Non-performing loans increased to GH¢6.4billion

Non-performing loans (NPL) increased to GH¢6.4 billion in February 2017 from GH¢4.7 billion in February 2016, according to the latest Banking Sector Report.

According to the report, the increase in the stock of NPLs, with no commensurate increase in gross advances, led to a higher NPL ratio of 17.7 per cent in February 2017, compared with 15.6 per cent in the same period last year.

The deterioration in asset quality according to the Central Banks was largely attributed to the Asset Quality Review of bank loans in 2016 which led to the downgrade of some existing loans by banks. The February 2017 NPL ratio of 17.7 per cent however, signaled an improvement over the January 2017 NPL ratio of 18.0 per cent.

The high non-performing loans were driven mainly by Commerce & Finance (39.7 percent), Services (13.6 percent) and the Electricity, Gas & Water (10.1 percent) sectors. Together, these three sectors represented 63.4 per cent of the total NPLs of the banking sector.

However, the share of investments in total assets increased to 29.2 per cent in February 2017 from 23.3 per cent in February 2016, while the share of cash and short term funds rose to 25.4 from 24.7 per cent over the same comparative periods.