By Elorm Desewu
The banking sector has remained sound and profitable, with adequate levels of capital and liquidity to withstand moderate to severe shocks.
The industry has witnessed sustained growth in deposits, total assets, profits, and shareholder funds.
The COVID–19 policy and regulatory response measures have somewhat helped to mute the effect of the pandemic on corporates and households and are being maintained in the near-term.
Profit before tax increased by 39.6 percent to GH¢2.3 billion, recovering from the marginal growth of 7.5 percent a year ago. Non-Performing Loans (NPL) ratio increased marginally from 15.0 percent in April 2020 to 15.5 percent in April 2021 arising partly from the general pandemic-induced repayment challenges as well as some bank specific loan recovery challenges.
The total assets increased by 16.4 percent to GH¢155.7 billion. This reflected strong growth in investments in government securities by 34.9 percent to GH¢73.3 billion funded by deposits and loan repayments.
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.
Overall, the impact of the pandemic on the industry’s performance was moderate, as banks remained liquid, profitable and well-capitalized.
Financial soundness indicators 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.
Core liquid assets to short-term liabilities was 24.9 percent in April 2021, relative to 30.1 percent in April 2020. Net interest income 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.
The banking sector deployed effective cost control measures which resulted in a marginal 1.7 percent growth in operating costs over the review period, significantly lower than the 17.8 percent growth for the same period in 2020. Loan loss provisions however increased by 29.4 percent, compared with 7.1 percent a year ago, on account of continued elevated credit risks.
