The structure of banks investment portfolio remain same in 2020 despite its investment holdings increasing.

According to Tesah Capital, the movement towards longer dated instruments which led to an increase in the share of securities in total investments from 1.1% in 2018 to 1.8% 2019 was reversed in 2020 to 0.4%.

In 2020, banks holdings in bonds was 77.6% compared with 68.2% in 2019, whereas investment in Treasury bills was 20% last year as against 30% in 2019.

However, banks’ appetite for Government of Ghana securities remain strong as they reduce the size of their loan books in response to the risks presented by the Covid-19 pandemic on banking activities.

For credit growth, it slowed down in 2020 from 25.7% in 2019 to 4.6%.

This was occasioned by the outbreak of the Covid-19 pandemic and its resultant effect on businesses and loan repayments.

However, private sector credit still constitutes the larger proportion of credit in the banking sector. Its share increased to 91.1% in 2020 from 87.1% in 2019, while the share of public sector decreased to 8.9% from 12.6% over the same period.

Assets and liability structure

Total assets of the banking sector stood at ¢149.3billion as at December 2020, indicating a year-on-year growth of 15.7% (2019: 20.2%).

The lower growth in 2020 was due to adverse impact of Covid-19 pandemic on banking activities in 2020.

Net advances formed the larger proportion of the asset mix until 2018 where investment began to dominate.

The sharp growth in total investments in 2018 was largely due to the special resolution bonds issued to Consolidated Bank Ghana (CBG).

Investment holdings increased in 2020 as banks move to less risky assets that is Government of Ghana securities as a result of the pandemic-induced elevated credit risks.

Meanwhile, deposits remained the main source of funding for the industry, with its share increasing from 64.7% to 69.6% between 2019 and 2020