Banks’ asset quality risks have elevated this year – BoG


The Bank of Ghana (BoG) has said banks’ asset quality risks have elevated this year compared to last year due to repayment challenges associated with the COVID-19 pandemic as well as some bank specific loan recovery challenges.

The NPL ratio increased from 15.5 percent in August 2020 to 17.3 percent in August 2021.

This was attributed to the combined effect of an increase in the stock of NPLs by 21.0 percent to GH¢8.4 billion, as well as a modest growth in the stock of gross loans by 8.7 percent over the period.

The adjusted NPL ratio (excluding the fully provisioned loan loss category) however, remained unchanged at 6.6 percent over the review period, an indication that the increase in the NPL ratio was due to a build-up of loss category loans.

The rise in the NPL ratio was mainly driven by the increase in the private sector NPL ratio from 16.6 percent to 18.6 percent, while the public sector NPL ratio marginally declined from 5.9 percent to 5.1 percent.

The increase in the industry NPL ratio reflected mainly in the construction and the transport, storage and communication sectors, which recorded higher NPL ratios in August 2021 compared with last year.

The NPL ratio of the construction and the transport, storage and communication sectors
increased by 13.6 percentage points and 7.6 percentage points to 35.0 percent and 11.9 percent respectively during the review period.

Additionally, the mining and quarrying and the commerce and finance sectors recorded increases in their respective NPL ratios by 4.6 percentage points and 2.3 percentage points to 14.0 percent and 26.4 percent over the same comparative period.

All other economic sectors recorded declines in the NPL ratios during the review period with the greatest improvement in the quality of the loan portfolio attributed to the agriculture, forestry and fishing sector.


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