Banks in Ghana recorded ¢7.4 billion profit before tax in 2021, the Bank of Ghana has said.

This is compared with ¢6.1 billion recorded in 2020.

According to the Monetary Policy Committee report, net interest income grew by 14.5% to ¢12.8 billion, lower than the growth of 20.9% recorded a year ago. This is partly due to declining in interest rates.

Net fees and commissions however recorded a 24.8% growth to ¢2.9 billion, compared with 5.0% growth last year, reflecting a continued recovery in trade finance-related and other businesses of banks.

This performance resulted in a 14.6% growth in total operating income to ¢17.4 billion, compared with 17.9% growth last year.

But operating costs increased by 14.2%, higher than the 8.2% per cent growth for the same period in 2020.

However, loan loss provisions contracted by 4.7% as of the end of December 2021 from the 28.0% growth recorded a year ago.

This follows the reversal of over-provisioning at the height of the pandemic in 2020.

Banking industry remains solvent

The Bank of Ghana also said the performance of the banking sector in 2021 pointed to sustained growth in assets, deposits, and investments alongside improvements in the financial soundness indicators.

The industry remained solvent with the average industry Capital Adequacy Ratio (CAR) of 19.6%, well above the 11.5% regulatory minimum threshold.

In 2021, total assets grew by 20.4% to ¢179.8 billion.

Asset quality however continued to reflect the general pandemic-induced repayment challenges as well as some bank-specific loan recovery challenges.

From the peak of 17.3 per cent in August 2021, the Non-Performing Loan ratio eased further to 15.2% in December 2021. Comparatively, the NPL ratio was 14.8 per cent in December 2020.

Credit growth up marginally

Also, credit performance improved marginally, consistent with the gradual recovery in the real sector. Annual nominal growth in private sector credit increased to 11.2% in December 2021 compared with 10.6%, in the corresponding period of 2020.

However, sustained price pressures weighed on real private sector credit, which contracted by 1.3% compared to modest growth of 0.2%, over the same comparative period.

New Advances extended by the commercial banks to the economy was ¢36.4 billion, a growth of 6.8% over the ¢34.1 billion extended in 2020.