Banks in the country for the year 2020 increased their holdings of investment securities, particularly, in government securities.
The increment in investment securities the Bank of Ghana (BoG) notes in its March 2021 Banking Sector Development Report, was due to banks appetite for less risky assets during the pandemic.
According to the Central Bank, the proportion of investment securities held by banks dominated banks assets mix as its share increased significantly from 36.3 percent in February 2020 to 44.7 percent in February 2021.
The BoG’s assertion of banks increasing investment share of assets mix is valid as a perusal of the various 2020 Financial Statements of banks in the country by norvanreports, revealed a similar trend.
For instance, Ecobank Ghana, the country’s biggest bank increased its investment securities holdings by more than Ghs 2.6 billion in 2020 alone.
The share of loans and advances in banks assets mix, however declined by 4.3 percent on a year-on-year basis as net loans and advances to customers declined to 27.2 percent end-February 2021 from 31.5 percent end-February 2020.
The decline in loans and advances made by banks for last year, was attributed to the slowdown in credit growth occasioned by decreased demand for credit by businesses and households.
But the decline in credit growth can also be attributed to a reduction in credit to risky customers as evidenced by the increase in investment securities holdings which are less risky compared to loans made to businesses and households during the heat of the pandemic last year, particularly to businesses in sectors severely hit by the pandemic.
Meanwhile, the BoG has said that its latest credit conditions survey shows that credit growth is expected to pick up on the back of anticipated increases in credit demand and continuous ease in credit stance in the next two months.
