year.
It also explained that the industry’s NPL went up from GH¢5.74 billion in April 2016 to GH¢7.15 billion in April 2017, adding that the stock of Non-Performing Loans (NPLs) increased by 24.5 percent between April 2016 and April 2017.
Banks’ balance sheet
Despite the balance sheet size of the banking sector, which comprised 33 banks, 16 of which were under domestic control and the remaining 17 foreign-controlled, continued to expand as at end-April 2017.
The branch network of the 33 banks stood at 1,377 branches as at April 2017 across the 10 regions of the country.
Assets
Total assets recorded an annual growth of 31.1 percent to GH¢84.49 billion compared with GH¢64.44 billion (16.7 percent year-on-year) in April 2016.
Of the total, foreign assets recorded the higher growth compared with domestic assets, although domestic assets constituted the greater proportion of banks’ total assets (91.3 percent share as at April 2017).
Banks’ foreign assets increased to GH¢7.39 billion in April 2017, up by 48.4 percent year-on-year from GH¢4.98 billion in April 2016.
Credit
Credit continued to pick up in April 2017 shown by the 14.5 percent year-on-year growth to GH¢30.99 billion in net loans and advances from GH¢27.07 billion in April 2016.
Gross advances also recorded an increase year-on-year growth to 16.7 percent in April 2017 from 11.9 percent in April 2016.
Banks’ investment portfolio (bills and securities) also continued to increase, recording a 57.3 percent year-on-year growth to GH¢24.80 billion from GH¢15.77 billion over the same comparative periods.
The banking industry’s funding structure deposits, which is the main source of funding for the industry, stood at GH¢52.83 billion (28.4 percent year-on-year growth) as at April 2017 compared to GH¢41.14 billion (17.5 percent year-on-year growth) in the same period last year.
Borrowing performance
Borrowing, the second major source of funding for the banking industry, grew by 47.0 percent to GH¢14.56 billion in April 2017 from GH¢9.9 billion in April 2016.
The pickup in the banks’ borrowing largely came from the sharp increase in banks’ foreign borrowing after contracting in the corresponding period last year.
Growth in short-term borrowing also picked up significantly during the review period.
The minimum paid-up capital of the banking industry grew by 29.5 percent to GH¢4.14 billion in April 2017 from GH¢3.20 billion in April 2016.
Investors share
Shareholders’ funds also grew in year-on-year terms by 21.2 percent to GH¢11.56 in April 2017 from GH¢9.54 billion in April 2016, representing an increase in the industry’s reserves over the period under review.
By Samuel Boadi
samuel10gh@yahoo.com