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| BoG |
There is also evidence of strong deposit growth in the industry pointing to a return of confidence in the banking sector.
This was contained in the Bank of Ghana’s Monetary Policy Committee statement released on Monday, 27 May 2019.
At the end of December 2018, the BoG successfully completed its recapitalization exercise. Twenty-three banks ? which met the new minimum paid-up capital of GHC400 million ? are now operating as universal banks in Ghana.
“Over the first four months of 2019, banks’ total assets amounted to GHS109.9 billion, representing an annual growth of 12.4 percent. The growth in total assets was funded mainly from deposits which grew by 19.6 percent year-on-year to GHS73.1 billion. 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 Bank of Ghana Capital Requirement Directive (CRD), the CAR was 17.4 percent compared with the 13.0 percent prudential requirement (inclusive of a 3% buffer under the CRD),” the BoG’s monetary policy statement said.
According to the BoG, asset quality, however, remains a key challenge and a major constraint to credit expansion in the banking sector.
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.
To help reduce the NPL ratio further, the BoG said banks are working to strengthen their credit risk management practices and loan recovery efforts.
Source: classfmonline.com
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