Banking Sector: Total assets value rises to GHS 209bn
Ghana’s banking sector witnessed an uptick in total assets, with the figure reaching GHC209.4 billion in December 2022, representing an increase of 16.4%. The growth in assets was fueled by sustained growth in deposits and exchange rate variations on banks’ balance sheets. However, the picture wasn’t entirely rosy, as total investments witnessed a significant decline, dropping from GHC83.1 billion in December 2021 to GHC64.8 billion in December 2022, indicating a contraction of 22.1%.
Despite the decline in investments, total credit surged by 28.5%, reaching GHC69.1 billion in December 2022 from GHC53.8 billion in December 2021. It is noteworthy that total deposits, a crucial liability component of the banking system, also witnessed an impressive surge of 30.4% year-on-year, reaching GHC157.9 billion. This figure represents a sharp contrast to the 16.6% recorded during the same period in 2021, highlighting the increased confidence of Ghanaians in the banking sector.
The banking sector’s soundness indicators, according to the Bank of Ghana’s report, remained broadly sound, underpinned by the regulatory reliefs provided by the central bank. However, despite the apparent resilience of the banking sector, uncertainties remain, considering the lingering impact of the COVID-19 pandemic on the global economy and the potential changes in regulatory policies.
The Ghanaian government’s commendable efforts to improve the banking sector’s performance and credibility cannot be overstated. These efforts include the government’s recapitalization policy, aimed at enhancing the sector’s financial stability by raising the minimum capital requirement for banks. The policy has seen most banks in Ghana increase their minimum capital to GHC400 million, positioning them to handle large credit deals and bolstering their reputation in the financial market.
Furthermore, the government’s focus on boosting financial inclusion through the promotion of mobile money and the introduction of other innovative products and services is laudable. These initiatives have enabled more Ghanaians to access financial services, thereby contributing to the banking sector’s growth.
Ghana’s banking sector has demonstrated impressive growth in total assets, sustained growth in deposits, and an increase in total credit. However, the significant decline in total investments is a cause for concern. Despite this, the sector’s soundness indicators remain broadly sound, largely due to the regulatory reliefs provided by the Bank of Ghana. The government’s efforts to improve the banking sector’s performance and credibility through recapitalization and the promotion of financial inclusion are commendable and will likely enhance the sector’s growth prospects in the coming months.
