General lending by banks slowed down by 10 per cent on the average for last year amid banks� growing appetite for the low risk but high-yielding government securities.
This explains why the yields from risk free government securities were very attractive as the industry holdings in these securities grew by 43 per cent from GH�6.53 billion to GH�9.34 billion during the period.
Consequently, returns from investment securities accruing to banks increased by 88 per cent from GH�855 million in 2012 to GH�1.608 million in 2013.
This year, the benchmark rate is already hovering around 25.33 per cent as of September 8.
The slowdown in general lending was an outcome of a more risk adverse industry as the risk profile of customers in a challenging economic condition was not considered favourable.
This has increased bank�s appetite for government backed treasuries such as the treasury bills and bonds. Although the benchmark 91-day Treasury bill ended 2012 at around 23 per cent, it fluctuated throughout 2013, ending that year at around 19 per cent.
Private enterprises were the worst hit because loans to that sector dropped by 40 per cent between the end of 2012 and the end of 2013, according to the annual banking survey conducted by accounting firm, PwC, which sampled all but one of the 28 universal banks in the country.
On the average, the yields on 91- and 182-day treasury bills increased from 18.7 per cent and 18.92 per cent in 2012 to 21.5 per cent and 22 per cent in 2013 respectively
However, unlike the slump in the loan portfolio, income from interests charged on loans increased by 32 per cent from GH�1.99 billion in 2012 to GH�2.6 billion in 2013.
On the whole, credit to the agricultural sector slumped to only six per cent at the end of 2013 following the sector�s dwindling contribution to the national productivity index, Gross Domestic Product (GDP).
Banks consider agriculture risky to lend to, and in a year enveloped in macroeconomic challenges, which saw a boom in money market deals, their best bet was the services sector.
The services sector was the largest beneficiary of credit extended to any sector of the economy, attracting 27 per cent of the industry�s loan book.
Growth in loans and advances by banks grew at the rate of 31 per cent to GH�16.85 billion at the end of 2013 growth. This compares unfavourably to the 41 per cent growth to GH�12.82 billion at the end of 2012 over the 2011 figure.
Almost the same amount of credit has been given to commerce and finance. This is not surprising because of the increased activity in the non-bank financial sector and the asset management companies.
The manufacturing sector�s component of the industry�s lending is unchanged at 11 per cent. This is a reflection of the economic conditions affecting the industry.
Lending to electricity, gas and water sector doubled from GH�687 million in 2012 to GH�1.45 million in 2013.
The agriculture�s component of the industry�s loans and advances extended to agriculture dipped from 6per cent as at end of 2011 to only five per cent as at end of 2013.
The Agricultural Development Bank Ltd, the development bank dedicated to agric lending, channelled 27.2 per cent of its advances into the agric sector and by June this year, the bank had done 31 per cent agric lending.
ADB, which is pressing to list on the Ghana Stock Exchange by the close of the year, targets channelling about 40 per cent of its lending portfolio into the agricultural value chain.
Going by the survey, Ecobank Ghana had the most aggressive credit expansion in the industry and achieved 53 per cent growth in its loan portfolio between the end of 2012 and the end of 2013.
Most of the growth was achieved in term loans, which almost doubled from GH�820 million in 2012 to GH�1.56 billion in 2013.
EBG holds the largest share of the industry�s lending and the trend is in line with the bank�s commitment to business growth.
In the last three years, Stanbic consistently gained market amid the risks relating to the unfavourable macroeconomic environment. Stanbic is pursuing its innovative campaign of significant customer acquisition which ramped up its loan book.
The bank�s lending grew by 48 per cent between end of 2012 and end of 2013, moving ahead of GCB and SCB to hold 7.4 per cent of industry lending.
The industry�s loan to deposit ratio is fairly stable at 59 per cent as at end of 2013. This generally portrays the willingness of banks to lend despite the high appetite for Government securities.
The industry�s profit before tax (PBT) margin consistently improved from 37.3 per cent in 2012 to 45.3 per cent in 2013. During the global financial crisis between 2008 and 2011 the banking industry in Ghana did not suffer significant losses but it appears that the industry�s profitability was impeded because of the slowdown in the global economy.
The improvement in PBT is attributable to the increase in total income by 38 per cent from GH�3.35 million in 2012 to GH�4.59 billion in 2013 with a less than proportionate increase in expenses.
Source: Graphic Online
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