Governor Asiama blames banks’ non performing loans largely on DDEP

The Domestic Debt Exchange Programme (GGEP) introduced by the previous administration played a major role in the Banks’ non-performing loan (NPL) problems, the Governor of the Bank of Ghana (BoG) Dr Johnson Asiama, has said.

Dr Asiama, however, said the NPLs problem is something that the central bank is wrong on aggressively.

Answering questions during the 123rd Monetary Policy Committee (MPC) press conference in Accra on Friday, March 28, he said, “The issues about NPLs across banks is a problem. But remember, the domestic debt exchange also impacted or contributed to the NPL problem.

“However, aside that, if you look at the local banks, they have a disproportionate impact on their NPL problem so going forward, particularly in the case of local banks, we will have to find ways to strengthen risk management in local banks.

“It is something that we have plans to do aggressively. Whether we like it or not, local banks will continue to be with us, there is a role for them. what we need to do is to put in the framework so that we can reduce these challenges for them so they can continue to thrive. ”

During his main press conference address, Dr Asiama said that private sector credit is beginning to show signs of recovery. In February 2025, private sector credit recorded 26.9 percent annual growth, compared with 5.1 percent in February 2024. In real terms, credit growth was 3.1 percent, compared with a decline of 14.7 percent in February 2024.

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The banking sector performance continued to improve, he said.

Total bank assets recorded 34.0 percent growth at the end of February 2025 relative to 12.1 percent
growth in the same period last year.

With regulatory reliefs, the banking industry’s Capital Adequacy Ratio (CAR) was higher at 14.4 percent compared to 13.6 percent in the same period last year. Without reliefs, CAR was 12.1 percent.

“The industry’s Non-Performing Loan (NPL) ratio declined to 22.6 percent in February 2025 from 24.6 percent in February 2024. Excluding the loans in the loss category, which are fully provisioned, the NPL ratio as at end-February 2025 was 8.9 percent.

“Overall, the Financial Soundness Indicators showed broad improvements in asset growth, solvency, liquidity, efficiency, and profitability,” Dr Asiama said.

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