Performance of banks in first half of 2021 reflected sustained growth in total assets

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Governor of the Bank of Ghana Performance of the banking sector during the first half of 2021 reflected sustained growth in total assets, investments and deposits. Total assets increased by 17.2 percent to GH¢162.9 billion, on account of strong growth of 28.8 percent in investments in government securities to GH¢75.7 billion.

Total deposits recorded a year-on-year growth of 22.5 percent to GH¢110.3 billion on the back of strong liquidity flows.

Overall, the impact of the pandemic on the industry’s performance has been moderate. As evidenced by the financial soundness indicators, the banking sector has remained solvent, liquid, profitable and well-capitalized.

The industry’s Capital Adequacy Ratio of 20.8 percent at end-June 2021 was well-above the regulatory minimum threshold. Core liquid assets to short-term liabilities was 27.5 percent compared with 29.2 percent a year ago. Net interest income grew by 19.4 percent, higher than the 16.5 percent growth a year ago.

Net fees and commissions also grew stronger by 19.6 percent, compared with 10.3 percent growth recorded during same period last year, reflecting a gradual recovery in trade finance-related and other ancillary businesses of banks. Operating income accordingly rose by 15.7 percent marginally higher than the growth rate of 15.0 percent, a year earlier.

Implementation of cost control measures by banks resulted in lower operating costs which increased by 7.3 percent, lower than the 12.9 percent growth in the same period of 2020. Growth in loan loss provisions slowed to 8.4 percent, compared with the 29.3 percent growth a year ago. Profit before tax accordingly increased by 32.1 percent to GH¢3.6 billion, higher than the growth of 14.0 percent a year ago.

However, gross advances recorded sluggish annual growth of 5.7 percent, relative to 15.7 percent growth in the same period of 2020. Similarly, private sector credit growth has remained sluggish over the past year, broadly reflecting the heightened credit risks associated with the Covid-19 pandemic.

Annual nominal growth in private sector credit slowed to 6.8 percent in June 2021 compared with 14.2 percent in the corresponding period of 2020. In real terms, private sector credit contracted marginally by 1.0 percent compared to 2.8 percent growth a year earlier.

By Laudbusiness.com|Ghana

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