The banking sector remains sound, and well-capitalised with strong growth in total assets, investments and deposits, Governor of the Bank of Ghana, Dr Ernest Addison, has said.
He said total assets of the banking industry in the first 10 months of the year increased by 16.1 per cent to GHC173.8 billion.
“In the first 10 months of the year, total assets increased by 16.1 percent to GH¢173.8 billion, reflecting strong growth in investments in government securities by 25.5 percent to GH¢83.4 billion,” Dr Addison said in a statement issued by the BoG after the 103rd meeting of the Monetary Policy Committee of the BoG.
He said the gradual growth in gross advances had continued, with 8.9 percent growth as at end of October 2021 compared to the end-June position of 5.2 percent growth.
Dr Addison said deposits grew by 17.2 percent year-on-year to GH¢117.4 billion on the back of strong liquidity flows.
“The industry’s Capital Adequacy Ratio of 19.8 percent as at end-October 2021 was well above the current regulatory minimum threshold of 11.5 percent. Core liquid assets to short-term liabilities was 24.6 per cent in October 2021 compared with 27.0 percent in October 2020,” the Governor said.
He said net interest income grew by 15.2 percent to GH¢10.5 billion, compared with 19.9 percent growth over the same review period, adding that Net fees and commissions recorded a stronger growth of 22.9 percent to GH¢2.3 billion, relative to 6.1 percent growth for same period last year, reflecting continued recovery in trade finance-related and other ancillary businesses of banks.
Dr Addison said total operating income grew by 14.3 percent to GH¢14.1 billion, marginally lower than the previous year’s growth of 16.6 percent, while operating costs increased by 11.0 percent, relative to the 9.9 percent growth for same period in 2020.
He said growth in loan loss provisions, however, moderated to 6.5 percent as at end-October 2021 from 18.9 percent a year ago.
These developments, Dr Addison resulted in profit before tax of GH¢6.0 billion, representing a year-on-year growth of 21.8 percent at the end of October 2021,” Dr Addison.
“The COVID-related policy measures and regulatory reliefs remain in place and have provided enough support to enable the banks withstand shocks. Trends in the private sector indicate some modest recovery in credit extension, although the year-on-year comparison suggests sluggishness, which broadly reflects the lingering pandemic related risk aversion on the part of credit institutions. Annual nominal growth in private sector credit slowed to 10.1 percent in October 2021 compared with 13.4 percent a year ago,” said the Governor.
In real terms, Dr Addison said private sector credit contracted marginally by 0.8 percent compared with a 3.0 percent growth, recorded over the same review period.
He said new loans and advances by the banks, totalled GH¢28.4 billion in the year to October 2021, marginally above the GH¢27.1 billion for the same period in 2020.
“Asset quality has improved somewhat in the course of the year. The Non-Performing Loans (NPL) ratio declined to 16.4 percent in October 2021 from 17.3 percent recorded in August 2021. A year ago, however, the NPL ratio was 15.3 percent in October 2020,” Dr Addison, said.
BY KINGSLEY ASARE