The latest Bank of Ghana (BoG) Financial Stability Report (FSR) has disclosed that “Government’s efforts to wean state owned enterprises (SOEs) off its balance sheet as well as the on-going fiscal consolidation is likely to minimize Government’s indebtedness to banks” in the country.
The report which was released by the BoG on 8th November 2016 (today) added: “The outlook for the industry is positive with the restructured VRA debt and commencement of payments”.
“Restructuring arrangements have been initiated for debts owed by Bulk Oil Distribution Companies (BDCs) to the banks”, the report noted.
“All these arrangements are expected to reduce the size of banks’ impaired loans, improve the industry’s solvency as well as liquidity, and in turn boost performance of the banking industry.
These efforts, together with improved loan recovery efforts and November 08, 2016 Bank of Ghana PRESS STATEMENT 2 improvement in the macro economy, will boost credit delivery to facilitate economic growth”, the report stressed.
The report drew a conclusion that the overall performance of the banking sector as at July 2016 remained strong, despite marginal declines in some financial soundness indicators.
The FSR published after the Monetary Policy Committee (MPC) meetings, highlights key developments in the banking sector which were deliberated on during the policy making process.
The aim of the report is to provide the public with information on performance of the banking sector, which served as inputs for the MPC meetings.
The latest report, dated September 2016, noted that “Annual growth in total assets of the industry picked up in July 2016, compared to the previous year, and was largely accounted for by the significant increase in banks’ investments in bills and securities, as well as the sharp increase in foreign assets”.
“The resultant increase in total assets from the rise in investments and foreign assets was moderated by the decline in the growth of banks’ advances to its customers due to the rise in their non-performing loans”, the report stated.
Broadly, the report covers developments in the Ghanaian banking sector for the first seven months of 2016, compared to the same period last year. Bank of Ghana aims to promote accountability of its decision making and build understanding of the monetary policy formulation process among stakeholders through the publication of these documents.
African Eye Report
