About 22% of banks operating in Ghana have failed to meet the the 13.0% Capital Adequacy Ratio (CAR) threshold.

According to IC Insights, these banks would require continuous adherence to recapitalisation plan, enforcement of strict credit risk standards, and continued profitability to restore capital buffers to pre-Domestic Debt Exchange Programme (DDEP) levels.

Joy Business understands that majority of these banks are indigenous.

IC Insights however stated that the banking sector is making good progress on capital restoration as head into the final year of regulatory relief.

“The disaggregated data on the banking sector’s solvency position showed steady improvement in the industry’s capital adequacy ratio as CAR (with regulatory relief) stood at 14.3% in October 2024. Notably, the CAR level (without regulatory relief) stood at 11.1%", it mentioned.

This indicated an improvement from 7.3% in the prior year with optimism for continued progress as the country heads into 2025 – the final year of regulatory reliefs.

According to the November 2024 Monetary Policy Report, the solvency indicators improved, with the capital adequacy ratio (with reliefs) increasing to 11.1% (14.2 %) from 7.3% (13.4%) in October 2023.

Credit risk, however, remained elevated, with the NPL ratio rising to 22.7% from 18.3% over the review period.