The banking industry has returned to the path of profitability despite the lingering effect of the Domestic Debt Exchange Programme (DDEP), the Governor of the Bank of Ghana (BoG) has said.
He said the data submitted by banks for the first half of 2023 showed a strong rebound in profitability in spite of the DDEP, which caused banks to incur huge impairment losses as a result of their holdings in government bonds.
“The banking sector’s profitability improved in the first half of 2023. Net interest income increased by 41.4 per cent to GH¢9.9 billion, relative to the increase of 12.4 per cent recorded a year ago. Net fees and commissions also grew by 30.6 per cent to GH¢2.2 billion, compared with 27.0 per cent over the same period last year,” Dr Addison stated this when he addressed a press conference in Accra on Monday to announce a new monetary policy stance after the 113th regular meeting of the Monetary Policy Committee.
He said the industry’s total assets as at June 2023 stood at GH¢242.4 billion, showing a moderation in growth of 21.2 per cent, and total borrowings contracted by 39.1 per cent to GH¢16.0 billion compared with GH¢26.4 billion a year earlier.
He said the industry’s profit-after-tax stood at GH¢4.3 billion, up from GH¢2.8 billion, representing a 51.4 per cent increase, and indicating that the strong profitability performance during the first half of the year translated into a higher return-on-equity of 37.6 per cent from 21.9 per cent in June 2022, and a higher return-on-assets of 5.5 per cent compared to 4.6 per cent in June 2022.
Dr Addison said the industry’s Capital Adequacy Ratio (CAR) for June 2023 stood at 14.3 per cent, higher than the revised prudential minimum of 10 per cent.
The industry’s NPL ratio, he said, deteriorated to 18.7 per cent in June 2023 from 14.1 per cent in June 2022, reflecting higher loan impairments and elevated credit risks.
On the re-capitalisation of banks, Dr Addison said all the 23 universal banks in the country have submitted their re-capitalisation plans to the BoG ahead of the deadline in September this year.
The BoG in May this year asked the universal banks to submit re-capitalisation plans to the BoG following the Domestic Debt Exchange Programme (DDEP).
The universal banks which participated in the DDEP incurred huge impairment losses in 2022 as a result of their exposure to government through their investment in Government of Ghana bonds.
Read More
source: GhanaianTimes