Bank of Ghana warns Savings and Loans Companies of mounting NPL risks
The Bank of Ghana has issued a stern warning to Savings and Loans Companies, urging them to closely scrutinize the escalating costs of interest and non-performing loans recorded in their books. Osei Gyasi, Head of Banking Supervision, stressed that these factors could potentially trigger financial risks, thereby adversely affecting the profitability of these institutions.
Speaking at the momentous 20th anniversary celebration of Bayport Savings and Loans in Accra, Osei Gyasi emphasized the central bank’s concern regarding the overall quality of financial assets. Gyasi candidly disclosed that the regulatory body has identified several problematic occurrences that necessitate prompt attention and resolution.
Gyasi revealed, “We have observed some marginal increases in Non-Performing Loans,” cautioning companies to proactively manage this issue in order to enhance asset quality and bolster the profitability of their respective institutions. He further elaborated that Savings and Loans companies must diversify their funding sources to reduce leverage ratios and curtail interest costs. Failure to do so could potentially crystallize financial risks, which would pose considerable challenges. By focusing on these areas, companies can augment profitability for their shareholders, bolster customer confidence, and consequently increase lending to foster economic growth.
Moreover, Osei Gyasi advised financial service providers to explore diversified funding avenues, aiming to alleviate the burden of high credit costs. By embracing such measures, these institutions can effectively navigate the evolving financial landscape and fortify their operational sustainability.
Commending Bayport for its commendable growth trajectory, the Central Bank acknowledged the substantial increase in the company’s total assets over the years. Notably, Bayport recorded a profit of ¢27.42 million in 2002, which exceeded its 2021 figures. This remarkable growth has paved the way for Bayport’s 20-year journey to be hailed as a testament to its steadfast dedication and exceptional achievements within the financial sector.
Acknowledging Bayport’s substantial contribution to Ghana’s financial inclusion drive, Osei Gyasi lauded the company for its unwavering commitment in providing access to financial services for all segments of society.
Akwasi Aboagye, the Managing Director of Bayport, assured stakeholders of the company’s resolute efforts to ensure its sustainability and compliance with the directives set forth by the Bank of Ghana.
The 20th anniversary celebration of Bayport Savings and Loans is aptly themed as “Celebrating 20 years of needs met, opportunities created, plans accomplished, hopes realized, and dreams fulfilled.” This milestone serves as a moment of reflection on the substantial impact Bayport has made on the lives of its customers while setting the stage for future growth and innovation.
As the Bank of Ghana continues to emphasize the need for prudent financial management and risk mitigation strategies, Savings and Loans Companies must heed these warnings and take decisive action to safeguard their operations, reassure stakeholders, and contribute to the growth of Ghana’s economy.
