The banking sector performance in the first half of the year pointed to continued recovery from the impact of the Domestic Debt Exchange Programme (DDEP).
Total banking sector assets grew by 33.3% to GH¢323.1 billion at end-June 2024, relative to 21.2% growth at end-June 2023.
The Bank of Ghana (BoG), which disclosed this, said profitability, liquidity, and efficiency indicators also improved over the period.
BoG Governor, Dr. Ernest Addison, who addressed journalists in Accra, said the Capital Adequacy Ratio (CAR) adjusted for reliefs, remained unchanged at 14.3%, between June 2023 and June 2024.
Without reliefs, he said the CAR was reported at 10.6% in June 2024, higher than the 7.4% recorded in June 2023.
He continued that despite improvements in the banking sector’s performance, elevated credit risk posed a threat to the sector’s recovery process adding that the industry’s NPL ratio was 24.1% in June 2024, up from 18.7% in June 2023.
“The consistent rebound in profits, adherence to recapitalisation plans, and enforcement of strict credit underwriting standards will help ensure that banks remain on the path to full recovery and resilience,” Dr. Addison emphasised.
On the interbank market, he said the Weighted Average Rate (WAR) increased by the tight monetary policy stance and sustained liquidity withdrawals from the market.
“The rate increased to 28.83% in June 2024 from 26.01% in June 2023. Over the same period, however, average lending rates of banks declined marginally to 31.10% from 31.15%.”
On interest rate trends, he said these were broadly mixed at the short-end of the market with the 91-day and 182-day Treasury bill rates increasing to 24.91% and 26.84% respectively in June 2024, from 21.77%, and 24.58%, in June 2023.
n contrast, rates on the 364-day instrument decreased to 27.83%, from 28.66% over the same comparative period.
Growth in broad money supply moderated in the first half year. Annual growth in broad money supply (M2+) slowed to 34.2% in June 2024, relative to 44.4% in June 2023.
He said the slowdown was reflected in all the components, that is, demand deposits, savings and time deposits, and foreign currency deposits.
Reserve money, however, recorded an annual growth of 77.8% in June 2024, compared to 29.2% in June 2023. The growth in reserve money was due to the adjustment in the reserve requirements of the banks.
“Private sector credit extension steadily improved in the first half of the year. In nominal terms, private sector credit grew by 17.6% in June 2024, relative to the 16.1% growth recorded in the same comparative period of 2023. In real terms, the contraction in redit to the private sector moderated at 4.2% compared to a contraction of 18.5% recorded in June 2023,” the governor noted.
Commenting on fiscal operations in the first half of this year, he said these were broadly aligned within the set targets adding that provisional data on budget execution indicated an overall fiscal deficit (commitment basis) of 2.0% of GDP, against the budget target of 2.7% of GDP.
The deficit of GH¢21.3 billion was financed from both domestic and foreign sources. The primary balance recorded a deficit of GH¢2.3 billion (0.2 percent of GDP), against the deficit target of GH¢2.4 billion (0.2 percent of GDP).
By Samuel Boadi
