Ghana’s banking sector is facing renewed scrutiny after S&P Global raised concerns over the financial position of five local banks, saying they remain undercapitalised despite widespread compliance with the Bank of Ghana’s new minimum capital requirements.
The assessment introduces a fresh layer of concern into Ghana’s banking sector, which has spent recent years rebuilding balance sheets after the domestic debt exchange programme, government payment arrears and prolonged macroeconomic instability.
According to S&P Global, the banking system’s credit risk remains elevated, with the non-performing loan ratio standing at 16.1% as of June 2026. The ratings agency considers the level too high, pointing to the lingering effects of the country’s economic and financial upheaval.
The assessment also creates a notable divergence with the Bank of Ghana’s position that all banks have met the new minimum capital requirement.
Five Banks Still Face Capital Pressure
S&P Global said the domestic debt restructuring undertaken in 2022 placed significant pressure on Ghana’s banking sector and resulted in 13 local banks requiring recapitalisation.
While most banks have since met the recapitalisation requirements, the ratings agency said five institutions remain undercapitalised.
“Although most have met the recapitalization requirements, five of them (including a state-owned bank) are still undercapitalised”.
S&P Global
The observation is significant because capital adequacy remains one of the central safeguards of banking-sector stability. Banks with stronger capital positions generally have greater capacity to absorb unexpected losses, protect depositors and continue extending credit during periods of economic stress.
S&P’s assessment therefore puts renewed attention on the quality and resilience of bank balance sheets, particularly as lenders continue to deal with the consequences of the domestic debt restructuring.
The situation also highlights the differing assessments of the banking sector’s recovery. While the central bank has indicated that banks have satisfied the revised minimum capital requirements, S&P’s assessment suggests that capital pressures have not been completely resolved across the industry.
16.1% NPL Ratio Keeps Credit Risk Elevated
Beyond capitalisation, the level of bad loans remains a major concern.
S&P said the banking sector’s non-performing loan ratio of 16.1% as of June 2026 is still too high. The agency linked the elevated ratio to several pressures that have affected households, businesses and financial institutions in recent years.
These include the 2022 domestic debt exchange programme, large government arrears owed to suppliers and contractors, as well as exchange-rate and inflationary pressures.
The combination has created a difficult operating environment for borrowers. Businesses facing delayed government payments can struggle to meet obligations to banks, while households dealing with higher costs and currency pressures can also experience difficulty servicing loans.
That pressure eventually finds its way onto bank balance sheets when borrowers fall behind on repayments.
S&P consequently said credit risk in Ghana’s banking system remains elevated after years of macroeconomic instability, the government default and the subsequent debt restructuring.
The 16.1% NPL ratio illustrates how much of the banking sector’s challenges remain connected to the wider economy. Even as macroeconomic conditions improve, banks must still manage legacy problem loans while ensuring that new lending does not create another wave of asset-quality deterioration.
Debt Crisis Still Haunts Bank Balance Sheets
Ghana’s banking sector became one of the major casualties of the sovereign debt crisis.
The domestic debt exchange significantly affected financial institutions that held government securities, forcing banks to recognise losses and strengthen their capital positions. The recapitalisation exercise that followed required substantial financial commitments across the sector.
S&P’s latest assessment indicates that the consequences have not completely disappeared.
Thirteen local banks required recapitalisation following the restructuring, while five remain undercapitalised according to the ratings agency. This points to a recovery process that remains uneven across individual institutions.
The issue extends beyond regulatory compliance. Strong capital buffers are particularly important when banks operate in an environment where non-performing loans remain elevated.
A bank can meet a formal capital requirement while still facing significant pressure from asset quality, profitability, liquidity or future credit losses. S&P’s assessment places these broader risks firmly back in focus.
Inflation Could Keep Pressure on Borrowers
S&P also sounded a note of caution about Ghana’s inflation outlook.
The ratings agency acknowledged improvements in monetary policy credibility and effectiveness, particularly after years of substantial fiscal deficit financing.
“The credibility and effectiveness of the country’s monetary policy are improving. After years of sizable fiscal deficit financing, the government seems to have put an end to monetary financing of the deficit. Nevertheless, we do not expect the low inflation seen at the start of 2026 to last; average inflation is more likely to be at the upper end of the Bank of Ghana’s 6%-10% target, until 2029.”
The projection could have implications for borrowers and banks alike. Inflation affects household purchasing power, business costs and the ability of borrowers to maintain regular loan repayments.
Although S&P expects inflationary pressures to remain contained relative to Ghana’s historical experience, its projection suggests that the exceptionally low inflation recorded earlier in 2026 may not persist.
Banks Face Another Test of Resilience
The latest S&P assessment arrives as Ghana’s banking sector attempts to move beyond the turbulence of the debt crisis and rebuild confidence in financial intermediation.
Lower inflation, improving monetary policy credibility and stronger macroeconomic conditions can support the sector. Yet the persistence of elevated non-performing loans means banks still have significant work to do in cleaning up their balance sheets and strengthening credit risk management.
The contrast between S&P’s assessment and the Bank of Ghana’s position on capitalisation also adds another dimension to the sector’s recovery story.
With five banks described by S&P as still undercapitalised and the NPL ratio remaining at 16.1%, the banking sector’s post-crisis recovery is clearly still being tested by the legacy of Ghana’s debt restructuring.
The next phase will depend not only on meeting regulatory capital requirements but also on improving asset quality, restoring borrower capacity and ensuring that new credit expansion does not recreate the vulnerabilities that pushed banks into difficulty in the first place.
