Business News of Friday, 4 August 2017
Finance Minister Ken Ofori Atta has described as worrying the high non-performing loans recorded in the banking sector.
Although the sector recorded strong performance in asset growth of 27.3% in May 2017 as against the 17.7% recorded in May 2016, it continues to face the threat of high non-performing loans.
“As at April 2017, the banking sector comprised 33 universal banks of combined network of 1,377 branches across the country. Despite the strong performance of the banking sector for the first four months of the year, as evidenced by the improved performance in asset growth, the sector is still threatened by the high non-performing loans”, Mr. Ofori Atta announced.
The latest Banking Sector Stability Report by the Bank of Ghana released in July also showed that Non-Performing Loans of banks as at May this year stood at about 22% as against the about 20% it recorded the same month in 2016.
According to the report, the private sector accounted for as much as 97.5 percent of banks’ Non-Performing Loans.
The Association of Oil Marketing Companies (AOMCs) is certain Non-Performing Loans (NPLs) of commercial banks is likely to worsen if government fails to stop the illegal trade in the petroleum downstream sector.
They believe the development has made it difficult for their members to repay debts due to the low sales thereby affecting the economy as a whole.
Although Mr. Ofori Atta admits the disturbing nature of the rising NPL’s, he remains confident the NPL ratio will improve significantly soon.
“The non-performing ratio will improve significantly and with increased liquidity, our banks will be in a better position to deliver cheaper credit to the private sector” he added.
He further assured that “We are however confident of the planned issuance of the energy sector bonds in the coming months.”
Banks are however very optimistic of a significant improvement in their non-performing loan portfolios as government initiates moves to clear all outstanding debts owed them.