Banks register 224.6% growth in profit to GH¢8.3bn in 2023

Banks in Ghana recorded a staggering 224.6 percent growth in profit to GH¢8.3 billion in 2023, an indication of a rebound from the Domestic Debt Exchange Programme-related losses posted in 2022.

In 2022, the banking industry lost GH¢6.6 billion.

According to the January 2024 Monetary Policy Report of the Bank of Ghana, the growth outturns for key income lines of banks contributed to the improved profit performance in 2023.

Net interest income grew by 41.5 percent in 2023, compared to a growth of 18.7 percent in 2022. Fees and commissions also grew by 22.7 percent in 2023, relative to a growth of 25.2 percent in 2022.

The increased growth in net interest income in December 2023, the Central Bank said, was on account of higher interest income on loans and investments from increased lending rates and interest rates on money market instruments.

The moderation in interest expenses, which is attributed to the contraction in borrowings observed during the year, also contributed to the higher growth in net interest income in December 2023 relative to December 2022.

According to the Bank of Ghana, the profitability indicators for the banking sector turned positive in December 2023 on the back of the improved profit performance recorded during the year.

The sector’s Return on Assets (ROA) improved to 5.4 percent in December 2023 from -3.8 percent in December 2022.

Also, banks’ Return on Equity (ROE) rose to 34.2 percent from -25.5 percent over the same comparative period.

Banks also reported lower impairments on financial assets in 2023, contributing to the improved profit performance during the year.

Total provisions and impairments contracted by 79.2 percent in December 2023, after increasing sharply in December 2022 on account of the huge impairments on restructured bonds.

Operating expenses, on the other hand, recorded a higher growth of 34.9 percent in December 2023, relative to the 27.2 percent growth in December 2022, driven by the higher growth in other operating expenses and staff costs.

Overall, the Bank of Ghana said the banking sector’s performance in 2023 pointed to a gradual recovery from the challenges in 2022.

Growth in assets increased, supported by increased liquidity flows from deposits and a build-up in shareholders’ funds from the profits posted by banks in 2023.

The sector, it said, is projected to remain stable with the implementation of recapitalization plans during the year.