Private sector credit surge by 26.5% reaching GHS 16.4bn in April
Credit to the private sector according to the Central Bank in its May 2022 Summary and Economic Financial Data, recorded an annual growth of 26.5% in April 2022.
This compares favourably to the 6.9% annual growth in private sector credit recorded same period last year – April 2021.
According to the Bank of Ghana, the recorded growth in private sector credit (almost back to pre-pandemic levels) is broadly in line with the uptrend in economic activities.
In terms of new advances, the data shows that credit growth continued to improve, reaching GH¢16.4 billion and representing a 56.5 percent year-on-year growth.
Per the Central Bank, the latest credit conditions survey revealed that banks are however beginning to tighten credit stance on loans to enterprises and households.
Despite the tightening of credit conditions, demand for credit by households and firms continue to remain strong, the BoG noted.
However, with the current 200 basis points hike in the policy rate, demand for credit by the private sector is expected to slow as cost of borrowing from banks is expected to increase on the back of the new policy rate which stands at 19%.
Average lending rate which currently stands at 21.61% is also expected to inch higher given the new increment in the policy rate.
Meanwhile, total assets of banks in the country rose to GH¢194.3 billion at end-April 2022, which represented 24.8 percent annual growth, relative to 16.4 percent growth in the previous year.
The growth was underscored by increased deposits and borrowings. Total deposits grew by 21.3 percent to GH¢127.2 billion, while borrowings recorded a strong growth of 66.2 percent to GH¢25.9 billion at end-April 2022.
The key financial soundness indicators of banks remained strong, with the Capital Adequacy Ratio at 21.3 percent, well above the regulatory minimum of 13.0 percent.
Core liquid assets to short-term liabilities improved to 28.2 percent in April 2022, compared with 24.9 percent a year earlier.
The Non-Performing Loan ratio eased to 14.3 percent at end-April 2022, compared with 15.5 percent in the previous year, signalling some improvement in asset quality during the year.
In the first four months of 2022, banks’ profit before tax was GH¢2.9 billion, representing a 26.3 percent growth, compared with 39.6 percent growth for the same period of last year.
Net interest income grew by 12.2 percent to GH¢4.6 billion, compared to 18.4 percent growth a year ago. Net fees and commissions grew by 17.7 percent to GH¢1.1 billion, compared with 26.5 percent growth last year, due to decline in trade finance-related activities in the economy.
Other income increased to GH¢1.0 billion, representing 117.5 percent growth, relative to the contraction by 7.9 percent last year.
These developments resulted in a 22.1 percent jump in operating income to GH¢6.7 billion, compared with 16.8 percent growth in the corresponding period of 2021. Operating expenses recorded 23.0 percent growth compared to 1.7 percent growth in the previous year.
