Banking industry more resilient - BoG Governor

Bank of Ghana (BoG) Governor, Dr. Ernest Addison, speaking at the 28th Annual National Banking and Ethics Conference organised by the Chartered Institute of Bankers (CIB) Ghana, observed that the foundation for a resilient banking industry in the country has been firmly established, thus priming it for the future.

Accordingly, credible measures have been implemented to safeguard the broader financial sector – and banks especially – from historical and emerging risks, even as global and local financial sector dynamics continue to evolve.

Consequently, Dr. Addison stated that broad and sustained stakeholder vigilance is required to maintain the momentum.

The banking sector has demonstrated steady signs of recovery, with assets growing by 38.7 percent at the end of August 2024 compared to 19.6 percent in the same period last year, according to the latest official figures.

Pre-tax and after-tax profits for the first eight months of 2024 also surpassed figures from the corresponding period in 2023.

In terms of solvency, the industry’s Capital Adequacy Ratio (CAR) rose to 10.3 percent in August 2024; up from 7.5 percent in August 2023. Including relief measures, CAR stood at 13.8 percent – slightly lower than the 14.2 percent recorded in August 2023. Additionally, liquidity and efficiency ratios showed improvements during the year’s first eight months.

“The Bank has prioritised climate and sustainability-related issues, including time and resources, to promote sustainable banking principles among regulated financial institutions.”

For his part, Benjamin Amenumey, President-CIB Ghana, expressed concern about issues including credit risk, financial fraud and macroeconomic pressures – describing them as key challenges and noting lingering effects of the recent Domestic Debt Exchange Programme (DDEP).

He described the rising level of non-performing loans (NPLs) as a major concern, saying: “Persistent economic pressures have strained businesses and households, impacting their ability to service loans”.

NPL ratio was 24.3 percent in August 2024 – up from 20 percent in August 2023 as defaults, especially from large borrowers, increased; highlighting that elevated credit risk remains the primary concern for the sector’s outlook.

Financial fraud is also on the rise with a 5 percent increase in fraud cases, notably an alarming 46 percent rise of staff involvement in fraudulent activities, according to the most recent BoG fraud report.

As a result, the CIB Ghana president advocated stronger internal controls, ethical training and enhanced corporate governance as part of the solution.

Cybersecurity threats and rapid digitalisation of banking services present vulnerabilities that demand investment.

Both the BoG and GAB stressed the importance of ethical practices in achieving resilience.

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