GCB Bank says it is taking a far more disciplined approach to lending as Ghana’s banking sector confronts the consequences of earlier economic instability and rising non-performing loans.

Managing Director Farihan Alhassan told Joy News on PM Express Business Edition that the bank has deliberately raised its underwriting standards to avoid repeating past mistakes.

“We have raised our underwriting standards as a bank; we have early warning meetings that we are able to identify which loans we think will be problematic in the long term,” he said.

He stressed that the bank is no longer willing to take risks in unfamiliar sectors.

“If we have to restructure, we do that. We play in areas that we understand, and if we don’t understand your sector, there’s absolutely no way we’re going to play in that sector.”

According to him, lending decisions now go through stricter internal scrutiny.

“We have standards that would go through as a credit committee to be sure that this loan ticks that box,” he explained, adding that the industry’s current non-performing loan (NPL) levels reflect past economic challenges.

“All I’m saying is that the current NPL ratios within the industry are a function of how badly the economy was run a few years ago.”

Mr Alhassan cautioned that even with improving macroeconomic conditions, risks remain—especially in a low-interest-rate environment.

“So a low-interest regime also comes with its own problems, coupled with the directives of the Central Bank, which is invariably forcing banks to lend to the real sector. So if you’re not careful, you’re going to have subprime loans, so there needs to be that balance.”

He noted that regulatory pressure is already shaping bank behaviour.

“But I think what would address that, again, is the fact that the central bank has actually cautioned that banks whose NPLs go above a certain threshold, the replication is for them,” he said.

He added that such measures will compel banks to remain cautious.

“So all those things will help banks stay within a certain appetite in terms of how much loans they can give out to the real sector, and they will pay attention to the quality of loans that they are giving out.”

He warned against aggressive asset creation without proper risk checks.

“So you don’t just create assets today, and then you come back to raise provision on this asset tomorrow.”

Despite the caution, he pointed to opportunities emerging from the current environment.

“But beyond that is the fact that banks will now not put their assets or their deposits in government instruments, because the earnings there are very low.”

He said this shift could benefit credible businesses.

“So, good businesses would have a good field day to operate. They would have access to credits that they probably won’t have had in the past, and would have the ability to actually pay back these loans, because the interest rates are quite low.”