Banking Sector Profit-After-Tax Grows by 25.5% to GH¢5.4 Billion in June 2024 Amid Slower Income Growth
The Bank of Ghana’s July Monetary Policy Report reveals a moderation in the profitability of the banking sector, with profit-after-tax rising by 25.5% to GH¢5.4 billion as of June 2024, a notable slowdown from the 51.4% growth recorded in the same period last year. Profit-before-tax also increased by 22.8% to GH¢8.1 billion. The slower profit growth reflects a decline in the pace of increases in interest income and other revenue streams compared to 2023.
Net interest income grew by 19.4% to GH¢11.8 billion, significantly lower than the 41.4% rise recorded a year earlier. Total interest income climbed by 19.1% to GH¢18.0 billion, down from a growth of 44.3% in June 2023. The central bank attributed the weaker interest income growth to lower rates on money market instruments and declining lending rates. Interest expenses also slowed, rising by 18.6% to GH¢6.2 billion, compared to the 50.0% growth seen in June 2023.
Fee-based income also saw weaker growth, with net fees and commissions increasing by 16.8%, compared to 30.6% a year earlier. Other income lines contracted sharply, falling 16.2% to GH¢2.4 billion, down from GH¢2.8 billion in June 2023. Despite these developments, overall operating income in the banking sector increased to GH¢16.8 billion, up from GH¢14.9 billion, while gross income reached GH¢23.0 billion.
On the cost side, operating expenses grew by 15.5%, a marked reduction from the 44.9% growth rate recorded last year. Slower increases in staff and administrative expenses helped contain costs. Furthermore, impairment losses and provisions for bad debt fell sharply, contracting by 39.5%, compared to a 32.7% increase in June 2023.
The report points to a banking sector experiencing subdued profitability growth amid lower income from interest-bearing assets and a softening in operating costs, as it adjusts to more moderate economic conditions following a strong performance in 2023.
