Banks’ investments contracted by 0.6% to ¢83.3 billion in April 2023, from a growth of 14.5% percent in April 2022, the May 2023 Banking Sector Developments Report revealed.

This is coming as banks rebalanced their assets portfolio in response to the Domestic Debt Exchange Programme (DDEP) and the revision of the Cash Reserve Ratio requirements by the Bank of Ghana.

As a result, the share of investments in total assets declined sharply to 35.0% in April 2023, from 43.2% in April 2022.

The decline in investments reflected in the contraction of securities by 24.2% in April 2023, from a growth of 25.4% during the same period in 2022.

However, short-term bills grew sharply by 86.6% in April 2023, after contracting by 13.2% in April 2022.

Bills, securities and equity remained largest component of banks assets

According to the report, investments (comprising bills, securities and equity) remained the largest component of banks’ assets as of April 2023, although its share in total assets declined to 35.0%, from 43.2% in April 2022.

This is due to portfolio reallocation by banks following the DDEP.

Cash and bank balances constituted the second largest component of total assets, with an increased share of 29.3% in April 2023, from 21.9% in April 2022, partly due to increases in the Cash Reserve Ratio (CRR).

Investments and cash and bank balances together accounted for 64.3% of total assets in April 2023, compared to a share of 64.9% in April 2022.

Net loans and advances constituted the third-largest component of total assets, recording a declined share of 26.1% from 27.4%.

Non-earning assets (fixed assets and other assets) in banks’ total assets increased in share to 9.6%, from 7.7% during the review period.