Non-Performing Loans (NPLs) of banks in the country reached 15.3 per cent of as at the end of February 2021.
This represents a year-on-year increase of 1.5 percentage points when compared to the same period last year per the data contained in the Central Bank’s Summary of Economic and Financial Data report for March 2021.
NPLs recorded at end-February 2021, saw a marginal increment of 0.6 per cent from that recorded at end-January 2021 which was 14.7 per cent.
The loss category of NPLs for end-February 2021 stood at 8.7 per cent.
Loan quality of banks in the country for 2020 fell marginally by 0.5 per cent as NPLs of banks slightly increased from 14.3 per cent end-2019 to 14.8 per cent end-2020.
According to the Bank of Ghana’s (BoG) January 2021 Summary of Economic and Financial Data report, the loss category of banks’ NPLs stood at 7.3 per cent in 2019 and 8.3 per cent in 2020 representing a marginal increase of 1 per cent for the period under review.
The continuous worsening of the loan quality of banks in the country for 2020 and the first two months of 2021 is attributable to the deferment of repayment of loans by businesses with regards to the moratoria given on loans following the outbreak of the Covid-19 pandemic in the country.
Hence, the true asset quality of banks in the country will be determined when businesses begin repayment of loans. NPLs due to the adverse impact of the pandemic on businesses is expected to be on the high side as most businesses will struggle to pay back loans taken.
Earnings and profitability of banks for the first two months of 2021 decreased marginally. Returns on assets and equities fell from 4.9 per cent to 4.4 per cent and 25.6 per cent to 22.1 per cent at end-February 2020 and end-February 2021 respectively.
Banks’ total deposits however, increased from Ghs 83.1 billion to Ghs 104.0 billion for the period under review – a 10.5 percentage points increment.
Banks’ total assets for the period between end-February 2020 and end-February 2021 also increased from Ghs 128.3 billion to Ghs 152.0 billion recording an increment of Ghs 23.7 billion.