Total banks assets up by 39% in first quarter
Masahudu Ankiilu Kunateh, Ghanadot

Accra, May 12, Ghanadot - In spite of the global financial crisis which has affected most economies around the world, the banking industry in Ghana has continued with its sterling performance for the first quarter of the 2009 fiscal year.

Total assets of the banking industry at the end of the first quarter of the 2009 witnessed a growth of GH¢ 11,240.0 million, representing a growth of 39 percent as compared with GH¢10,692.0 million, a growth of 37.2 percent in December 2008.

Even though the feet achieved saw a decline of 4.7 percent to that of growth recorded same time last year (43.7 percent), the Bank of Ghana intimated that the performance was an improved one over last year since the banks operated in a volatile market.

The Monetary Policy Committee of the Bank of Ghana, its Chairman, Dr. Paul Acquah told journalists in Accra yesterday that the growth in total assets of the banking industry was driven mainly by growth in credit during the period which recorded a 60.2 percent growth.

He noted that the operation of the banking industry was mainly funded by strong annual growth in deposits of GH¢ 7,315.0 million, representing 39.2 percent compared with GH¢ 5,254.0 million, representing a 45 percent growth for the same period in 2008.

Time and savings deposits of the banking industry increased by 37.3 percent compared with 37.7 percent for the same period in 2008.

Non-Performing Loans (NPL) ratio and the loan loss provision to gross loans ratio both increased by 9.6 percent and 7.6 percent respectively in the first quarter of the year (2009) compared with 8.7 percent and 5.9 percent for the same period in 2008.

Dr. Paul Acquah stressed that, “The banking sector performance continues to remain strong with strong asset growth and improved profitability during the first quarter of 2009. The direct links of the banking sector to the global financial crisis is mainly by way of banks’ exposure to counterparties in the form of nostro balances and placements of funds with some correspondent banks abroad”.

According to him, a stress test conducted by the Bank of Ghana (BoG) revealed that only a significant default or recall of borrowings in excess of 50 percent by counterparties could pose material threat to banks’ risk-adjusted capital. The stress he said further confirms that the industry as a whole is quite robust to exogenous macroeconomic shocks given the current level of capital adequacy of banks.