Governor of the Bank of Ghana, Dr. Ernest Addison has said that the bank’s latest rigorous assessment of the banking industry’s ability to withstand shocks has revealed that banks have additional capital and liquidity buffers in the event of shocks from exchange rate and interest rate movements.
The local currency has depreciated by more than 5.8 percent against the US dollar since the turn of the year and the Governor speaking at Monday’s Monetary Policy Committee’s (MPC) press briefing said the banks are well insulated should there be a shock depreciation in the cedi against its major trading partners.
Dr. Addison also added that following the recent banking sector reforms, the sector has become more resilient and is well-capitalized, solvent and liquid — which is reflected in the industry’s profitability position.
“Profitability is also on the rise as banks deploy their additional capital on interest-earning assets. There is also evidence of strong deposit growth in the industry pointing to a return of confidence in the banking sector,” the Governor said.
Over the first four months of 2019, banks total assets amounted to GH¢109.9 billion, representing an annual growth of 12.4 percent.
The growth in total assets was funded mainly from deposits which grew by 19.6 percent year-on-year to GH¢73.1 billion, the central bank data indicated.
The Governor, however, stated that asset quality remains a key challenge and a major constraint to credit expansion in the banking sector.
“Although the Non-Performing Loans (NPL) ratio has declined from 23.5 percent in April 2018 to 18.9 percent in April 2019, it remains high and points to the industry’s exposure to credit risk. To help reduce the NPL ratio further, banks are working to strengthen their credit risk management practices and loan recovery efforts
