Total banking sector assets as at the end of February, 2021 increased by 18.5% year-on-year to GHC152.0 billion, the Bank of Ghana’s (BoG) Banking Sector Developments report for March 2021 has said.
This is marginally higher than the annual growth of 17.8% as at the end of February 2020.
The higher growth in total assets reflected similar stronger growth in domestic and foreign assets of 19.1% and 11.1%; compared to the respective rates of 18.7% and 8.2% a year earlier.
“Growth in banks’ investment holdings outpaced other asset classes due to the higher propensity of banks to invest more in less risky government instruments as a result of the pandemic-induced elevated credit risks and slowdown in credit demand.
“Investments shot up by 45.9% t to GHC67.9 billion, compared to the growth of 7.2% in the prior year. Accordingly, the share of investments in total assets scaled up further from 36.3% to 44.7% over the review period,” the report stated.
Weak credit demand
According to the report, gross loans and advances continued to experience a subdued growth, at 3.6%, a sharp decline from the 26% growth in the corresponding period last year.
This is attributable to weak credit demand, higher repayments and banks’ increasing appetite for less risky assets. Adjusting gross loans for provisions and interest in suspense, net loans and advances grew by 2.2% to GHC41.4 billion, down from 27.2% over the same comparative periods.
“New loans and advances for the first two months of 2021 of GHC4.7 billion also reflected the sluggish credit market condition with a 24.6% decline from the pre-pandemic level of GHC6.2 billion for the first two months of 2020,” the report added.
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