The average lending rate or cost of loans offered by the various banks in the country has declined by 1.5 percentage points from 22.4 percent in April 2020 to 20.9 percent in April 2021.
According to the Central Bank, the fall in the average lending rate was triggered by a marginal decline in interbank lending rate from 14 percent to 13.6 percent.
With a reduction in the monetary policy rate by 100 basis points to 13.5 percent, average lending rates is expected to further decline in the near-term, thereby making cost of loans to businesses and individuals less expensive.
Generally, the banking sector, according to the Central Bank, maintained its resilient performance through to end-April 2021, with strong growth in total assets, deposits and investments.
Total assets increased by 16.4 percent to GH¢155.7 billion reflecting strong growth in investments in government securities by 34.9 percent to GH¢73.3 billion, mainly funded by deposits and loan repayments.
Also, total deposits recorded an annual growth of 24.2 percent to GH¢104.9 billion on the back of the strong liquidity flows from the fiscal stimulus and payments to contractors, and to depositors and clients of defunct SDIs and SEC-licensed fund managers respectively.
Financial soundness indicators the BoG further notes, remained strong, underpinned by improved solvency, liquidity and profitability indicators. The industry’s Capital Adequacy Ratio of 21.8 percent as at end-April 2021 was well above the regulatory minimum threshold of 11.5 percent.
Bank’s net interest income for the period under review also grew by 18.4 percent to GH¢4.1 billion, compared with the 18.8 percent growth over the same comparative period. Net fees and commissions grew stronger by 26.5 percent to GH¢917.6 million, relative to 8.8 percent growth during same period last year, reflecting a gradual recovery in trade finance-related and other ancillary businesses of banks.
Accordingly, operating income rose by 16.8 percent, marginally higher than the corresponding growth rate of 15.2 percent a year ago.
“Overall, the impact of the pandemic on the industry’s performance was moderate, as banks remained liquid, profitable and well-capitalized,” noted the Governor.