This report covers developments in the Ghanaian banking sector as at the end of February 2017. The sector comprised thirty-three (33) banks, sixteen (16) of which were domestically controlled and the remaining seventeen (17) foreign controlled.
The branch network of banks increased from 1,342 in December 2016 to 1,367 in February 2017 and spread across the ten (10) regions.
The performance of the banking sector broadly improved over the first two months of 2017, reflected in some key financial soundness indicators (FSIs). Relative to December 2016, the industry recorded strong asset growth on account of sharp increases in foreign assets and investments, as well as a pickup in the credit extension over the review period.
The industry’s Capital Adequacy Ratio (CAR) posted a 37-month high of 18.5 per cent in February 2017, signaling the sector’s improved ability to absorb losses. Asset quality, as measured by the non-performing loans (NPL) ratio, improved to 17.7 per cent in February 2017, from 18.0 per cent in January, but worsened in comparison to the 15.6 per cent recorded in February 2016.
The increase in the NPL ratio over the one year period was partly due to the downgrade of some loans by banks after the 2016 Asset Quality Review (AQR), with no
commensurate increase in gross advances.
