TOTAL assets of banks operating in Ghana have risen significantly at the time that the Ghanaian economy is reported not to be doing well. From January to July this year, the country’s total banking assets increased by 39.7 percent to GH¢44.2 billion in July 2014.
This was driven mainly by advances, which accounted for 45.8 percent of the total, according to data from the Bank of Ghana (BoG).
The Governor of the BoG, Dr Henry Kofi Wampah added: “The banking industry continued to experience steady growth in both nominal and real terms, evidenced by trends in total assets as well as branch expansion across the industry”.
According to him, credit to the private sector remained strong. In nominal terms, credit to the private sector grew by 46.2 percent in July 2014, compared to 28.1 percent in the same period last year.
Real credit growth was 26.8 percent compared to 14.6 percent a year ago. The
credit growth was funded mainly by increased mobilisation of deposits by the banking
system, Dr Wampah said at the recent Monetary Policy Committee (MPC) meeting press briefing in Accra.
The growth of the banks’ assets fit in perfectly into the mantra of government officials who insist that the short term prospects of the Ghanaian economy are brighter than before.
They based their argument on the 7.4% growth of the economy as well as the flamboyant profits being made by banks operating in the country.
But renowned economist, Dr. Mahamudu Bawumia, disagreed with the assertion that because the banks are making profits, the economy is doing well.
As you can see, many small and medium enterprises (SMEs) are dying because of the current economic challenges. So, it is wrong to say that all is well with the economy, he added.
Non-performing loans (NPL) ratio adjusted for fully provisioned loans, increased
marginally from 5.3 percent in July 2013 to 5.4 percent in July 2014, the BoG said.
It however noted that the unadjusted NPL ratio declined from 12.9 percent to 12.3 percent in the same comparative period.
On the other hand, the capital adequacy ratio for the banking industry declined to 16.2 percent compared to 18.6 percent in the corresponding period last year, but remained well above the regulatory threshold of 10 percent.
Interest rates have generally trended up on the money market between December 2013 and August 2014. The rate on the 91-day instrument increased to 25 per cent from 19.2 percent.
Similarly, the bank said that on the 182-day instrument increased to 26.4 percent from 18.7 percent, while the rate on the 1-year note rose to 22.5 percent from 17 percent, and the rate on the 2-year increased to 23 percent from 16.8 percent.
During the period under review, the central bank stated: “The 3-year bond rate rose to 25.5 percent from 19.2 percent. The weighted average interbank rate increased to 24.2 percent from 16.3 percent in December 2013.
Average lending rates of the banks rose to 27.8 percent from 25.6 percent in December 2013. The average rate on 3-month term deposits increased marginally to 13 percent from 12.5 percent”.
African Eye News
