Ghana’s banking sector has taken another costly hit from troubled loans, with banks writing off a staggering GH¢1.23 billion in loan losses and depreciation during the first half of 2026.
The figure represents a sharp 38% increase from the GH¢893 million recorded in June 2025, highlighting the financial pressure still confronting banks even as some key indicators of credit quality continue to improve.
The latest figures from the Bank of Ghana’s Domestic Money Banks’ Income Statement suggest that while the sector has made meaningful progress in reducing non-performing loans, the cost of cleaning up bad credit remains substantial.
For banks, the numbers tell a complicated story. Fewer loans are turning sour compared with a year earlier, but the financial damage from existing problem loans continues to weigh heavily on earnings.
GH¢1.23bn Bill Raises Fresh Concerns
The GH¢1.23 billion recorded under loan losses and depreciation is significant because it represents money banks have had to recognise against loans and other assets that have deteriorated in value.
Compared with the GH¢893 million recorded in June 2025, the latest figure means banks absorbed roughly GH¢337 million more in losses over the period.
That increase comes at a time when banks are also trying to expand lending to businesses and households, improve profitability and support the broader economic recovery.
The concern is not necessarily that Ghana’s banking sector is becoming weaker across the board. Rather, the figures show that the legacy of poor-quality credit has not disappeared.
Banks may be healthier than they were a year ago, but the clean-up process is still expensive.
NPL Ratio Drops Sharply
There is, however, an important positive development behind the headline loss figure.
The industry’s non-performing loan ratio fell considerably to 16.1% in June 2026, from 23.1% in June 2025.
That represents a substantial improvement in the proportion of loans classified as non-performing.
The Bank of Ghana also reported that the NPL ratio adjusted for the fully provisioned loan loss category declined to 4.6%, compared with 8.5% a year earlier.
This suggests that although the headline NPL ratio remains high, a significant portion of the problem loans has already been adequately provided for.
The stock of non-performing loans also declined from GH¢20.7 billion in June 2025 to GH¢19.9 billion in June 2026.
So, on the surface, the banking sector appears to be moving in the right direction.
But the increase in loan loss charges shows that the journey is far from complete.
Private Sector Loans Remain the Biggest Problem
Another striking feature of the latest data is where the problem loans are coming from.
The private sector accounted for 98% of total non-performing loans in June 2026, up from 96.4% a year earlier.
Meanwhile, the public sector’s share dropped from 3.6% to just 2%.
The figures are not entirely surprising given the dominance of private sector lending in the banking industry.
Banks provide substantial credit to businesses across manufacturing, trade, construction, services, agriculture and other economic activities. When companies struggle with cash flow, rising operating costs or weaker-than-expected revenues, their ability to service bank loans can come under pressure.
That can eventually translate into higher NPLs and larger provisions for lenders.
The latest figures therefore offer an important warning to banks as they increase lending.
More credit can generate stronger interest income and support economic activity, but poor underwriting or weak repayment capacity can quickly turn new loans into tomorrow’s problem assets.
Banks Still Carry Heavy Credit Risk
Despite the improvement in headline NPL indicators, the Bank of Ghana has warned that asset quality risks remain elevated.
That caution is important.
A 16.1% NPL ratio is still considerably above the levels banks would ideally want to maintain. Although the ratio has fallen significantly, it means a sizeable portion of the banking industry’s loan portfolio remains classified as non-performing.
The GH¢19.9 billion stock of NPLs also represents a substantial pool of distressed credit that banks must continue to manage.
For customers and investors, this matters because prolonged loan problems can affect banks’ profitability, capital positions and willingness to extend fresh credit.
Banks may become more selective, demanding stronger collateral, better financial records and clearer evidence of repayment capacity before approving loans.
Credit Recovery Could Hold the Key
The banking sector’s next challenge will be converting the improvement in asset quality into a sustained reduction in credit losses.
The decline in the NPL ratio provides some encouragement. However, the GH¢1.23 billion loan loss figure demonstrates that banks are still paying a heavy price for bad credit.
Effective loan recovery will therefore remain critical.
Recovering even part of distressed loans can reduce pressure on bank balance sheets and improve profitability. Stronger credit monitoring can also prevent newly issued loans from following the same path.
For Ghana’s banks, the message from the first half of 2026 is clear.
The worst of the asset-quality pressures may be easing, but the bill for past and existing bad loans remains painfully high.
As banks push to expand credit and take advantage of improving economic conditions, maintaining lending discipline will be just as important as growing their loan books.
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