Foreign-Owned Banks Dominate Secured Loans Despite Declining Market Share – BoG Report

Foreign-owned banks remained the dominant players in secured loan issuance in Q4 2024, despite a decline in their market share, according to the Bank of Ghana’s Quarterly Collateral Registry Brief.

The share of secured loans granted by foreign-owned banks dropped to 51.5% in Q4 2024 from 74.6% in Q4 2023, while domestically owned banks increased their share to 48.5%, up from 25.4% in the same period the previous year.

This shift reflects the increasing role of local banks in secured lending, even as foreign-owned banks remained the primary drivers of secured loans during the period under review.

Lending Rates Across Institutions

The average lending rate on secured loans from banks stood at 28.6% in Q4 2024, slightly lower than 28.8% in Q4 2023, making banks the most competitive lenders.

Comparatively, other lending institutions recorded higher rates:

• Finance and Leasing Companies: 33.1% (down from 38.8% in Q4 2023).
• Rural and Community Banks: 33.5% (down from 34.4%).
• Savings and Loans Companies: 43.0% (down from 44.1%).
• Microfinance Institutions: 46.5% (down from 51.1%).
• Micro Credit Companies: 49.5% (up from 47.7%).
• Finance Houses: 59.4% (down from 60.3%), maintaining the highest lending rates in the sector.

Borrower Classification Trends

Large enterprises remained the biggest recipients of secured loans but saw a decline in their share from 60.3% in Q4 2023 to 48.5% in Q4 2024.

Conversely, individual borrowers saw a significant increase, securing 28.0% of total loans, up from 20.4% in Q4 2023. Private Enterprises – SMEs also increased their share to 18.5%, compared to 14.3% the previous year.

However, Micro Businesses experienced a decline in their share of secured loans, falling to 1.8% in Q4 2024 from 3.3% in Q4 2023. Other borrower types saw a marginal increase to 3.2%, from 1.8% in the same period the previous year.

Market Implications

The shift in secured loan distribution indicates a growing role for domestic banks in credit markets, as well as increased lending to SMEs and individuals.

The marginal decline in lending rates across most institutions signals a potentially easing credit environment, which could support economic growth and financial inclusion.

Source: Norvanreports