With the onset of payments of the restructured Tema Oil Refinery (TOR) and Volta River Authority (VRA) debts, the ratio of Nonperforming loans (NPL) within Ghana’s banking sector in the last quarter of 2016 has improved from 19.0 percent at the end September 2016 to 17.3 per cent at the end December 2016.
The latest Monetary Policy Summary of the Bank of Ghana (BoG) has disclosed. The asset quality started improving in the last quarter of 2016 after restructuring, reclassification and commencement of actual payments of the energy-related State Owned Enterprises (SOEs) debts owed banks, it added.
In September last year, the previous government announced that it had reached an agreement with some local banks to restructure legacy debts of the SOEs) in the energy sector.
The agreement cover a restructuring of the Volta River Authority’s debt as well as those of the Tema Oil Refinery (TOR) and Bulk Oil Distributing Companies.
The initiative targeted about half of GH₵2.2 billion of the total energy sector debt of GH₵4.4 billion being paid over a period of three to five years.
The initiative was the first major collaboration between the Ministry of Finance, the BoG and major banks in the country and the first time dealing with the banks as an association.
The payments were funded by collections from the energy sector levies: Energy Debt Recovery Levy, Public Lighting levy, Price Stabilisation and Recovery Levy and the National Electrification Scheme Levy; backed by the Energy Sector Levies Act.
The key arrangers in the VRA agreement were Ecobank Ghana Limited, Stanbic Bank Ghana limited and Standard Chartered Bank Limited.
Meanwhile, the BoG’s summary noted: “Growth in banks’ loans and advances remained modest through 2016 despite a slight pick-up in the last quarter on the back of easing stance in bank credit to both enterprises and households”.
The banking industry CAR also picked up slightly from 17.0 per cent as at end-September 2016 to 17.8 per cent as at the end of the year, the summary was circulated by the Communications Depart of the BoG stated.
“The key profitability indicators, namely, return-on-equity (ROE) and return-on-assets (ROA) however, fell from 20.8 per cent and 4.5 per cent as at September 2016 to 18.0 per cent and 3.8 per cent respectively for the period ending December 2016.
Liquidity eased with both core and broad liquidity indicators, pointing towards marginal improvement in liquidity as at end-December 2016 compared with the end-September 2016 position”.
Instructively, the Bank of Ghana’s aim of issuing these monetary policy publications is to provide the public with background materials which served as inputs for the policy decision making process and economic assessments at each MPC session.
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