The Governor of the Bank of Ghana (BoG), Ernest Addison, has said the performance of commercial banks in the first half of the year looks promising, despite the impact of the government’s domestic debt exchange programme (DDEP).
Data from the central bank shows that in the first four months of 2023, the sector witnessed positive growth with its return-on-assets increasing from 4.7% to 5.5%.
Already, it has emerged that a comprehensive strategy to revive the nation’s financial sector is being readied for the end of June as part of the US$3 billion facility being provided by the International Monetary Fund (IMF).
Under the proposed reforms – which aim to strengthen the sector, restore market confidence and promote lending to the private sector – commercial banks, special deposit-taking institutions and other regulated entities must submit plans for recapitalisation.
Delivering a speech on behalf of the governor at the official launch of the GCB Bank’s 70th anniversary launch in Accra, the First Deputy Governor of the BoG, Maxwell Opoku-Afari, said banks whose capital adequacy ratio (CAR) dropped below the 10% minimum due to the DDEP have been advised to provide recapitalisation plans for review.
“It is evident that the Ghanaian economy is currently undergoing some adjustments, which calls for innovation and creativity in business conduct, especially in the banking sector.
“The Domestic Debt Exchange Programme (DDEP) affected profitability and solvency of banks in 2022, but performance of banks during the first half of 2023 looks promising,” he said.
“The Bank of Ghana has also granted some temporary regulatory reliefs to dampen the impact of the debt restructuring and these, together with the expected operationalisation of the Ghana Financial Stability Fund, should provide adequate support to the banking sector. Furthermore, banks whose CAR levels have dropped below the 10% minimum due to the DDEP have been advised to provide recapitalisation plans for review,” Addison said.
Reporting by Fred Dzakpata in Accra
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