Banks Write Off GHS 654 Million in Bad Loans as NPL Ratio Declines to 23.6%
Banks operating in Ghana wrote off a total of GHS 654.2 million as bad debt during the first four months of 2025, reflecting a lower impairment compared to previous years, the Bank of Ghana has disclosed.
According to the Central Bank’s April 2025 Domestic Money Bank Report, the amount written off is down from GHS 863.4 million in the same period in 2024 and significantly below the GHS 1.087 billion recorded in April 2022. The provision for bad debts was categorised under loan losses, depreciation, and other related charges.
Despite the elevated levels of credit risk in the banking sector, the report noted improvements in asset quality and a moderation in the non-performing loan (NPL) ratio. The industry’s NPL ratio declined to 23.6% in April 2025 from 25.7% a year earlier. When adjusted for fully provisioned loan losses, the ratio dropped to 9.0%, from 11.1% over the same comparative period.
The decline in the NPL ratio, according to the BoG, was mainly driven by higher growth in total loan volumes relative to the increase in the stock of NPLs.
The sector’s total stock of NPLs rose by 8.7% year-on-year to GHS 21.7 billion in April 2025, up from GH¢20.0 billion in April 2024. A decomposition of the NPL stock shows that the private sector continued to dominate non-performing assets, accounting for 93.4% of the industry’s bad loans in April 2025, compared to 91.0% a year prior.
Conversely, the share of NPLs attributable to the public sector declined to 6.6% in April 2025, from 9.0% in April 2024, highlighting a shifting credit risk burden towards private borrowers.
The data underscores the banking industry’s ongoing efforts to improve risk management and asset quality, even as bad loan provisions remain a significant component of operational expenses.
