The banking sector continue to recover from the impact of covid-19 as banks pre-tax went up by 32.1% percent to ¢3.6 billion in the first half of this year.

According to the Bank of Ghana, this was higher than the growth of 14.0% recorded during the same period a year ago.

All the earning indicators pointed to the right direction as net interest income grew by 19.4%, higher than the 16.5% growth a year ago.

Net fees and commissions also grew stronger by 19.6%, compared with 10.3% growth recorded during same period last year, reflecting a gradual recovery in trade finance-related and other ancillary businesses of the banks.

Operating income accordingly rose by 15.7%, marginally higher than the growth rate of 15.0%, a year earlier.

The Bank of Ghana cited the implementation of cost control measures by banks resulting in lower operating costs as the main reason.

Overall, the Central Bank said the impact of the Covid-19 pandemic on the banking industry’s performance has been moderate.

As evidenced by the financial soundness indicators, it pointed out that the banking sector has remained solvent, liquid, profitable and well-capitalized. Despite these positive developments, Non-Performing Loans ratio increased to 17.0% in June, from 15.7% recorded during the same period last year.

This arose partly from the Covid-19 pandemic-induced repayment challenges in some of the badly affected sectors as well as some bank-specific loan recovery challenges.

Credit growth remains sluggish

Gross advances recorded sluggish annual growth of 5.7%, relative to 15.7% growth in the same period of 2020, the Central Bank explained.

Similarly, private sector credit growth remained sluggish over the past year, broadly reflecting the heightened credit risks associated with the Covid-19 pandemic.

Annual nominal growth in private sector credit, the Central Bank slowed to 6.8% in June 2021 compared with 14.2% in the corresponding period of 2020.

In real terms, private sector credit contracted marginally by 1.0% compared to 2.8% growth a year earlier.

Notwithstanding the sluggish credit demand and supply conditions due to the pandemic, the Bank of Ghana said Covid-related regulatory reliefs and policy measures have provided strong support to new lending.

For the first half of 2021, new advances totalled ¢16.0 billion, marginally above the ¢15.8 billion for same period in 2020.

Net restructured loans by banks to cushion customers severely impacted by the pandemic stood at ¢3.66 billion as at June 2021, representing some 7.7% of industry loan portfolio.

Growth of other finance institutions pick-up

The regulator said developments in the Specialized Deposit-Taking Institutions sub-sector also reflected gains from the pre-pandemic clean-up efforts.

In the year to May 2021, financial soundness indicators in the sub-sector generally improved on account of strong profit performance and strong balance sheet growth.

 The total deposits from Savings and Loans Companies and Finance Houses, Rural and Community Banks, and Microfinance companies grew by 30% year-on-year to ¢10.8 billion, while total advances increased by 16.0% to ¢7.48 billion.