The banking sector in spite of the difficult economic conditions influenced by the COVID-19, in the first two months of the year recorded strong asset growth, Governor of the Bank of Ghana, Dr Ernest Addison, has said.
“Total assets stood at GH¢187.8 billion in February 2022, representing 23.5 percent annual growth, compared with 18.5 percent growth in the previous year. The growth in assets was on the back of increased deposits and borrowing,” he said at the 105th regular meeting of the Monetary Policy Committee of the BoG on Monday.
The BoG on Monday increased the Monetary Policy Rate, the rate at which the BoG lends to the commercial banks, by 250 basis (2.5 percentage) points to 17 per cent from 14.5 per cent.
Dr Addison said total deposits recorded a year-on-year growth of 18.2 percent to GH¢123.0 billion.
“Borrowing increased significantly by 78.8 percent to GH¢25.5 billion, relative to the contraction of 23.4 percent in the previous year. The rebound in credit growth continued in the first two months of 2022, with a 70.7 percent increase in New Advances to GH¢8.0 billion, compared with 24.6 percent growth in the same period last year,” he said.
Dr Addison observed that banks’ profitability improved over the first two months of 2022, with profit before tax at GH¢1.3 billion, compared to GH¢1.1 billion in the same period last year.
“Net interest income grew by 10.3 percent to GH¢2.2 billion, compared to 10.9 percent a year ago. Net fees and commissions grew by 11.8 percent to GH¢486.8 million, lower than the growth of 13.7 percent registered during the same period last year,” the Governor stressed.
He said other income of the banks stood at GH¢383.2 million, representing 95.5 percent growth, compared with a contraction of 16.5 percent in the same period last year.
“These developments resulted in a 16.9 percent growth in operating income to GH¢3.1 billion, compared with a growth of 8.7 percent in the corresponding year,” Dr Addison stated.
However, operating expenses went up by 21.3 percent on account of higher administrative costs and emoluments, relative to a contraction of 0.3 percent in the same period last year.
Dr Addison disclosed that trends in the financial soundness indicators remained positive, underpinned by strong solvency, liquidity, and profitability.
“The Capital Adequacy Ratio of the industry was 19.6 percent at end-February 2022, well above the current 11.5 percent regulatory minimum threshold. Core liquid assets to short-term liabilities was 24.2 percent in February 2022, compared with 26.5 percent in the previous year,” the Governor, stated.
Dr Addison said improvements in asset quality continued into 2022, with the Non-Performing Loans (NPL) ratio declining to 14.4 percent on average, at end-February 2022, compared with the NPL ratio of 15.3 percent in February 2021.
BY KINGSLEY ASARE