THE BANK of Ghana (BoG) has disclosed that Non-Performing Loans (NPL) of commercial banks in the country remains despite the clean up carried out in the sector.
Governor of the BoG, Dr. Ernest Addison, made this to journalists on Monday, May 27, 2019 in Accra, he presented highlights from the 88th meeting of the Monetary Policy Committee (MPC) of the Central Bank.
The Governor lamented that “although the Non-performing Loans (NPL) ratio has declined from 23.5 percent in April 2018 to 18.9 percent in April 2019, it remains high and points to the industry’s exposure to credit risk.”
According to him, to help reduce the NPL ratio further, banks were working to strengthen their credit risk management practices and loan recovery efforts.
Sector Outlook
Giving an outlook of the banking sector following the massive cleanup exercise between 2017 and 2018 which led to the collapse of some seven indigenous banks, the Governor observed that over the first four months of 2019, banks total assets amounted to Gh₵ 109.9 billion.
That, he said, represented an annual growth of 12.4 percent, adding that the growth in total assets was funded mainly from deposits which grew by 19.6 percent year-on-year to Gh₵ 73.1 billion.
According to him, the industry’s financial soundness indicators have improved, with the Capital Adequacy Ratio (CAR) at 21.4 percent in April 2019, significantly higher than the prudential requirement of 10.0 percent.
Under the new BoG Capital Requirement Directive (CRD), the CAR was 17.4 percent compared with the 13.0 percent prudential requirement.
Concerns
However, the Governor bemoaned that asset quality remained a key challenge and a major constraint to credit expansion in the banking sector.
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