The 8th Ghana Economic Update designed by the World Bank has revealed that more than half of the 23 banks operating in Ghana are well-positioned to avoid the need for recapitalisation.
The bank’s report stated that within a year, most banks successfully achieved over two-thirds of the required recapitalisation target.
The recapitalisation was originally set to be completed in three years, but the banks achieved it in a year.
The report explained that the banking sector is now stronger and better capitalised than during the DDEP, with increased profitability, though some emerging risks remain.
It further noted that the banks have seen significant improvements in profitability, with return-on-equity after-tax surging to 34.2% in December 2023, up from -34.4% in December 2022. Similarly, return-on-assets climbed to 5.4% from -3.8% over the same period.
The Capital Adequacy Ratio (CAR) remained relatively high at 13.9% in December 2023, comfortably exceeding the revised prudential minimum of 10.0%, as losses from the domestic debt restructuring were not fully accounted for due to regulatory relief.
However, the industry’s non-performing loan (NPL) ratio increased to 20.7% in December 2023, up from 16.0% in December 2022, and further rose to 25.7% by April 2024.
The figures were attributed to heightened credit risk, driven by the delayed effects of the 2022 macroeconomic crisis.
By: Rainbowradioonline.com/Ghana
