A Professor at the University of Ghana Business School, Goddfred Bokpin, has asked the public not to be concerned about the losses suffered by several Ghanaian banks in 2022.
He explained that the banks have indicated the measures that have been put in place to prevent the losses from recurring.
Major banks in Ghana posted losses in 2022. The county’s move to restructure its local currency and overseas debt resulted in the first loss on record for two of the West African nation’s top banks.
GCB Bank Plc, the country’s largest lender by assets, posted a 593.4 million cedis ($50.5 million) net loss for the year to end-December, its first since 1993 when Bloomberg started maintaining data.
Standard Chartered Bank Ghana Ltd., the biggest by market value, reported a loss of 297.8 million cedis.
Banks operating in West Africa’s second-largest economy have taken a hit of about $1.4 billion, according to Bloomberg, as Ghana restructures most of its public debt, estimated at 576 billion cedis.
The impairments prompted Guaranty Trust Holding Co., Nigeria’s largest bank by market value, to vow to slow lending and bond trading in Ghana.
GCB Bank took a charge of 1.83 billion cedis after impairing its debt securities, while for Standard Chartered Bank Ghana the amount was 173 million cedis.
Ghana’s lenders were allowed a month’s extension to release full-year earnings.
Speaking to the media on Monday, May 8, Prof Bokpin said “To a large extent, people will be concerned but I want to believe that the worst moment is over.
“If you look at the first quarter results for some of them, even though some of us have a little bit of an issue with the treatment of Treasury Bills in terms of the payment as compared to the medium term because it is the same borrower, but with the foreign banks, they have a very strong balance sheet from the group bank. In the case of Stanbic and the others, you will see the assurance of the group that they are going to recapitalise their banks, so there is no cause for fear, there should be no reason why we should have a run on those banks.
“But when it comes to the domestic banks, if you look at those that have been impacted heavily, GCB and the rest of them, actually that is also on the strength of the government balance sheet, you will see that some of them have capital adequacy ratio that is very low even though Bank of Ghana decided to remove the 3 percent capital conservation buffer in order to accommodate the effect of the DDEP.
“I believe that in consultation with the central bank, there will be a grace period they can adequately recapitalize. I am sure that almost all the banks will be going through the capital planning process to ensure that all their banks are adequately capitalized.
“But I think if you are looking at the effect in the immediate that is where the issue is whether banks are robust enough to be able to support growth and employment generation, that is where the issue is because some have expressly indicated that they will cut back on their lending.”