NPL stock falls to GH¢19.9 billion as bank credit growth improves

The stock of non-performing loans (NPLs) in Ghana’s banking sector declined to GH¢19.9 billion at the end of June 2026, from GH¢20.7 billion during the corresponding period a year earlier, as the industry recorded broad improvements in asset quality.

New data from the Bank of Ghana (BoG) show that the industry’s NPL ratio fell significantly to 16.1 percent in June 2026 from 23.1 percent in June 2025.

The NPL ratio, adjusted for the fully provisioned loan-loss category, also declined to 4.6 percent from 8.5 percent over the same period.

The improvement points to strengthening asset quality across the banking industry, although the agriculture, forestry and fishing sector continued to pose a significant credit risk.

Private sector borrowers continued to account for the overwhelming majority of non-performing loans. Their share of total NPLs increased to 98 percent in June 2026 from 96.4 percent a year earlier, while the public sector’s contribution declined to 2 percent from 3.6 percent.

“The distribution of NPLs remains broadly consistent with the sectoral composition of industry credit exposures,” the Bank of Ghana said.

According to the central bank, asset quality improved across most sectors during the review period, except agriculture, forestry and fishing.

The NPL ratio for that sector increased to 65.1 percent in June 2026 from 59.1 percent a year earlier. However, improvements in other sectors more than offset the deterioration, resulting in an overall strengthening of the banking industry’s asset quality.

The Bank of Ghana attributed the improvement in the credit portfolio partly to enhanced loan recovery efforts and better credit risk management practices.

The development signals improving credit conditions, although vulnerabilities in asset quality remain a concern. A sustained reduction in NPLs could also improve banks’ capacity and willingness to extend credit to businesses and households and potentially support a gradual reduction in the cost of borrowing, although any decline in lending rates may be modest.

Credit growth accelerates

The improvement in asset quality comes alongside a significant acceleration in bank credit growth.

Gross loans and advances increased by 39.4 percent year-on-year to GH¢124.3 billion at the end of June 2026, compared with growth of just 5.5 percent in June 2025.

The expansion was driven primarily by stronger lending to the private sector. Credit to private enterprises and households rose by 39.6 percent to GH¢119.1 billion, compared with 9.2 percent growth a year earlier.

Credit to the public sector also recovered, growing by 5.6 percent to GH¢4.7 billion after contracting by 31.3 percent during the corresponding period in 2025.

Consequently, the private sector’s share of total bank credit increased to 96.2 percent from 95.1 percent, while the public sector’s share declined to 3.8 percent from 4.9 percent.

Despite the strong growth, bank lending remained concentrated in a few sectors. The services sector accounted for the largest share of total industry credit at 36.6 percent, followed by commerce and finance at 24.1 percent. Construction accounted for 10.7 percent.

Together, the three sectors absorbed 71.4 percent of total industry lending, slightly below the 72.3 percent recorded a year earlier, and indicating a modest diversification in the allocation of bank credit.

The Bank of Ghana said financial soundness indicators remained broadly positive at the end of June 2026, supported by improvements in solvency, core liquidity and asset quality.

“Efficiency and profitability indicators, however, showed mixed trends during the review period,” the report added.