BoG moves to tackle Non-Performing Loans in the banking sector

The Bank of Ghana (BoG) has announced measures to fully implement regulatory guidelines aimed at reducing Non-Performing Loans (NPLs) in the banking industry. According to the BoG, despite improvements in asset quality, the NPL ratio remains a key risk to the sector.

The NPL ratio declined to 18.7 percent in February 2026 from 22.6 percent a year earlier, driven by a pickup in bank credit and a contraction in the NPL stock.

The Governor of the BoG, Dr Johnson Pandit Asiama, disclosed this at a news conference last Thursday following the 129th regular meeting of the Monetary Policy Committee (MPC).

He said that although NPLs are declining, the levels remain elevated and require sustained policy attention.

At the meeting, the MPC reduced the monetary policy rate by 150 basis points to 14.0 percent from 15.5 percent, a move expected to support credit growth and ease borrowing costs.

Although the Governor did not provide details of the new NPL measures, he emphasised that they are aimed at strengthening credit risk management practices and improving loan recovery efforts across the banking sector.

Dr Asiama noted that despite the high NPL ratio, the banking sector’s performance improved significantly in February 2026. Total assets expanded, supported by growth in domestic deposits, borrowings, and shareholders’ funds.

He explained that the asset growth was largely driven by investments, which surged by 57.5 percent compared to 8.6 percent in February 2025.

“The financial soundness indicators, profitability, liquidity, solvency, asset quality, and efficiency, all improved over the period,” he stated.

The Governor further indicated that the sector remains solvent and liquid, with a positive outlook supported by declining interest rates and a gradual recovery in private sector credit.

He said the recent reduction in the policy rate is expected to translate into lower lending rates, thereby enhancing access to credit for businesses and households. Some borrowers, he noted, are already accessing loans at rates as low as 11.7 percent.

“We are working actively with banks to scale up financial intermediation and ensure that credit flows to the private sector to support economic growth,” he added.

On inflation, Dr Asiama cautioned that external risks, particularly developments in the Middle East, could pose challenges.

“As a net importer of petroleum products, rising oil prices could have direct implications for inflation and the foreign exchange market,” he said.

He explained that any sustained increase in global crude oil prices would impact Ghana’s import bill and exert pressure on domestic inflation.

However, he assured that the country has built sufficient foreign reserves, currently estimated at about 5.9 months of import cover, to cushion against short-term shocks.

He added that the central bank is closely monitoring global developments and stands ready to adjust policy if necessary.

Dr Asiama also highlighted ongoing collaboration between the Bank of Ghana and fiscal authorities to mitigate potential external shocks, particularly in the event of persistent increases in oil prices.

He stressed that efforts to build reserves remain on track, supported by measures to boost non-traditional exports and strengthen external resilience.