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The Bank of Ghana’s July 2024 Monetary Policy Report has disclosed that the Non-Performing Loans (NPL) ratio in the banking sector increased to 24.2% in June 2024, compared to 18.7% in June 2023.
Even when adjusted for fully provisioned loan losses, the NPL ratio climbed to 10.8% in June 2024, up from 7.8% the previous year, indicating a rise in all categories of non-performing loans.
This increase in the NPL ratio is attributed to the faster growth of non-performing loans compared to total loans during the review period.
The industry’s total NPL stock surged by 49.4%, reaching GH¢20.4 billion in June 2024, up from GH¢13.7 billion, showing a deterioration in both domestic and foreign currency-denominated loans.
The private sector, being the largest recipient of bank credit, accounted for the majority of non-performing loans.
Its share of NPLs increased slightly to 95.6% in June 2024, from 95.5% in June 2023. Meanwhile, the public sector’s share dropped marginally to 4.4% from 4.5% in the same period.
Among the sectors, agriculture, forestry, and fishing reported the highest NPL ratio at 56.4%, up from 30.0% a year prior, followed by the transportation, storage, and communication sector, with an NPL ratio of 49.1%, up from 22.1%.
The construction sector’s NPL ratio rose to 36.8% from 32.8%, while the electricity, water, and gas sector saw an increase to 20.6% from 7.8%. The commerce and finance sector remained steady at 20.2%.
Mining and quarrying recorded the lowest NPL ratio at 13.7% in June 2024, slightly higher than the 12.7% recorded in June 2023.
Source: tigpost.com
