Fitch Solutions has indicated that its outlook of Ghanaian banks has improved.

However, the government’s domestic debt restructuring will continue to weigh on the sector, with capital under pressure, whilst Non-Performing Loans surge.

In its latest report dubbed “SSA Banking Sector: What Are We Watching In 2024?” it said although the improving economic environment in 2024 will support lending, worsening loan quality and monetary policy easing will also weigh on banks’ profits.

However, it said banks will be in a better position to manage their capital levels and deal with any expected losses

“We think that banks will be in a better position to manage their capital levels and deal with any expected losses. Regulatory forbearance measures implemented by the Bank of Ghana (BoG) will also help to support the industry. However, capital levels and profits will remain under considerable pressure in the coming quarters, as banks will continue to recognise losses on new bonds against their original carrying amounts.

The UK-based firm also said South African banks will face a number of challenges in 2024. 

“Granted, we think that some headwinds will fade in 2024, which will reduce the pressure on the banking sector and lead to an acceleration in client loan growth from 3.5% year-on-year at end-2023 to 4.5% at end-2024. However, the economy will continue to suffer from load shedding, high borrowing costs and elevated unemployment, which will weigh on the banking sector”.