Bank of Ghana (BoG) Governor, Dr. Ernest Addison, has highlighted that the groundwork for a robust and future-ready banking industry in Ghana has been firmly laid.
Speaking at the 28th Annual National Banking and Ethics Conference organized by the Chartered Institute of Bankers (CIB) Ghana, he emphasized the resilience of the country’s financial sector.
To strengthen the financial ecosystem further, comprehensive measures have been introduced to shield banks and the broader financial sector from both historical challenges and emerging risks, as global and domestic financial landscapes continue to shift.
Dr. Addison stressed the importance of ongoing vigilance from all stakeholders to sustain the progress achieved.
The banking sector is showing signs of strong recovery, with assets increasing by 38.7% as of August 2024, compared to 19.6% during the same period last year, based on recent official data.
Pre-tax and after-tax profits for the first eight months of 2024 also exceeded those recorded in the same period in 2023.
In terms of solvency, the Capital Adequacy Ratio (CAR) of the banking industry rose to 10.3% in August 2024, up from 7.5% in August 2023. When relief measures are factored in, CAR was recorded at 13.8%, slightly lower than the 14.2% seen in August 2023. Moreover, liquidity and efficiency ratios have improved in the first eight months of 2024.
“The Bank has prioritised climate and sustainability-related issues, including time and resources, to promote sustainable banking principles among regulated financial institutions.”
President of CIB Ghana, Benjamin Amenumey, raised concerns about critical issues such as credit risk, financial fraud, and macroeconomic challenges, citing the lingering effects of the Domestic Debt Exchange Programme (DDEP) as a key factor.
He pointed out that the increasing number of non-performing loans (NPLs) is a serious issue, stating: “Ongoing economic difficulties have put pressure on businesses and households, affecting their ability to repay loans.”
The NPL ratio rose to 24.3% in August 2024, compared to 20% in August 2023, with defaults—particularly among major borrowers—on the rise. This underscores that heightened credit risk remains the most pressing challenge for the sector’s future.
Instances of financial fraud have also surged, with cases increasing by 5%. Alarmingly, there was a 46% rise in fraud involving bank staff, according to the latest Bank of Ghana (BoG) fraud report.
In response, the CIB Ghana president emphasized the need for improved internal controls, ethical education, and stronger corporate governance as key strategies to address these challenges.
Cybersecurity threats and the rapid digital transformation of banking services have created new vulnerabilities, necessitating significant investments to mitigate risks.
Both the Bank of Ghana and the Ghana Association of Bankers (GAB) underscored that ethical practices are crucial for ensuring the sector’s resilience.