Banks wrote off ¢2.416 billion as bad debt in the first eight months of this year, 36.4% increase over the previous year, highlights of Banks Income Statement by the Bank of Ghana as of August 2023.

This is compared with ¢1.713 billion bad loans recorded ending-June 2023.

The provisioning was made up of loan losses, depreciation, among others.

According to the Bank of Ghana, the banking industry’s asset quality weakened during the period under review reflected by the pickup in the Non-Performing Loan (NPL) stock and Non-Performing Loan (NPL) ratio.

The industry’s NPL ratio rose to 20.0% in August 2023, from 14.3% in August 2022.

Similarly, adjusted for the fully provisioned loan loss category, the industry’s NPL ratio increased sharply to 9.0% from 3.8% during the same review period, due to increasing shares of both sub-standard and doubtful loans in the NPL stock.

The rise in the NPL ratio, according to the Bank of Ghana, was attributable to the higher growth in the NPL stock relative to the growth in total loans during the reference period.

The banking industry’s NPL stock increased by 53.6% to ¢14.5 billion in August 2023, from ¢9.5 billion in August 2022. This is partly reflecting the revaluation of foreign currency NPLs as well as the deterioration in some domestic currency loans.

When decomposed into the two main economic sectors, the private sector accounted for the most non-performing loans as the larger recipient of total credit.

The proportion of NPLs attributable to the private sector was 95.0% in August 2023, marginally lower than the 95.9% recorded in August 2022, while that of the public sector rose to 5.0%, from 4.1% a year ago.