The Bank of Ghana has optimistic of a further drop in the Non-Performing Loans (NPLs) of commercial banks at least by the first quarter of this year.
Figures from the central bank indicate that the NPLs have increased from 14.7 percent to 17.4 percent between December 2015 and December 2016.
The figure however witnessed a marginal drop between November and December 2016.
Governor Dr. Abdul Nashiru Issahaku explains that the restructuring and repayment of some of government’s debts should reflect a turnaround story for the commercial banks.
“We expect a further decline because what we put out was a restructuring that has taken place until November but we have had some pay downs in December to the BDCs among others which have not been factored into the calculation of the NPLs and that is expected to come down further. So by our next reporting, we should see the NPLs come down further expectedly,” he said.
The summary of economic and financial data by the Bank of Ghana shows that the NPLs of commercial banks have increased by 18 percent between December 2015 and December 2016.
The figure inched up from 14.7 percent to 17.4 percent between the one year period.
Of the eleven months, the highest of 19.3 percent was recorded in May 2016.
This was followed by July, October, November and August with NPL rates of 19.1, 19, and 18.7 percent respectively.
Major contributors to the NPLs have been the over 4 billion cedis debt owed state institutions such as the VRA, GRIDCo and the ECG.
In addition, government’s indebtedness to over 17 Bulk Oil Distribution Companies (BDCs) to the tune of 500 million cedis has been a huge challenge for commercial banks.
The development has equally affected the credit to the private sector over the period.
For instance, credit to the Private sector dropped from 163.2 million cedis in December 2015 to 159 million cedis in November 2016.
This translated into a drop in growth from 5.8 to negative 1.8 percent between the same period.
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(Via: CitiFM Online Ghana)
