The Bank of Ghana (BoG) has said it is initiating measures for the full implementation of the regulatory guidelines aimed at reducing Non-Performing Loans (NPLs) in the banking industry. According to BoG, despite improvement in asset quality, the NPL ratio remained a key risk to the banking sector.
The Non-Performing Loan (NPL) ratio declined to 18.7 per cent in February 2026 from 22.6 per cent a year earlier, driven by a pickup in bank credit and a contraction in the NPL stock.
The Governor of the BoG, Dr Johnson Pandit Asiama, who disclosed this at a news conference last Thursday after the 129th regular meeting of the Monetary Policy Committee (MPC), said although NPLs were declining, the levels remained elevated and required sustained policy attention.
At the meeting, the MPC reduced the monetary policy rate by 150 basis points to 14.0 per cent from 15.5 per cent, a move expected to support credit growth and ease borrowing costs.
Though the Governor did not provide details of the new NPL measures, he emphasised that they were targeted at strengthening credit risk management practices and improving loan recovery efforts across the banking sector.
Dr Asiama noted that in spite of the high NPL ratio, the banking sector’s performance improved significantly in February 2026. Total assets expanded, supported by growth in domestic deposits, borrowings, and shareholders’ funds.
He explained that the asset growth was largely driven by investments, which surged by 57.5 per cent compared to 8.6 per cent recorded in February 2025.
“The financial soundness indicators, profitability, liquidity, solvency, asset quality, and efficiency, all improved over the period,” he stated.
The Governor further indicated that the sector remained solvent and liquid, with a positive outlook supported by declining interest rates and a gradual recovery in private sector credit.
He said the recent reduction in the policy rate was expected to translate into lower lending rates, thereby enhancing access to credit for businesses and households. Some borrowers, he noted, were already accessing loans at rates as low as 11.7 per cent.
“We are working actively with banks to scale up financial intermediation and ensure that credit flows to the private sector to support economic growth,” he added.
On inflation, Dr Asiama cautioned that external risks, particularly developments in the Middle East, could pose challenges. He explained that any sustained increase in global crude oil prices would impact Ghana’s import bill and exert pressure on domestic inflation.
“As a net importer of petroleum products, rising oil prices could have direct implications for inflation and the foreign exchange market,” he said.
However, he assured that the country had built sufficient foreign reserves, currently estimated at about 5.9 months of import cover, to cushion against short-term shocks.
He added that the central bank was closely monitoring global developments and stood ready to adjust policy if necessary.
Dr Asiama also highlighted ongoing collaboration between the Bank of Ghana and fiscal authorities to mitigate potential external shocks, particularly in the event of persistent increases in oil prices.
He stressed that efforts to build reserves remained on track, supported by measures to boost non-traditional exports and strengthen external resilience.
BY KINGSLEY ASARE
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