Dr Ernest Addison
Total assets of the banking industry were valued at GH₵100.3 billion as at end-June 2018, growing by 15.7 percent from the corresponding period last year.
Governor of the Bank of Ghana (BoG), Dr Ernest Addison, said this was influenced by credit off-take, which increased year-on-year by 3.1 percent to reach GH¢38.7 billion.
He said asset growth fueled expansion in branch and ATM networks, as well as increased competition evidenced by product and service deliveries.
Speaking at the 18th luncheon of the Ghana Association of Bankers (GAB) in Accra, he said the financial soundness indicators of the banking industry had broadly improved though pockets of weaknesses remain.
“The asset quality of banks remains a concern since it has transmitted into capital deficiency and profitability pressures in some banks.
“The Non-Performing Loans (NPLs) ratio remains high, but eased slightly to 22.6 percent in June 2018 from 23.4 percent in April. Adjusting for loan loss provisioning, the NPLs ratio remained stable at 12.3 percent. The capital adequacy of the industry remained above the 10 percent benchmark at 19.3 percent in June 2018 from 14.8 percent a year earlier, reflecting efforts by banks to comply with the capitalization directive by December 2018.”
The governor stated that government had assured his outfit that it would provide financial support to indigenous banks, as needed, to help them meet the minimum capital requirement of GH¢400 million by 31st December 2018.
“However, the government has indicated that such support will be limited to indigenous banks that are solvent, well-governed and managed in full compliance with the Bank of Ghana’s regulatory requirements, and able to demonstrate that they have been unable to access private sector solutions for recapitalization due to market conditions.”
Furthermore, he said corporate governance had become increasingly important, given recent infractions in the financial sector.
“As mentioned earlier, one of the key reasons for the revocation of licences of seven banks was weak corporate governance structures. We have started work on addressing the crisis that bedeviled the industry and crisis management and response should be critical in enhancing customer confidence in the system. The implementation of the deposit protection scheme is ongoing in line with the Ghana Deposit Protection Act, 2016 (Act 931), as amended, to provide a safety net for vulnerable depositors in the event of a bank failure.”
By Samuel Boadi