The Bank of Ghana
The 23 banks in Ghana anticipates inflation to decline in the next six months.
According to the January 2020 Banking Sector, the strong performance of the economy and continued decline in actual inflation contributed to the decline in inflation expectations by the banking sector. Inflation is hovering around 7.8% in February 2020.
However, banks expect lending rates to remain broadly unchanged six-months ahead.
But lending rates are likely to ease as the risk premium on loans measured by the Non-Performing Laon (NPL) ratio continues to decline.
Meanwhile, banks’ stance on loans to households tightened during the last two months of 2019 largely due to a net tightened stance on loans for consumer purchases and other lending.
The seasonal tightened stance by banks on loans for consumer credit and other lending at year-end partly reflects anticipated increase in demand for loans by households during the yuletide.
The report said the more stable form of household credit and loans for house purchases however recorded a net ease in stance due to more structured, stable, and secured cash flows. Banks however project the overall stance on loans to households to remain broadly unchanged during the first two months of the year from the projected unchanged stance on loans for house purchases while the stance on loans for consumer credit and other lending is projected to marginally tighten.
The December 2019 survey also pointed to net increases in the overall demand for credit by enterprises. The net increase in the enterprise demand for credit came from increases in the demand for both long-term enterprise loans and loans by large enterprises, while demand for short term loans and by SMEs declined.
The overall demand for credit by households however declined with less demand for consumer credit and other lending, as well as demand for loans for house purchases.
For the next two months, banks however indicated a much stronger pickup in the demand for credit by enterprises from all the subcomponents of enterprise credit, while demand for credit by households could rebound over the same period.
