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Economic Activities Improve   
 
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25-Sep-2018  
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Dr Ernest Addison
 
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The Bank of Ghana (BoG) says its real Composite Index of Economic Activity (CIEA) recorded an annual growth of 6.6 percent in July 2018, the highest in eight months, compared to 2.1 percent in the corresponding period of 2017.

Governor of BoG, Dr Ernest Addison, who announced this at a press conference yesterday in Accra after a Monetary Policy Committee meeting, said the improvement was mainly fanned by strong export growth, domestic VAT, industrial consumption of electricity and tourist arrivals.

“Overall, GDP growth is expected to remain steady and broad-based, estimated at some 6.8 percent by end-2018.”

Loan write-off

Dr Addison also announced that his outfit had approved a loan write-off of GH¢1.2 billion for the banking industry to help reduce the Non-Performing Loans (NPL) ratio significantly to 18.4 percent.

“The banking system continues to be profitable, sound and well-capitalized. Total assets increased by 39.7 percent to GH¢44.2 billion in July 2018. Of the total, advances constituted 45.8 percent. The industry’s capital adequacy ratio of 19.1 percent is significantly above the prudential requirement of 10.0 percent.

“Banks reduced their operating expenses in response to a decline in both interest and non-interest income. The quality of loans improved, as industry NPLs ratio eased to 21.3 percent in August 2018 from 21.9 percent for the corresponding period in 2017.”

Private credit

He said private sector credit growth continues to recover, although at a moderate pace as the ongoing balance sheet restructuring by the banks continues, adding that private sector credit in August 2018 grew by 15.8 percent year-on-year compared with 6.5 percent a year earlier.

“In real terms, private sector credit expanded by 5.4 percent in August against a contraction of 5 percent over the same period last year.

Tightening in bank’s credit

The governor also revealed that the latest credit conditions survey showed a tightening in banks’ credit stance on loans to both households and enterprises as banks continued to repair their balance sheet and also build their capital base.

“On the other hand, the weighted average interbank rate, the rate at which commercial banks lend among themselves, declined further to 16.2 percent in August 2018 from 21.0 percent a year ago. The average lending rates of the banks declined to 27 percent in August 2018 from 29.8 percent in August 2017.”
 
 
Source: Daily Guide
 
 

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