Governor of the Bank of Ghana, (BoG), Dr Ernest Addison, has said that credit to the Private sector by banks continued to remain weak.
He explained that as of February 2024, private sector credit growth was 5.1 percent compared with a 29.5 percent growth recorded in February 2023.
In contrast, he said, as of February 2024, banks’ investments in GOG and BOG instruments stood at GHS53.6 billion, an increase of 67.6 percent year-on-year, compared with an increase of 36.9 percent for the corresponding period of 2023.
In real terms, he added, credit to the private sector contracted by 14.7 percent, relative to a 15.3 percent contraction recorded over the same comparative period in February 2023.
Addressing the 117th Monetary Policy Committee Press Conference in Accra on Monday, March 25, Dr Addison said “Money market rates continued on a downward trend at the short end of the yield curve. The 91-day and 182-day Treasury bill rates declined to 27.87 percent and 30.34 percent in February 2024, from 35.67 percent and 35.73 percent respectively, in the same period of 2023. Similarly, the rate on the 364-day instrument decreased to 30.90 percent in February 2024 from 34.92 percent in February 2023.
“The banking sector’s performance has rebounded after the implementation of the Domestic Debt Exchange Programme (DDEP). In the first two months of 2024, total assets of the Banks increased by 21.0 percent, while total deposits and advances rose by 25.5 percent and 1.8 percent, respectively.
“Trends in key financial soundness indicators were mixed. The Capital Adequacy
Ratio, adjusted for reliefs, was 13.6 percent in February 2024, above the regulatory
minimum threshold of 13.0 percent, compared with 12.6 percent in February 2023.
Liquidity and profitability ratios also improved compared to a year earlier.”
The nonperforming loan (NPL) ratio, on the other hand, increased to 24.6 percent, reflecting the downgrading of several large exposures to the banks. NPLs, excluding loss category, however remained in single digits at 9.8 percent. Banks impacted by the DDEP in
2023 continue to implement their approved capital restoration plans in line with BoG’s
requirements.
“The Bank of Ghana expects that early completion of recapitalisation
efforts will lead to more resilience of the banking sector and position it to provide
stronger support for real sector recovery.”