Vish Ashiagbor, Country Senior Partner, at PricewaterhouseCoopers (PwC) Ghana, has said banks savings and other investments are safe at the moment in spite of the impact of the coronavirus outbreak.
He told TV3’s Alfred Ocansey in interview on the Business Focus programme Monday May 18 that the recapitalisation exercise undertaken by the Bank of Ghana, which led to the collapse of some nine domestic banks, has strengthened the existing commercial banks to withstand shocks.
“Today the money is safe. I say today because obviously it is a dynamic situation,” he said,
He added that : “Before the full impact of COVID-19 has been felt, if you go back to March and you look at the Bank of Ghana report for the banking sector for March this year, the capital adequacy of the industry was running at 20%, the regulatory treasury is 13 %.
‘What that means is that there is enough buffer to take some shocks . That is why I am saying that today the money is safe.”
Regarding projections, he said : “I do not know what will happen seven months down the line but the confidence I have is that the Bank of Ghana may be strengthening the regulations or its supervisory activities. So, I believe that the money will be safe seven months from now.”
The Bank of Ghana has said the latest stress tests conducted in April 2020 suggest that banks are “strong and resilient and are well-positioned to withstand mild to moderate liquidity and credit shocks on the basis of strong capital buffers and high liquidity positions”.
Announcing the maintenance of the policy rate at 14.5 per cent at the central bank’s monetary policy committee meeting on Friday, 15 May 2020, Bank of Ghana Governor Dr Addison said: “Capital Adequacy Ratio is well above the revised regulatory floor of 11.5 per cent”.
However, he noted, the industry nonperforming loan ratio has “inched up during the quarter, reflecting the emerging impact of the [COVID-19] pandemic on low credit growth and higher loan provisioning”.
So far, he noted, “banks are also responding positively to the recently-announced policy initiatives to support the economy by reducing lending rates and supporting credit growth, as well as offering moratoriums on loan repayments to cushion customers”.
The Governor, however, pointed out that the three-week lockdown imposed by the government as part of measures to control the spread of the virus, “resulted in a decline in currency as consumers resorted to the use of electronic modes of payment”.
General economic uncertainty, he observed, “reduced demand for credit, as commercial banks tightened their credit stance”.
As a result, “credit to the private sector remained virtually flat during the period”, Dr Addison told journalists, adding: “Broad money supply (M2+) slowed significantly to 13.5 per cent in March 2020, compared with 21.6 per cent growth a year ago”.