Ghana’s banking sector took a substantial hit in the first half of 2025, writing off loans and other losses amounting to GH¢893.0 million, according to the Bank of Ghana’s July 2025 Domestic Money Banks Income Statement.
This represents a 14.8% decline compared to the same period in 2024, reflecting improved loan management and asset quality across the industry.
In comparison, banks wrote off GH¢654.2 million in June 2024 — about a 24.2% drop from the same period in 2023. The Central Bank attributed this year’s lower figure to “improved credit underwriting standards, intensified loan recovery efforts, and a general decline in the stock of sub-standard loans.”
Despite these write-offs, the banking industry’s resilience continues to shine through, supported by improved profitability and stronger balance sheets.
The report indicates that the Non-Performing Loan (NPL) ratio of the banking industry declined to 23.1% in June 2025, down from 24.2% a year earlier. When fully provisioned loan losses are adjusted for, the ratio falls further to 8.5%, from 10.8% in June 2024 — suggesting a genuine improvement in credit quality and loan recovery.
According to the Monetary Policy Committee (MPC) report, the fall in the NPL ratio was largely driven by the slower growth in NPL stock relative to total loans. This means while total lending grew significantly, the amount of new bad loans did not increase at the same pace.
“This trend points to an overall improvement in the credit environment,” the report stated. “The decline in the NPL ratio during the review period is explained by lower growth in the NPL stock relative to the growth in total loans.”
NPL Stock Hits GH¢20.7 Billion Despite Improvements
While asset quality improved, the total NPL stock still rose marginally by 1.3%, reaching GH¢20.7 billion in June 2025, compared to GH¢20.4 billion a year earlier. This represents a 49.4% year-on-year growth, driven by rising credit to the private sector and persistent repayment challenges in certain industries.
Notably, the commerce and finance sector recorded the highest NPL ratio at 27.0%, up sharply from 19.7% in June 2024. The agriculture, forestry, and fishing sectors also experienced increases in their NPL ratios, while the manufacturing sector remained unchanged.
The private sector continued to dominate the bad loan landscape, accounting for 96.4% of total non-performing loans, compared to 95.6% in June 2024. Conversely, the public sector’s share of NPLs dipped slightly to 3.6%, from 4.4% a year earlier.
Profitability Remains Strong Despite Loan Losses
Interestingly, while banks wrote off hundreds of millions of cedis in bad loans, profitability surged. The sector’s profit-after-tax (PAT) rose by 32.6% to GH¢7.2 billion in June 2025, up from a 25.5% growth in June 2024. Similarly, profit-before-tax (PBT) climbed to GH¢10.8 billion, representing a 32.2% increase year-on-year.
This robust performance was driven by higher interest income, improved efficiency, and growth in other revenue streams. Banks also recorded strong growth in total assets and deposits, even as liquidity levels moderated slightly.
“The banking industry remained profitable in the first half of 2025, with improved solvency and efficiency indicators. This reflects sound risk management practices and the continued recapitalization of the sector.”
BoG
BoG Tightens Grip on Loan Defaulters
To sustain these improvements and prevent the recurrence of excessive defaults, the Bank of Ghana has rolled out a series of new directives targeting chronic loan defaulters. Commercial banks are now required to blacklist willful defaulters and publish their identities in audited financial statements.
“Banks must restrict further credit to strategic or willful defaulters and share their identities with key financial sector oversight bodies,” the Central Bank emphasized.
The BoG has further directed that banks cap their NPL ratios at 10% of gross loans by December 2026, as part of efforts to strengthen the financial system’s stability. Microfinance institutions, however, are to continue observing their existing prudential limits on NPLs.
Financial analysts say the new regulatory stance, though necessary, could make banks more cautious in their lending, particularly to small and medium-sized enterprises (SMEs) and high-risk sectors.
The outlook for Ghana’s banking industry remains broadly stable. The BoG expects continued improvements in solvency, capital adequacy, and credit risk management as recapitalization and digitalization efforts deepen.
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