Dr. Asiama hints at BoG’s tough but necessary measures to address banks’ high NPL ratio

Governor of the Bank of Ghana Dr Johnson Asiama has said that the central bank will soon meet with players in the banking industry on the increasing rate of non-performing loan (NPL) ratio.

He observed that the banks’ inability to recover loans is a disturbing phenomenon that must be addressed immediately.

Dr Asiama said this when he was speaking on financial sector reforms during the National Economic Dialogue 2025.

Dr. Asiamah noted that while the Financial Sector Strengthening Strategy under the fund program is ongoing, the alarming NPL figures remain a significant concern.

“There is a local bank with an NPL ratio of about 81%, meaning for every 100 Ghana cedis lent, 81 cedis are not recovered. Another local bank has an NPL ratio of 62%, while the highest among foreign banks is around 21%,” he revealed on Tuesday, March 4.

He added “Going forward, we have to find out ways to reduce the high non-performing loans ratios across banks and for me, I’m particularly interested in the local banks, especially the government-owned banks. We’ll be sitting down with them. We’ll be sitting down with the Industry Association of banks; we started those conversations already, and we believe that if we can lower the NPL ratios of banks, if we can stabilise the fiscal side of things, we should see lending rates trending down quickly,” he said.

Dr. Asiama reaffirmed the Bank of Ghana’s commitment to making tough but necessary decisions to address the problem, adding that “We are resolved to act, and we want the public to understand why certain decisions will be taken.”

During the 122nd Monetary Policy Committee (MPC) press conference held in Accra on Monday, January 27 at the  Bank Square, the newly built headquarters of Ghana’s central bank, Dr Asiama’s predecessor, Dr  Ernest Addison indicated that “The industry’s Non-Performing Loans (NPL) ratio increased to 21.8 per cent in December 2024, up from 20.6 per cent in December 2023.”

A nonperforming loan is a loan that is in default due to the fact that the borrower has not made the scheduled payments for a specified period.

Assets of the banking sector grew by 33.8 per cent in 2024. Capital Adequacy Ratio (CAR) with reliefs grew marginally to 14 per cent in December 2024 from 13.9 per cent in December 2023.

“The resilience of the banking sector in 2024 was supported by improved domestic macroeconomic conditions,” he stressed.

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