The issuance of the 10-year energy sector bond would help offset part of the energy sector debts, particularly debts owed by Bulk Oil Distribution Companies (BDCs) and reduce the stock of non-performing loans in the industry.
A new banking Sector Report released by the Bank of Ghana (BoG), which made this known, covers developments in the Ghanaian banking sector as at the end of June 2017.
The sector comprised 36 banks, 19 of which were domestically-controlled and the remaining 17 foreign-controlled.
The branch network of the banks stood at 1,377 branches distributed across the 10 regions of the country.
It mentioned the key risk to the banking industry as the high stock of impaired assets to total loans as measured by the non-performing loans (NPLs) ratio.
“The industry's NPL ratio increased between June 2016 and June 2017 driven by the energy related and other large non-oil related exposures.
The Asset Quality Review (AQR) exercise conducted in 2016 also revealed some weaknesses in banks' credit classification practices, leading to the downgrading of some already-existing credit facilities.
“The industry's asset quality is, however, projected to improve, as banks put in place measures to strengthen credit risk management processes and improve loan recovery efforts.”
It indicated that the performance of the banking sector for the first half of 2017 was mixed with some key performance indicators pointing to better performance in June 2016 compared with June 2017.
“Most banking sector indicators declined in June 2017, but remained within the statutory or regulatory thresholds. The industry also recorded strong total asset growth in June 2017 compared with the same period last year, driven by strong growth in investments and domestic assets.”
It mentioned that gross advances also picked up in June 2017 compared to the June 2016 level.
“However, results of the credit conditions survey conducted by the Bank of Ghana in June 2017 also indicated net tightening in the credit stance of banks on loans to enterprises and households in the second quarter of 2017.
“In addition, the survey pointed to a decline in the industry's inflation and lending rates expectations a year ahead due to sustained decline in inflation and general improved expectations regarding the performance of the economy.”
By Samuel Boadi
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