Profit before tax of banks operating in the country increased by 39.6% in the first four months of this year to GH¢2.3 billion.

This is compared with a marginal growth of 7.5% a year ago.

According to the Bank of Ghana, the banking sector deployed effective cost control measures which resulted in a marginal 1.7% growth in operating costs over the review period, significantly lower than the 17.8% growth for the same period in 2020.

Net fees and commissions grew stronger by 26.5% to GH¢917.6 million, relative to 8.8% growth during same period last year. This reflected a gradual recovery in trade finance-related and other ancillary businesses of banks.

Accordingly, operating income rose by 16.8%, marginally higher than the corresponding growth rate of 15.2% a year ago.

Also, financial soundness indicators remained strong, underpinned by improved solvency, liquidity and profitability indicators.

Importantly, the industry’s Capital Adequacy Ratio of 21.8% as at end-April 2021 was well above the regulatory minimum threshold of 11.5%.

Core liquid assets to short-term liabilities was also 24.9% in April 2021, relative to 30.1% in April 2020. Net interest income grew by 18.4% to GH¢4.1 billion, compared with the 18.8% growth over the same comparative period.

Bad debt of banks rises

But Loan loss provisions however increased by 29.4%, compared with 7.1% a year ago. This is on account of continued elevated credit risks.

At the same time, Non-Performing Loans (NPL) ratio increased marginally from 15.0% in April 2020 to 15.5% in April 2021, arising partly from the general pandemic-induced repayment challenges as well as some bank specific loan recovery challenges.