The Bank of Ghana‘s (BoG) Banking Sector report released in March 2020, indicates a 7.2 percent growth in funds put into investments, by banking institutions from February 2019.
This figure represents the highest share in the banking sector for February this year even though it recorded a 33.3 percent growth in the same period last year. The 7.2% growth was not because the industry did not do well in the period, but rather, there was a higher level of long-term resolution bonds issued to Consolidated Bank Ghana (CBG) in February 2019 which shot the investment growth up.
Possibility of More Credit
Reduced funds in investments may also be a good sign for the private sector as it could indicate a lot more loans. Notably, there was a high growth in gross advances of 26% for February 2020 compared to 1.9% in February 2019.
Again, the report shows that investments as a share of banks’ assets grew to GH₵46.57 billion. This increase of about GH₵3.12 billion between February 2019 and 2020, according to the BoG, is about three times lower compared to the over GH₵10 billion growth recorded in the previous year. This also means that there has been a decrease in allocations to bills, securities and equities between February 2019 and February 2020.
Total assets of Banks – Banking Sector Report
According to the report, the value of assets of the banking sector stood at GH₵128.33 billion in February 2020. This represents a year-on-year growth of 17.8 percent compared to 14.5 percent recorded within the same period last year.
It further stated that strong growth in both domestic and foreign assets is the reason for the increase in total asset of the banking sector.
Similarly, gross loans and advances increased by 26 percent from GH₵36.43 to GH₵45.91 billion between February 2019 and February 2020. This, according to the report, is as a result of a restrained growth of 1.9 percent a year earlier. Furthermore, net loans and advances grew by 27.2 percent to GH₵40.47 billion.
The report again noted that the increase in net loans is occasioned by the positive impact of higher capital levels and sustained deposit growth in supporting financial intermediation. This is ensuring that persons in need of financial assistance get same from increased deposits of those with excess funds.
Non-performing loans
For this, the BoG report shows that the total Non-Performing Loans (NPLs) of banks declined further by 4.5 percent to GH₵6.33 billion in February 2020, following a decline of 14.4 percent a year earlier.
Profits of Banks
The banks also recorded an increase in profit of 38.8 percent growth in February this year compared to the 31.5 percent growth in the same period last year.
This, the report says, is due to increases in banks’ income, which outweighed the growth in operating expenses.
Attached below is a copy of the Banking Sector report, February 2020
