By Elorm Desewu
Banks’ year on year profitability growth have declined recording 22.1 percent or GHC7.4 billion compare with 27.2 percent in 2020.
Notwithstanding the decline in the profit growth, the industry remained solvent with the average industry Capital Adequacy Ratio (CAR) of 19.6 percent which is well above the 11.5 percent regulatory minimum threshold.
Core liquid assets to short-term liabilities was 25.9 percent in December 2021 compared with 27.8 percent a year ago. Net interest income grew by 14.5 percent to GH¢12.8 billion, lower than the growth of 20.9 percent a year ago partly due to decline in interest rates.
Net fees and commissions however recorded a 24.8 percent growth to GH¢2.9 billion, compared with 5.0 percent last year, reflecting continued recovery in trade finance-related and other businesses of banks.
This resulted in a 14.6 percent growth in total operating income to GH¢17.4 billion, compared with 17.9 percent growth last year. Operating costs increased by 14.2 percent, higher than the 8.2 percent growth for same period in 2020.
Loan loss provisions however contracted by 4.7 percent as at end-December 2021 from the 28.0 percent growth recorded a year ago, following the reversal of over-provisioning at the height of the pandemic in 2020.
The performance of the banking sector in 2021 pointed to sustained growth in assets, deposits, and investments alongside improvements in the financial soundness indicators. In the year, total assets grew by 20.4 percent to GH¢179.8 billion as at December 2021. Asset quality however continued to reflect the general pandemic-induced repayment challenges as well as some bank-specific loan recovery challenges. From the peak of 17.3 percent in August 2021, the Non Performing Loans (NPL) ratio eased further to 15.2 percent at end-December 2021. Comparatively, the NPL ratio was 14.8 percent in December 2020.