Banks' profit increase to GH¢2.8 billion in Q1 2023 after GH¢6.6 billion losses in 2022

The Bank of Ghana has revealed that the profitability of banks has begun showing signs of profitability in the first four months of 2023 after recording losses in 2022 due to the domestic debt exchange programme.

According to the 2022 audited financial statement of banks, banks recorded up to GH¢6.6 billion in losses due to the government’s debt restructuring programme.

The BoG said the 2022 audited financial statements of banks also pointed to some impairments in capital levels, although most banks posted Capital Adequacy Ratios (CAR) above the 10 percent regulatory minimum at end-December 2022.

“This was attributed to the effect of the roll-out of the temporary regulatory reliefs extended to the banks to cushion them against the impact of the DDEP as was done at the onset of the pandemic,” the Governor of the Central Bank, Dr Ernest Addison said at the 112th Monetary Policy Committee press conference held on May 22, 2023.

The Central Bank said loan loss provisions also increased relative to a year ago, due to the pickup in credit growth and elevated credit risks.

These developments culminated in a 47.0 percent increase in profit-before-tax in April 2023 compared with the 26.3 percent growth recorded during the same period a year ago, according to the BoG.

Similarly, the industry’s net income or profit after tax increased to GH¢2.8 billion from GH¢1.9 billion, representing a 45.8 percent increase in April 2023.

The industry’s return-on-assets increased to 5.5 percent from 4.7 percent, while return-on-equity rose to 36.3 percent from 22.3 percent.

“Performance of the banking sector broadly reflected the general macroeconomic operating environment as well as the impact of the DDEP as indicated in the 2022 audited financial statements. However, prudential returns for the first four months of 2023 have shown signs of recovery in the profitability of banks and a gradual improvement in the solvency positions, supported by the regulatory reliefs issued to safeguard the stability of the financial sector,” the BoG Governor added.

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SSD/MA