The recent gains in macroeconomic stability are improving the soundness in the banking sector – Asiama

Governor of the Bank of Ghana, Dr Johnson Asiama has said that they continue to witness broad-based improvement in financial stability, though they remain keenly aware that persistent challenges require continued and focused efforts.

He notes that “the recent gains in macroeconomic stability following the DDEP, the improved profitability of banks amid the structural high liquidity and continuing recapitalization are improving the soundness in the banking sector.”

Even without reliefs, he said, the Banking Sector Soundness Indicator (BSSI) showed sustained improvement on the back of improving solvency and asset quality measures amid strong liquidity and profitability.

He stressed that the banking sector continues to experience strong asset growth, expanding by 34.05 percent year-on-year at end-February 2025—funded primarily by deposits, which also grew by 27.89 percent.

“The industry remains solvent, recording a Capital Adequacy Ratio (CAR) of 14.35 percent, above the regulatory minimum of 10 percent, with most banks maintaining capital adequacy ratios above thresholds. Nonetheless, solvency concerns persist for a few domestically controlled and state-owned banks, where recapitalization efforts remain unclear,” Dr Asiama said in a meeting with Chief Executive Officers of Banks in Ghana on Wednesday, April 9.

He further noted that addressing the capital shortfalls in these banks remains a priority.

“We are working closely with the affected institutions to achieve sustainable capital levels, restore depositor confidence and ensure compliance with regulatory requirements.

“Our supervisory engagement has intensified to assess the credibility of recapitalization strategies and to mitigate potential systemic implications,” he said.

Private sector credit is recovering, but credit risk remains elevated. Nonperforming loans have risen, largely due to growth in legacy exposures.

The Non Performing Loan (NPL) ratio stood at 22.57 percent at end-February 2025. Excluding the fully provisioned loss-category loans, the adjusted NPL ratio was 8.93 percent.

“This trend reflects ongoing deficiencies in credit risk management practices, including weak underwriting standards and inadequate provisioning.

“To address rising credit risks, we urge all banks to strengthen their risk management frameworks—improving underwriting, early warning systems, and provisioning practices. We expect tangible improvements in loan origination, monitoring, and credit review,” he said.

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