Ghana tops Fitch Solutions list in NPLs, banking sector labeled as fragile

UK-based rating firm Fitch Solutions has disclosed that Ghana's banking sector is the most vulnerable among the top ten Sub-Saharan African (SSA) countries, with a high Non-Performing Loan (NPL) ratio of 21.8% and a relatively weak Capital Adequacy Ratio (CAR) of 14.05%.

According to Fitch Solutions’ latest report titled “US Tariffs Increase Risks for SSA Banks”, Ghana tops the list in NPLs and ranks third-lowest in CAR, underscoring the fragility of its banking sector.

The rating agency attributed the sector’s weakened fundamentals to the fallout from the Domestic Debt Exchange Programme (DDEP) and a persistently high interest rate environment.

Despite these challenges, Fitch noted that banks across the SSA region are generally better positioned to weather upcoming headwinds, supported by robust capital buffers and relatively stable asset quality in most markets.

“We anticipate improvements in most sectors’ capital, driven by regulatory enhancements in markets such as Nigeria and Kenya, alongside improving economic conditions in most markets,” the report stated.

Fitch expects interest rates across most SSA countries to decline in 2025, a development it believes will support improvements in loan quality.

Moreover, it noted that the exceptionally high profits banks have recorded in recent years, largely driven by aggressive interest rate hikes, will provide a financial cushion for institutions in the coming year.

SP/MA

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