BoG directs banks to cut Non-Performing Loans below 10% by end of 2026

The Bank of Ghana (BoG) has directed all regulated financial institutions to reduce their non-performing loan (NPL) ratios to below 10% by the end of December 2026 as part of efforts to strengthen the banking sector, improve credit quality and support economic growth.

Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, said although the banking industry has made significant progress in reducing bad loans over the past year, the current level remains high and continues to constrain banks' ability to extend credit to businesses and households.

Speaking at a forum on "Restructuring Distressed Companies: Non-Performing Loans (NPLs) and Post-Commencement Financing," Dr. Asiama disclosed that the industry's NPL ratio declined to 16.1% in June 2026 from 23.1% in June 2025.

He, however, stressed that the improvement should not be seen as the end of the challenge.

“The industry's non-performing loan ratio has declined to 16.1% as of the end of June this year, down from over 23% a year ago, while the capital adequacy ratio stood at 20.4%. Capital at that level gives banks the room to take considered risks. But while this represents progress, it is not sufficient.

“Our regulatory measures require every regulated institution to reduce its NPL ratio to no more than 10% by the end of December this year, supported by stronger credit appraisal, credible NPL reduction plans, effective recovery functions, and the write-off of fully provisioned exposures with no realistic prospect of recovery,” he said.

Dr. Asiama explained that high levels of non-performing loans have broader implications for the economy because they lock up bank capital, increase recovery costs and limit the availability of credit, particularly for small and medium-sized enterprises and higher-risk borrowers.

“High non-performing loans tie up capital. They raise recovery costs and restrict new credit, most severely for smaller and higher-risk borrowers. Reducing them is therefore not merely a supervisory concern. It is part of Ghana's development agenda,” he added.

The Governor noted that the decline in the industry's NPL ratio reflects improvements in asset quality and stronger loan performance across the banking sector.

He also highlighted the sector's strong financial performance in the first half of 2026, with total banking industry assets increasing by 30.7% year-on-year to GH¢502.4 billion, driven by growth in customer deposits, borrowings and shareholders' funds.

In addition, the sector's Capital Adequacy Ratio (CAR) improved significantly to 20.4% in June 2026, compared with 10.6% during the same period in 2025, providing banks with stronger capital buffers to absorb potential shocks while supporting increased lending to the economy.

The Bank of Ghana believes that sustained reductions in non-performing loans, coupled with stronger risk management and prudent lending practices, will enhance the resilience of the banking sector and improve access to credit for businesses and individuals.