Banks Write Off GHS 1.05bn as Bad Debt
Banks wrote off a total of GH¢1.05 billion as bad debt in the eight months of 2025, representing a 46% decline compared to the GH¢1.95 billion recorded during the same period in 2024.
According to the Bank of Ghana’s Domestic Money Banks (DMBs) Income Statement for August 2025, the write-offs were primarily due to loan losses and depreciation.
Asset Quality Improves Despite Elevated Credit Risk
The Central Bank noted that the banking industry’s asset quality improved in August 2025 relative to August 2024, although it cautioned that credit risk remains elevated.
“The improvement in asset quality was broad-based with a decrease in non-performing loans (NPLs) in all economic sectors. This led to a decrease in the NPL ratio for the banking industry,” the Bank of Ghana stated.
The report showed that the industry’s NPL ratio declined to 20.8% in August 2025, from 24.3% in the same period last year.
When adjusted for fully provisioned loan loss categories, the NPL ratio improved further from 10.6% in August 2024 to 6.8% by end-August 2025. This reflected a decline in both sub-standard and doubtful loans in the total NPL stock.
NPL Stock Contracts as Cedi Appreciation Takes Effect
The industry’s NPL stock contracted by 6.1%, from GH¢21.1 billion in August 2024 to GH¢19.8 billion in August 2025, driven by increased write-offs and the appreciation of the Ghana cedi.
The contraction in the NPL stock (4.4% year-on-year), relative to a 10.0% growth in total loans, contributed to the reduction in the NPL ratio, according to the report.
Private Sector Dominates Credit and NPLs
The private sector, being the largest recipient of credit from the banking industry, continued to account for the majority of NPLs.
Its share of NPLs rose marginally from 96.0% in August 2024 to 97.4% in August 2025, while the public sector’s share declined from 4.0% to 2.6% over the same period.
Rising Interest Expenses
Meanwhile, interest expenses of the banking sector rose to GH¢10.11 billion as of August 2025, representing a 20.9% year-on-year increase, reflecting the impact of tight monetary conditions and higher funding costs within the sector.
Overall, the data suggests a gradual improvement in banks’ balance sheet quality, though the Central Bank’s caution over lingering credit risk highlights the need for continued prudence in loan portfolio management.
