Liquidity risk is well contained in the banking sector – BoG

The Bank of Ghana has noted that profitability within the banking sector improved during the year under review. Return-on-Equity (ROE) increased to 28.65 percent at end-December 2019 from 27.70 percent at end-December 2018.

Similarly, Return-on-Assets (ROA) increased to 2.87 percent at end-December 2019 from 2.26 percent at end of December 2019, the BoG said.

The positive growth in profits was mainly as a result of increasing net interest income.

Improvement in the earnings of banks is expected to reinforce capital accumulation efforts of banks and banking sector soundness.

Liquidity risk is well contained in the banking sector. Liquidity measures generally remained unchanged during the period under review.

These measures indicated that the banking sector was in the position to cover its immediate and short-term debts and obligations.

The improved liquidity stance was mainly driven by the increase in cash and balances due banks mainly as a result of the recapitalisation exercise and subsequent increase in long-term deposits after the clean-up of the banking sector.