Ghana’s banking sector is grappling with a significant increase in non-performing loans (NPLs), which rose by 49.4% to GH¢20.4 billion in June 2024, up from GH¢13.7 billion in the same period last year. This surge in bad loans has led to a deterioration in both domestic and foreign currency-denominated loans, causing concerns for the Bank of Ghana (BoG).
According to the BoG’s latest Monetary Policy Report, the industry’s NPL ratio increased to 24.2% in June 2024, from 18.7% in June 2023. When adjusted for the fully provisioned loan loss category, the industry’s NPL ratio still rose to 10.8% in June 2024, from 7.8%. This indicates a growing stock of nonperforming loans across all categories.
The report revealed that the private sector accounted for the largest share of non-performing loans, with a proportion of 95.6% in June 2024, up from 95.5% in June 2023. The public sector’s share declined to 4.4% from 4.5% in the same period last year.
Sector-wise, the agriculture, forestry, and fishing sector recorded the highest NPL ratio of 56.4% (up from 30.0% a year ago), followed by the transportation, storage, and communication sector with an NPL ratio of 49.1% (up from 22.1% a year earlier). The construction sector saw its NPL ratio rise to 36.8% (from 32.8%), while the mining and quarrying sector had the lowest NPL ratio of 13.7% (up from 12.7% a year earlier).
Key Highlights:
– NPLs increased by 49.4% to GH¢20.4 billion in June 2024
– Industry’s NPL ratio rose to 24.2% in June 2024, from 18.7% in June 2023
– Private sector accounted for 95.6% of non-performing loans
– Agriculture, forestry, and fishing sector recorded the highest NPL ratio of 56.4%
