Ghana’s banking industry has recorded a sharp increase in bad debt write-offs, with banks writing off GH¢1.86 billion as of August 2026, raising fresh concerns about the cost of managing credit risks despite improvements in asset quality.
The figure represents a 76.3% increase from the GH¢1.05 billion recorded during the same period in 2025, highlighting the growing financial burden associated with loan losses and other related expenses across the banking sector.
Data published by the Bank of Ghana (BoG) in its Banks’ Income Statement show that the provision covers loan losses, depreciation and other related items.
The latest figures present a mixed picture for the industry. Although key asset quality indicators have improved over the past year, the substantial increase in bad debt write-offs suggests that banks continue to face challenges arising from troubled loans and the costs associated with managing their credit portfolios.
The development also comes at a time when Ghana’s banking sector is working to strengthen lending, improve financial intermediation and support businesses and households seeking credit.
Bad Debt Write-Offs Jump by GH¢810 Million
The increase in bad debt write-offs marks a significant change from the previous year’s performance.
Banks recorded GH¢1.05 billion in write-offs by August 2025, but the amount had climbed to GH¢1.86 billion by August 2026, representing an additional GH¢810 million within a year.
The 76.3% increase highlights the pressure that loan-related losses and other expenses can place on banking operations.
Bad debt write-offs generally occur when banks determine that certain loans or receivables are unlikely to be recovered and remove them from their books, subject to applicable accounting requirements. While such write-offs do not necessarily represent losses incurred during the period alone, a sharp increase can reflect the continuing impact of earlier lending decisions and difficulties borrowers face in meeting their obligations.
The figures do not, by themselves, establish the specific causes behind the increase. However, they underline the importance of effective credit assessment, early intervention when borrowers fall behind on repayments and stronger recovery measures.
The development also raises questions about how banks will balance lending growth with prudent risk management as demand for credit evolves.
Operating Expenses Climb to GH¢13.25 Billion
Alongside the increase in bad debt write-offs, banks’ operating expenses also rose during the review period.
The sector’s operating expenses increased by 6.4% to GH¢13.25 billion in August 2026, adding to the costs banks must manage while maintaining their operations and serving customers.
The increase in expenses comes as financial institutions contend with the demands of managing credit portfolios, supporting banking services and maintaining operational efficiency.
Higher expenses can weigh on profitability when revenue growth fails to keep pace. However, the overall impact on earnings depends on several factors, including interest income, fee-based revenue, funding costs and the level of provisions recognised against potential losses.
The combination of rising operating expenses and higher bad debt write-offs therefore warrants close attention, particularly as banks seek to expand credit without allowing deteriorating loans to undermine their financial performance.
Non-Performing Loan Ratio Drops to 15.7%
Despite the increase in write-offs, Ghana’s banking sector recorded improvements in key asset quality indicators.
The Non-Performing Loan (NPL) ratio declined to 15.7% in August 2026 from 20.8% a year earlier, indicating that the proportion of loans classified as non-performing had fallen considerably.
The adjusted NPL ratio also improved, dropping to 3.8% from 6.8% over the same period.
These reductions suggest progress in the industry’s efforts to improve the quality of its loan portfolios. Lower NPL ratios can strengthen confidence in banks’ lending operations and provide a better foundation for expanding credit to productive sectors of the economy.
However, the improvement in the ratios does not mean that the problem of bad loans has disappeared.
The Bank of Ghana reported that the stock of non-performing loans increased marginally to GH¢20.2 billion in August 2026 from GH¢19.8 billion in August 2025.
According to the Central Bank, the increase was largely driven by valuation effects on foreign currency-denominated non-performing loans.
This distinction is important because the NPL ratio measures bad loans relative to the overall loan portfolio, while the outstanding stock represents the total value of non-performing loans. Changes in the size of the loan portfolio and exchange rate valuations can therefore affect the two indicators differently.
The figures suggest that, although asset quality has improved relative to the size of banks’ loan portfolios, the absolute amount of troubled credit remains substantial.
Private Sector Accounts for 98% of Bad Loans
The distribution of non-performing loans also reveals the extent to which private sector borrowers account for credit problems within the banking industry.
The private sector’s share of total NPLs increased to 98.0% in August 2026 from 97.4% in August 2025.
In contrast, the public sector’s contribution declined to 2.0% from 4.0% over the same period.
The figures reflect the dominance of private sector lending in banks’ credit portfolios. They also highlight the importance of borrower repayment capacity, business performance and effective credit monitoring in determining the quality of bank assets.
The Central Bank indicated that the distribution of non-performing loans remained broadly consistent with the sectoral composition of industry credit exposures.
This means that the private sector’s dominant contribution to NPLs must also be considered alongside its significant role in bank lending.
Credit Risks Improve, but Challenges Remain
The Bank of Ghana reported that improvements in asset quality were broad-based across the banking industry’s credit portfolio, with most sectors recording lower NPL ratios during the review period.
The development points to progress in managing troubled loans, even as the rise in bad debt write-offs highlights the financial consequences of credit risk.
The immediate challenge for banks will be to sustain improvements in loan performance while strengthening their capacity to assess borrowers, monitor repayments and recover outstanding debts.
Ultimately, the rise in write-offs to GH¢1.86 billion presents a significant development for Ghana’s banking industry. Although declining NPL ratios offer some encouragement, the increase in the value of bad debt write-offs and the GH¢20.2 billion stock of non-performing loans show that credit quality remains an important concern.
The ability of banks to contain further losses while maintaining sound lending practices will be critical to protecting their balance sheets and supporting sustainable credit growth.
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