Banks battle for deposits

Total assets of the banking industry reduced by 1.74 percent to GH¢57.2 billion at the end of the third quarter of this year, indicating the challenges in the Ghanaian economy which consequently have affected most financial institutions.

At the same time, total deposits also reduced marginally from GH¢35.4 billion in August 2015 to GH¢35.3 billion in September 2015.

According to the latest summary of economic and financial data by the Bank of Ghana (BoG), the capital adequacy ratio which measures a bank’s capital over assets was however relatively high at 17.6 percent at the end of the first nine months of this year compared with 16.8 percent in August 2015.

But the banks’ made a provisioning of 6.2 percent of its bad debt in September 2015 compared with 5.9 percent the previous month.

The non-performing loan (NPL) asset ratio was still high at 13.5 percent in September 2015, from 13.0 percent in August, 2015.

Some banks have NPLs of more than 40 percent on their books, a situation some industry watchers have described as dangerous to the economy.

It will be recalled that accounting professional, KPMG, was directed by the Bank of Ghana to conduct a stress test on banks operating in the country. This was after the International Monetary Fund (IMF) has for the second time this year assessed the Ghanaian economy.

Though the results have not been published, it is believed that the banks’ exposures to credit and interest rate risks are very high.

According to the data, liquidity in the banking industry also reduced from 25.6 percent in August 2015 to 23.3 percent in September 2015.

Savings and time deposits however went up from 26.8 percent in August 2015 to 31.5 percent in September 2015.

In July 2015, interest rate on savings and time deposits dipped by 3.7 percent to 23.9 percent.

The banks borrowed from individuals and institutions at 34.9 percent in February 2015, the highest in over a decade.

However, in March 2015, the rate reduced to 28.0 percent but shot up to 32.3 percent in April 2015. It however came down to 29.4 percent in May 2015 and subsequently to 26.0 percent in June.