Banking Sector Resilient Despite Rising Credit Risks – BoG Governor Says

Ghana’s banking sector demonstrated resilience in 2024, with notable growth in assets, capital adequacy, and profitability, according to the Governor of the Bank of Ghana, Dr. Ernest Addison.

Speaking at the 122nd Monetary Policy Committee (MPC) press briefing on January 27, Dr. Addison highlighted the sector’s strong performance amid an improving macroeconomic environment.

Total assets of the banking sector grew by an impressive 33.8% in 2024, reflecting the sector’s robust expansion.

The Capital Adequacy Ratio (CAR) with regulatory reliefs increased marginally to 14.0% in December 2024, up from 13.9% in the previous year. Without reliefs, the CAR rose significantly to 11.3%, compared to 8.3% in December 2023, indicating improved capitalization across the sector.

Profitability also improved in 2024, although the pace of growth slowed, moderating key profitability indicators. Dr. Addison noted that elevated credit risks remain the primary challenge for the banking industry, with the Non-Performing Loans (NPL) ratio increasing to 21.8% in December 2024, compared to 20.6% a year earlier.

“The resilience of the banking sector in 2024 was underpinned by improved domestic macroeconomic conditions,” Dr. Addison stated, adding that the outlook for the sector would depend on the ability to manage credit risks effectively.

The Bank of Ghana emphasized the need for continued vigilance and prudent risk management practices to sustain the sector’s stability in the face of potential vulnerabilities.

The strong performance of the banking industry in 2024 serves as a foundation for further consolidation in 2025, as the economy continues to recover.

Source: norvanreports.com