Ghana’s Banking Sector Strengthens Stability Amid Ongoing Challenges, Central Bank Reports

Ghana’s banking sector has demonstrated resilience with improving financial stability, driven by macroeconomic gains and robust liquidity, though challenges persist for some institutions, Bank of Ghana Governor Dr. Johnson Asiama announced Wednesday.

Speaking at a meeting with bank CEOs, Asiama highlighted a 34.05% year-on-year asset growth by February 2025, fueled largely by a 27.89% rise in deposits, signaling renewed confidence in the financial system.

The sector’s Capital Adequacy Ratio (CAR) stood at 14.35%, above the 10% regulatory minimum, reflecting strengthened solvency and asset quality. However, Asiama noted lingering concerns for a subset of domestically controlled and state-owned banks, where recapitalization plans remain unclear. “Addressing these capital shortfalls is a priority,” he said, emphasizing intensified supervisory efforts to ensure credible strategies and mitigate systemic risks.

While private sector credit shows signs of recovery, credit risk remains elevated. Nonperforming loans (NPLs) reached 22.57% by February 2025, though adjusted to 8.93% when excluding fully provisioned losses. Asiama attributed the rise to legacy exposures and weaknesses in credit risk management, urging banks to enhance underwriting standards, early warning systems, and provisioning practices.

The governor linked recent stability to structural reforms, including post-Domestic Debt Exchange Program (DDEP) macroeconomic improvements and banking sector recapitalization. He reaffirmed the central bank’s commitment to collaborating with institutions to restore depositor confidence and ensure regulatory compliance.

Ghana’s banking recovery unfolds against a backdrop of broader economic recalibration, with the sector’s growth outpacing many regional peers. Yet, the persistence of high NPLs and uneven solvency underscores the delicate balance between progress and vulnerability. Analysts suggest that sustained reforms, coupled with disciplined risk management, will be critical to consolidating gains and shielding the economy from external shocks.

Asiama’s remarks reflect cautious optimism, acknowledging achievements while underscoring the need for vigilance in a sector pivotal to Ghana’s economic ambitions. The path forward hinges on resolving capital deficits in struggling banks and reinforcing frameworks to navigate an evolving financial landscape.