Dr Ernest Addison, the Governor of Bank of Ghana, commenting on the growth of assets in the banking sector, noted that the growth was mainly driven by a 28.0 percent year-on-year growth in investments to GH¢80.3 billion.
According to the report published by the Bank of Ghana on the banking industry, total assets of Ghana’s banking sector has expanded by 16.7 percent to hit GH¢166.4 billion as at end of August 2021.
In addition, Dr Ernest Addison also attributed the growth to increase in gross advances. He stated that the gross reserve rose by 8.7 percent as at August 2021 from the end-June position of 5.7 percent. Also, he revealed that strong liquidity flows during the period resulted in a 21.8 percent annual growth in total deposits to GH¢111.6 billion.
Dr Ernest Addison, Governor of the Bank of Ghana, said the sector remained strong and well-capitalised, with stronger growth in total assets, investments and deposits.
According to the governor, the Financial Soundness Indicators (FSIs) have remained strong over the period while also the industry’s Capital Adequacy Ratio (CAR) was 20.7 percent at the end of August 2021, well-above the regulatory minimum threshold of 11.5 percent.
Again, Dr Addison said core liquid assets to short-term liabilities was 24.7 percent in August 2021 compared with 29.0 percent a year ago while over the same comparative period, net interest income grew by 17.9 percent to GH¢8.3 billion, marginally lower than the 18.7 percent growth a year ago.
Net fees and commissions also grew strongly by 21.8 percent to GH¢1.85 billion, which is higher than the growth of 8.9 percent for same period last year, reflecting the continued recovery in trade finance-related and other ancillary businesses of banks.
The report further indicated that total operating income rose by 15.7 percent, marginally below the corresponding growth rate of 17.0 percent. The cost control measures within the banking sector continued to support profit performance with operating costs increasing by 9.0 percent, lower than the 12.1 percent increase for same period in 2020.
Banks PBT shoot up 27% to GHS 4.9bn
Similarly, the profit before tax (PBT) of the banking industry shot up by 27.4 per cent to GH¢4.9 billion in the first eight months of this year, signalling a recovery in economic activity. According to the Bank of Ghana, this is higher than the growth of 19.2 per cent registered a year ago.
For loan loss provisions, it also increased by 5.3 per cent, compared with the 29.5 percent growth a year ago.
However, the Central Bank Government averred that private sector credit growth has not fully recovered to pre-pandemic (COVID-19) levels due to lingering supply-side risk aversion from the shock of the pandemic as well as slower-than-expected growth in demand for loans that are backed by bankable projects.
The annual nominal growth in private sector credit therefore slowed to 9.5 per cent in August 2021 compared with 14.3 per cent, in the corresponding period of 2020.
Similarly, real private sector credit contracted marginally by 0.1 per cent compared to a growth of 3.4 per cent, recorded over the same comparative period.
The Bank of Ghana, thus, described the banking sector as strong, with stronger growth in total assets, investments and deposits.
