The banking sector maintained its resilient performance through to end-April 2021, with strong growth in total assets, deposits and investments, governor of the Bank of Ghana, Dr Ernest Addison has said.
Speaking at the press conference to announce a reduction in the policy rate, on Monday May 31, he said, total assets increased by 16.4 percent to GH¢155.7 billion.
This, according to him, 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.
Dr Addisonm further stated that 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. 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 banks specific loan recovery challenges.
On the external sector, the average prices of cocoa, gold and crude oil traded mixed in the year to April 2021. Crude oil prices rebounded strongly and increased by 30.0 percent to settle at an average price of US$65.3 per barrel compared to US$55.3 per barrel in January, supported by production restraints from OPEC+ and re-opened economies as vaccinations expanded across most advanced countries.
In contrast, gold prices declined by 5.3 percent to US$1,760.7 per fine ounce on account of stronger US dollar and rising US Treasury yields. Similarly, cocoa prices eased to US$2,419.5 per tonne in April 2021 compared to the US$2,523.9 per tonne in January. The decline in cocoa prices was attributed to increased supply in Ivory Coast.