Banks with high NPLs to face dividend and bonus restrictions from 2027

From January 2027, banks and regulated financial institutions with non-performing loan (NPL) ratios above 10% will be barred from paying dividends to shareholders and bonuses to staff.

This is under a new directive from the Bank of Ghana.

The central bank said lenders with NPLs between 10% and 15% will be given a two-year window to clean up their loan books before sanctions take effect.

Institutions with NPLs at 15% or higher, however, will face immediate restrictions covering dividend payments, staff incentives and expansion of loan portfolios.

For microfinance institutions, a stricter threshold of 5% has been set.

The measure is to enforce stronger credit risk management, protect depositors and improve asset quality in the financial sector.

The new rules mean shareholders of weaker banks should not expect dividend distributions, while staff bonuses will be curtailed if bad loans remain elevated.

Customers may also face tighter credit access as lenders act to avoid breaching the threshold.

With 16 months to comply, banks and other financial institutions have a limited window to restructure bad assets or risk losing the ability to reward investors and employees.