Banks’ holdings of T-Bills increase by 285% in October 2023 – BoG report
Per data made available in the Bank of Ghana’s 2023 November Monetary Policy Report, banks’ holdings of short-term investments (t-bills) increased sharply by 285.8 percent, after contracting by 45.5 percent during the same period last year – October 2022.
Conversely, banks’ holdings of long-term investments (securities) contracted by 25.5 percent in October 2023 from 20.9 percent growth in October 2022.
The significant increase in short-term investment holdings and decrease in long-term investment holdings by banks, the BoG asserts follows the completion of the Domestic Debt Exchange Programme (DDEP).
Overall, investments (both long term and short term) constituted the largest component of total assets of banks and was up by 22.0 percent year-on-year to GH¢103.7 billion in October 2023, compared to 1.9 percent in October 2022.
Consequently, the share of investments in total assets increased to 40.2 percent in October 2023, from 34.0 percent in October 2022.
Total assets of the banking sector within the review period grew by 3.2 percent year-on-year to GH¢257.9 billion as at October 2023, compared with 43.7 percent growth in October 2022.
A breakdown of assets into its two main parts indicates that foreign assets grew by 14.3 percent in October 2023, from 125.3 percent in October 2022, while domestic assets went up by 2.3 percent in October 2023, compared to 39.7 percent growth in October 2022.
Accordingly, the share of foreign assets in total assets increased to 8.2 percent from 7.4 percent, while the share of domestic assets declined from 92.6 percent to 91.8 percent, during the same reference period.
Gross loans and advances contracted by 9.5 percent to GH¢73.5 billion in October 2023 compared to the strong growth of 57.5 percent in October 2022.
The decline in credit was mainly on the back of general risk aversion reflecting the current macroeconomic challenges. Net loans and advances (gross loans adjusted for provisions and interest in suspense) also contracted by 12.8 percent in October 2023 compared to 60.8 percent growth in October 2022.
Deposits remained the main source of funding for the banking sector, accounting for 77.5 percent share of total assets in October 2023, up from 68.9 percent a year ago.
The growth in deposits, however, declined within the review period, partly reflecting the translation effects of the appreciation of the Ghana cedi in October 2023 relative to October 2022.
Accordingly, total deposits grew by 16.2 percent year-on-year to GH¢199.9 billion in October 2023, compared with 46.5 percent growth in the same period of last year.
