Before 2009, the five largest banks controlled more than half of the industry’s assets, accounting for 56% in 2007 and 52% in 2008; but their combined share of the market has tumbled to below half – due to above average expansion in the lower ranks, and a new entrants have come in.
Ghana Commercial Bank (GCB) remains the biggest bank and now owns 12.1% of the industry’s assets. Standard Chartered Bank follows with 9.6% of total assets, after toppling Barclays, whose share fell much more – from 10.8% to 9.4%. Ecobank Ghana and Agricultural Development Bank (ADB) are the fourth – and fifth – largest banks with respective shares of 8.7% and 5.9%.
Among the biggest five, Stanchart recorded the highest return per unit of asset in 2010 with return-on-average assets topping 4.3%. GCB’s return-on-average assets are the lowest in the group-rising from 1% to 2.8% last year.
The top-five’s share of industry deposits also dipped to 45.8% from 48.7% in 2009. Customer deposits held in the banking system grew by 32% from GH¢8.97 billion to GH¢11.82 billion, according to official data from the Central Bank. Foreign currency deposits were about one-quarter of total deposits in 2010.
Nearly GH¢8 billion was advanced in loans to customers by banks last year. Of this amount, 37% was granted by the top-five-a decline from 44% of total loans and advances in 2009. The total gross loans reported on the balance sheets of the five biggest banks was GH¢2.98 billion, down from GH¢3.02 billion in 2009.
The drop in market share notwithstanding, there has been a steady and consistent increase in the size of each bank’s balance sheet over the years, together with improved deposit mobilisation and financial intermediation.
Other measures of competition – the Herfindahl Index and Gini Concentration Index – have improved as well, the Central Bank showed in an industry report. The two indices,
Which fell with increasing competition, shed points again after a decade of consistent decline.
Also, an official release from the Bank of Ghana on Treasury developments said an auction last week of three-year fixed-rate bonds for the government was oversubscribed by 163%.
The Central Bank, which issued the bond on behalf of the government, said it sold the total amount of GH¢320 million on offer, but received tenders worth GH¢840.79 million from bidders.
The bonds were sold at a uniform allocation rate of 12.39%, which is the maximum coupon rate payable on all bids. Both resident and foreign investors bought this tranche of securities.
Central Bank figures show foreign investors’ holdings of outstanding government securities increased to 20% of the total by the end of January 2011, double the proportion that they held 12 months earlier. About 55% of securities were held in the banking system, including 2% held by the regulator.
Government debt in developing economies, such as Ghana, appeal strongly to global investors because of the relatively higher yields and growing confidence in these increasingly stable economies.
A second attraction is the relative stability of the local currency as foreign investors, upon redemption, look to buy back the dollars that they exchanged to purchase these bonds.
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Big Banks Lose Market Share