By Kofi Ahovi
The total assets of the banking industry grew from GH¢14 billion at the end of December 2009 to GH¢15.1 billion by the end of July 2010. This represents a growth in the total asset base by 7.8%.
Despite the growth, the current level of Non Performing Loans (NPL) is impacting on the balance sheet of the banks. NPL, a measure of commercial banks loan portfolio quality and defined as the ratio of loan losses to gross advances showed a marginal improvement during the first seven months of the year. The NPL’s which stood at 16.2% in December 2009, peaked at 20% in February and has since improved to a position of 18.2% in July 2010.
1.
The banking sector continued to be well capitalised, profitable and liquid during the first eight months of this year. The banking industry’s capital adequacy ratio (CAR), which is a measure of the industry’s ability to withstand unexpected loses, increased from 14.9% in December 2009 to 19.1% in July 2010.
2.
The latest credit conditions survey by the Bank of Ghana show a general net easing of credit conditions for enterprises, with a shift from small and medium scale enterprises (SMEs) to large enterprises. The survey also shows that banks increased credit to households. However credit for mortgages tightened in August 2010. Reductions in margins on average loans and maximum size of loan/credit lines were the main contributing factors for the easing of the credit stance for large enterprises and for consumer credits.
3.
Real annual Deposit Money Banks (DMBs) credit to the private sector declined by 3.8% at end of July 2010 compared with a growth of 11.6% at the end of July 2009. Between June and August, the average base rate quotations of the banks declined by 153 basis points to 27.1% while average lending rates declined by 213 basis points to 28.5% over the same period.
The average deposit rates of the commercial banks also reduced from 9.5% in June to 8.9% in August.
During the period June to August 2010 therefore, commercial banks’ spreads, defined as the difference between the average lending rates and the average deposit rate, narrowed by 1.2 percentage points.
The total assets of the banking industry grew from GH¢14 billion at the end of December 2009 to GH¢15.1 billion by the end of July 2010. This represents a growth in the total asset base by 7.8%.
Despite the growth, the current level of Non Performing Loans (NPL) is impacting on the balance sheet of the banks. NPL, a measure of commercial banks loan portfolio quality and defined as the ratio of loan losses to gross advances showed a marginal improvement during the first seven months of the year. The NPL’s which stood at 16.2% in December 2009, peaked at 20% in February and has since improved to a position of 18.2% in July 2010.
1.
The banking sector continued to be well capitalised, profitable and liquid during the first eight months of this year. The banking industry’s capital adequacy ratio (CAR), which is a measure of the industry’s ability to withstand unexpected loses, increased from 14.9% in December 2009 to 19.1% in July 2010.
2.
The latest credit conditions survey by the Bank of Ghana show a general net easing of credit conditions for enterprises, with a shift from small and medium scale enterprises (SMEs) to large enterprises. The survey also shows that banks increased credit to households. However credit for mortgages tightened in August 2010. Reductions in margins on average loans and maximum size of loan/credit lines were the main contributing factors for the easing of the credit stance for large enterprises and for consumer credits.
3.
Real annual Deposit Money Banks (DMBs) credit to the private sector declined by 3.8% at end of July 2010 compared with a growth of 11.6% at the end of July 2009. Between June and August, the average base rate quotations of the banks declined by 153 basis points to 27.1% while average lending rates declined by 213 basis points to 28.5% over the same period.
The average deposit rates of the commercial banks also reduced from 9.5% in June to 8.9% in August.
During the period June to August 2010 therefore, commercial banks’ spreads, defined as the difference between the average lending rates and the average deposit rate, narrowed by 1.2 percentage points.
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