Banking Industry: Non-Performing Loans Edge Higher to GHS 20.7bn
Ghana’s banking sector is showing early signs of recovery in asset quality despite a marginal rise in bad loans, according to the Bank of Ghana’s July 2025 Monetary Policy Committee report.
Non-performing loans (NPLs) increased by 1.3 per cent to GH¢20.7 billion in June 2025, up from GH¢20.4 billion a year earlier. The share of bad loans in total credit, however, fell to 23.1 per cent from 24.2 per cent, suggesting stronger loan growth relative to defaults. When fully provisioned losses are excluded, the adjusted NPL ratio declined further to 8.5 per cent from 10.8 per cent, reflecting improved credit risk management across the sector.
“The decline in the NPL ratio is explained by the lower growth in the NPL stock relative to the growth in total loans,” the Central Bank said.
Private borrowers remain the biggest contributors to bad loans, accounting for 96.4 per cent of total NPLs compared with 95.6 per cent a year earlier. The commerce and finance sector saw its NPL ratio surge to 27 per cent from 19.7 per cent, while the services sector’s ratio eased slightly to 25.7 per cent. Manufacturing held steady year-on-year.
Analysts warn that persistently high NPLs could complicate efforts to reduce lending rates, as banks price in elevated credit risks. Some businesses cite delayed government payments for missed loan instalments, underscoring the link between fiscal bottlenecks and private credit distress.
In response, the Bank of Ghana has introduced tighter supervisory measures, directing banks to blacklist willful defaulters in their audited financial statements and share their identities with oversight bodies. Institutions are expected to reduce their NPL ratios to 10 per cent of gross loans by December 2026.
Despite the sector’s credit challenges, profitability remains strong. Profit-before-tax rose 32.2 per cent to GH¢10.8 billion in June 2025, while profit-after-tax climbed 32.6 per cent to GH¢7.2 billion, driven by higher interest income and fee-based revenue.
The Central Bank said solvency and efficiency indicators have strengthened, though liquidity levels moderated slightly. It however, expects recapitalisation efforts, tighter underwriting standards, and intensified loan recoveries to support stability in the coming year.
