Banking

NPLs fall marginally-BoG

Governor Dr Ernest Addison

Non-Performing Loans ratio of the banking industry went down by 0.2 percent from June 2020 to 15.5 percent in August 2020, the latest Bank of Ghana’s Summary of Macroeconomic and Financial Data has revealed.

Whilst some banks have registered very low NPLs, others have recorded NPLs of more than 20%.

According to the July 2020 Banking Sector Development Report, the banking industry’s exposure to credit risk as at June 2020 showed broad improvement on a year-on-year basis on account of high loan recoveries, write-offs, and the rebound in credits between the two periods.

However, the year-to-date assessment showed that the NPLs ratio inched up due largely to the COVID-19 pandemic-induced slowdown in credit growth and higher loan loss provisions arising from repayment challenges during the first half of 2020.

Other banking indicators

On some banking indicators, Core Liquid Assets to Short-term Liabilities was estimated at 29.0% in August 2020.

This signal the industry was still highly liquid. It had hovered around 29.0% on the average for quite sometime now.

With regard to management efficiency, cost-to-income ratio which shows the management of cost in relation to its income stood at 53.5%, higher than its minimum threshold.

Cost-to-income ratio gives investors a clear view of how efficiently the firm is being run. The lower it is, the more profitable the bank will be.

Capital Adequacy Ratio (CAR) stood at 20.9%, far higher than the industry average of the minimum threshold of about 12%.

Total deposits inched up to GHS91.6 billion in August 2020 to GHS90.6 billion in July 2020.

From April 2020 to June 2020, deposits has seen some sharp growth, from GHS84.4 billion to GHS90 billion. This comes despite the effect of covid-19,

Total loans and advances has however dropped between January and July 2020.

In January 2020, total loans stood at GHS46.5 billion whilst it was estimated at GHS45 billion in August 2020. It has however hovered around GHS44.9 billion.

This comes despite the BoG announcing measures to encourage banks to advance loans to the private sector especially, amid covid-19.

Half-year profit

Banks recorded a profit of GHS1.9 billion in the first half of 2020.

This was a 15.5% growth, compared with the 36.3% growth during the same period last year.