Banking sector resilient despite macroeconomic challenges – BoG

The banking sector performance remained resilient in spite of the difficult macroeconomic challenges facing the country. Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who disclosed this in a statement issued by the BoG after the 108th regular meeting of the Monetary Policy Committee of the BoG, said total assets increased by 22.9 per cent on year-on-year basis to GH¢204.6 billion in August 2022 due to sustained growth in deposits, compared to a 16.7 per cent annual growth in the previous year. He said total deposits increased by 22.5 per cent to GH¢136.7 billion, relative to 21.8 per cent growth in August 2021. “The key Financial Soundness Indicators (FSIs) of the banking industry have remained positive in the year, with Capital Adequacy Ratio at 18.1 per cent, well above the regulatory minimum of 13.0 per cent. The sector was also liquid, reflected by an increase in the core liquid assets to short-term liabilities to 31.1 per cent in August 2022 from 24.7 per cent in the previous year,” he said. He said the asset quality also improved as the non-performing loans ratio declined to 14.3 per cent at end of August 2022, from 17.3 per cent in August 2021, reflecting partly, the higher level of outstanding loans. The governor said profit before tax for banks stood at GH¢6.1 billion in August 2022, representing an annual growth of 25.2 per cent, compared to 27.4 per cent in the previous year. He said the net interest income of baking sector grew by 17.3 per cent, compared to 17.9 per cent, adding that Net fees and commissions also increased by 26.9 per cent to GH¢2.3 billion, compared with 21.8 per cent growth in the previous year, reflecting the rebound in credit growth as well as an increase in trade finance-related business. “Other income of banks grew by 85.6 per cent to GH¢2.0 billion, compared with a contraction of 5.4 percent a year ago. These developments resulted in a 25.5 percent growth in operating income to GH¢14.2 billion, relative to a growth of 15.7 percent in the previous year,” Dr Addison, said. He indicated that operating expenses increased sharply by 24.3 per cent in August 2022, compared to 9.0 per cent growth in August 2021, partly reflecting the impact of inflation on banks’ operations. In a related development, Dr Addison said the results from the bank’s August 2022 confidence surveys showed further softening of Business and Consumer sentiments. “The latest Bank of Ghana high frequency indicators signaled some moderation in economic activity. The Composite Index of Economic Activity (CIEA) recorded an annual growth of 0.5 per cent in July 2022, compared to 1.6 per cent in June 2022, and 5.0 per cent in December 2021. The sources of the slowdown were from construction and port activities,” Dr Addison, said. He indicated that consumer confidence also dipped on account of rising inflation, business sentiments softened on the back of concerns about price pressures, currency depreciation, and weakening consumer demand.

The banking sector performance remained resilient in spite of the difficult macroeconomic challenges facing the country. Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who disclosed this in a statement issued by the BoG after the 108th regular meeting of the Monetary Policy Committee of the BoG, said total assets increased by 22.9 per cent on year-on-year basis to GH¢204.6 billion in August 2022 due to sustained growth in deposits, compared to a 16.7 per cent annual growth in the previous year. He said total deposits increased by 22.5 per cent to GH¢136.7 billion, relative to 21.8 per cent growth in August 2021. “The key Financial Soundness Indicators (FSIs) of the banking industry have remained positive in the year, with Capital Adequacy Ratio at 18.1 per cent, well above the regulatory minimum of 13.0 per cent. The sector was also liquid, reflected by an increase in the core liquid assets to short-term liabilities to 31.1 per cent in August 2022 from 24.7 per cent in the previous year,” he said. He said the asset quality also improved as the non-performing loans ratio declined to 14.3 per cent at end of August 2022, from 17.3 per cent in August 2021, reflecting partly, the higher level of outstanding loans. The governor said profit before tax for banks stood at GH¢6.1 billion in August 2022, representing an annual growth of 25.2 per cent, compared to 27.4 per cent in the previous year. He said the net interest income of baking sector grew by 17.3 per cent, compared to 17.9 per cent, adding that Net fees and commissions also increased by 26.9 per cent to GH¢2.3 billion, compared with 21.8 per cent growth in the previous year, reflecting the rebound in credit growth as well as an increase in trade finance-related business. “Other income of banks grew by 85.6 per cent to GH¢2.0 billion, compared with a contraction of 5.4 percent a year ago. These developments resulted in a 25.5 percent growth in operating income to GH¢14.2 billion, relative to a growth of 15.7 percent in the previous year,” Dr Addison, said. He indicated that operating expenses increased sharply by 24.3 per cent in August 2022, compared to 9.0 per cent growth in August 2021, partly reflecting the impact of inflation on banks’ operations. In a related development, Dr Addison said the results from the bank’s August 2022 confidence surveys showed further softening of Business and Consumer sentiments. “The latest Bank of Ghana high frequency indicators signaled some moderation in economic activity. The Composite Index of Economic Activity (CIEA) recorded an annual growth of 0.5 per cent in July 2022, compared to 1.6 per cent in June 2022, and 5.0 per cent in December 2021. The sources of the slowdown were from construction and port activities,” Dr Addison, said. He indicated that consumer confidence also dipped on account of rising inflation, business sentiments softened on the back of concerns about price pressures, currency depreciation, and weakening consumer demand.