Banks’ share of foreign assets decline to 4.6%
The share of banks’ foreign assets in relation to their total assets according to the Bank of Ghana declined to 4.6% from 7.3% as at February 2022.
Foreign assets within the review period the BoG notes, contracted by 21.9% from a growth of 11.1%.
The contraction in the growth of foreign assets, the Central Bank says largely reflected the observed slowdown in banks’ offshore activities from declines in both nostro balances and placements.
Growth in domestic assets on the other hand, was higher at 27.1% in February 2022 from 19.1 percent in February 2021.
Domestic assets as a share of total assets increased to 95.4% from 92.7% within the year under review.
Total assets of the banking industry grew by 23.5 percent (year-on-year) to GH¢187.8 billion as at February 2022, well-above the 18.5 percent growth recorded in the same period of 2021.
The higher growth in the industry’s assets was broadly in line with the observed pickup in economic activity during the period.
Investments (comprising bills, securities and equity) remained the largest component of total assets as at end-February 2022, though its rate of growth slowed from 45.9 percent in February 2021 to 30.2 percent.
The share of investments in total assets increased to 47.1 percent from 44.7 percent, still reflecting banks’ continued portfolio reallocation in favour of these less risky assets in a bid to moderate their exposure to increased credit risks from the protracted effects of the COVID-19 pandemic.
Uptick in credit growth
The observed uptick in credit growth recorded during most of 2021 continued into the first two months of 2022.
The industry’s gross loans and advances increased from GH¢47.6 billion in February 2021 to GH¢56.3 billion, representing a year-on-year growth of 18.3 percent from the modest 3.6 percent growth recorded during the same period in 2021.
As expected, net loans and advances (gross loans adjusted for provisions and interest in suspense) also recorded a higher growth of 20.4 percent in February 2022 from the low 2.2 percent growth in February 2021.
The foreign currency component of net advances also recorded a higher growth of 25.6 percent from 1.5 percent during the same reference period, largely attributable to the revaluation effect from the sharp depreciation of the Ghana Cedi particularly during the first two months of the year.
New lending by banks also increased sharply by 70.7 percent to GH¢8.0 billion during the first two months of the year from GH¢4.7 billion during the same period in 2021.
In sum, the industry witnessed appreciable activity in its credit portfolio as at February 2022, in consonance with the observed pickup in economic activity as indicated by the Banks’ Composite Index of Economic Activity (CIEA) and the growth trends from the real sector of the economy.
Growth in deposits remains robust
Growth in the industry’s deposits remained robust, recording a year-on-year increase of 18.2 percent to GH¢122.9 billion as at end-February 2022, relative to the 25.1 percent growth recorded during the same period last year.
The slowdown in the growth of the industry’s deposits was reflected in both domestic deposits (from 24.6% to 18.0%) and deposits of non-residents (from 168.2% to 49.6%).
The slower growth in the industry’s deposits was compensated for by a sharp increase in banks’ borrowings during the period under review. Total borrowings by banks (foreign and domestic) increased by 78.8 percent to GH¢25.5 billion in February 2022 from GH¢14.3 billion in February 2021 (representing a 23.4% contraction).
The increased borrowings were almost evenly split between foreign and domestic sources, increasing by 75.6 percent and 82.1 percent respectively, whereas in terms of tenors, they were more tilted towards the short end of the market.
