The banking sector sustained its strong profit growth trajectory in the second month of the year after the banking regulatory reforms, the Bank of Ghana (BoG) has said.
Profits of the banking sector jumped to 38.8 per cent in February, 2020 from the 31.5 per cent recorded in the same period last year.
The BoG’s in its March 2020 Banking Sector Report (BSR) which discussed developments in the banking sector based on the prudential returns of the twenty-three (23) banks as at February 2020, attributed the improvement on the banking industry’s financial performance to the “the significant increases in banks’ income”.
“The banking sector’s strong financial performance during the first two months of the year reflects continued positive dividends from the regulatory reforms,” the report said.
The BSR explained that net interest income of the banking sector grew by 25.9 per cent on the back of a 22 per cent growth in interest income, higher than the 14 per cent increase in interest expenses.
“The stronger profit outturn translated into improved profitability indicators,” the report said, adding that Return on Equity (ROE) went up by 25.5 per cent at end-February 2020 from 20.1 per cent at end-February 2019.
It said Return on Assets (ROA) also grew by 4.9 per cent compared with 4.2 per cent and the increases in both ratios signified enhanced resource utilisation of both shareholders’ funds and total assets over the comparative periods.
Highlighting on assets of the banking industry, the report said the banks recorded a stronger annual growth in total assets in the period under the review.
“Total assets of the banking sector amounted to GH¢128.33 billion in February 2020 representing a year-on-year growth of 17.8 per cent compared to 14.5 per cent recorded in February 2019,” the report said.
The strong growth in total assets the BSR said “was on the back of a rebound in credit growth”.
“Investments continued to dominate although its share in total assets declined to 36.3 per cent in February 2020 from 39.9 per cent in February 2019. Loans and advances (net) represent the second largest component with its share moving up to 31.5 per cent from 29.3 per cent over the period on account of the strong growth in credit. Cash and Due from banks followed with a marginal increase in its share to almost a quarter of total assets,” the report said.
It saidtotal deposits of the industry grew by 15.6 per centto GH¢83.10 billion as at end-February 2020, suggesting sustained confidence in the sector.
BY KINGSLEY ASARE
