Banking industry experiences steady growth — Dr Henry Wampah
Trends in total assets and branch expansion across the banking industry in the country have demonstrated that the industry continues to experience a steady growth in both nominal and real terms.
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Total assets increased by 39.7 per cent to GH¢44.2 billion in July, 2014, out of which advances constituted 45.8 per cent.
Credit to the private sector grew by 46.2 per cent in July, 2014 in nominal terms, compared to 28.1 per cent in the same period last year.
Real credit growth which was funded mainly by increased mobilisation of deposits by the banking system stood at 26.8 per cent compared to 14.6 per cent a year ago.
The Governor of the Bank of Ghana (BoG), Dr Henry Kofi Wampah, told journalists at a regular briefing of the Monetary Policy Committee (MPC) in Accra that non-performing loans (NPLs) ratio adjusted for fully provisioned loans increased marginally from 5.3 per cent in July, 2013 to 5.4 per cent in July, 2014.
However, he noted that the unadjusted NPLs ratio declined from 12.9 per cent to 12.3 per cent in the same comparative period.
Dr Wampah announced that the capital adequacy ratio for the banking industry declined to 16.2 per cent compared to 18.6 per cent in the corresponding period last year but remained well above the regulatory threshold of 10 per cent.
The governor announced that the deficit of GH¢6.1 billion was financed mainly from domestic sources, resulting in a Net Domestic Financing (NDF) of GH¢4.8 billion, higher than the budget target of GH¢4.2 billion.
He said the stock of public sector debt as of the end of June, 2014 was 55.4 per cent of Gross Domestic Product (GDP), marginally lower than the 55.5 per cent observed at the end of December, 2013.
Interest Rates
Between December, 2013 and August, 2014, the governor said interest rates generally trended up on the money market, with the rate on the 91-day instrument increasing to 25 per cent from 19.2 per cent, while the 182-day instrument increased to 26.4 per cent from 18.7 per cent.
For the one-year note, the rate rose to 22.5 per cent from 17 per cent, while the two-year rate moved up to 23 per cent from 16.8 per cent.
The three-year bond rate moved upward to 25.5 per cent from 19.2 per cent, with the weighted average interbank rate increasing to 24.2 per cent from 16.3 per cent in December 2013.
The governor also disclosed that the average lending rates of the banks increased to 27.8 per cent from 25.6 per cent in December, 2013, with the average rate on three-month term deposits increasing marginally to 13 per cent from 12.5 per cent.
International Scene
On the international scene, the governor said global economic growth was now forecast at 3.4 per cent in 2014, down from the April forecast of 3.7 per cent.
He said global inflation was expected to stay subdued in 2014-2015 with continued sizeable negative output gaps in advanced economies, weaker domestic demand in many emerging market economies and falling commodity prices.
Dr Wampah noted that while the outklook for inflation in the US remained stable amid an expected growth rebound, falling inflation in the Euro area suggested increasing deflation risks in the outlook.
The governor, however, noted that: “In emerging markets and developing economies, inflation is expected to decline from about six per cent currently to around five per cent by 2015”.
