Banks in Ghana wrote off about ¢1.08 billion cedis as bad loans in the first four months of this year.

According to the May 2023 Income Statement of Domestic Money Banks published by the Bank of Ghana, the bad loans was about 41.6% higher than the same period in 2022.

The provision for bad debt was as a result of loan losses, depreciation, among others.

In February 2023, the banks wrote off ¢859 million as bad loans, about 145% year-on-year growth.

The report stated that the banking industry’s asset quality declined during the period under review.

The industry’s Non-Performing Loans ratio rose to 18.0% in April 2023, from 14.3% in April 2022.

When adjusted for the fully provisioned loan loss category, the industry’s NPL ratio also increased to 7.6%, from 4.2%, reflecting increasing shares of both sub-standard and doubtful loans.

The rise in the bad loan, the report added, was attributable to the higher growth in the NPL stock of 51.5% relative to the growth in total loans (20.2% year-on-year growth). The NPL stock was estimated at ¢13.1 billion in April 2023, from ¢8.6 billion in the same period last year.

This partly reflected the revaluation of foreign currency NPLs as well as the deterioration in some domestic currency loans.

Private sector accounted for 93.7% of NPLs

Decomposition of the NPL, the report, stated showed that the private sector accounted for the most non-performing loans, due to its dominant holdings in total credit.

The proportion of NPLs attributable to the private sector, however, declined to 93.7% in April 2023, from 95.7% in April 2022, while that of the public sector increased to 6.3%, from 4.3% a year earlier.