Banks wrote off GH¢1.048bn as bad debt in half-year 2024, 39% lower over previous year

Banks in Ghana wrote off GH¢1.048 billion in the first-half of 2024, according to the Bank of Ghana’s Domestic Money Banks Income Statement.

This was howeer 39.5% lower than the same period last year.

The provision was classified as loan losses, depreciation and others.

According to the report, the asset quality of the banking industry declined during the period under review.

The banking industry’s NPL ratio rose to 24.2% in June 2024, from 18.7% in June 2023.

When adjusted for the fully provisioned loan loss category, the industry’s NPL ratio still increased to 10.8% in June 2024, from 7.8%.

This reflected increasing stock of all categories of nonperforming loans.

The rise in the NPL ratio during the period under review was explained by the higher growth in the NPL stock relative to the growth in total loans.

The industry’s NPL stock grew by 49.4% to GH¢20.4 billion in June 2024, up from GH¢13.7 billion, reflecting a deterioration in both domestic and foreign currency-denominated loans in the period under review.

Private sector accounted for largest share of NPLs

The private sector accounted for the largest share of the non-performing loans, being the largest recipient of the industry’s credit.

The proportion of NPLs attributable to the private sector rose marginally to 95.6% in June 2024, from 95.5% in June 2023, while that of the public sector declined to 4.4%, from 4.5% in a similar period last year.

The agriculture, forestry, and fishing sector recorded the highest NPL ratio of 56.4%, an increase from 30.0 percent a year ago, followed by the transportation, storage and communication sector with an NPL ratio of 49.1% from 22.1% a year earlier.

The NPL ratio of the construction sector rose to 36.8 from 32.8 percent, followed by the electricity, water and gas sector at 20.6% from 7.8%, and then the commerce and finance sector unchanged at 20.2%.

The mining and quarrying sector accounted for the lowest NPL ratio of 13.7% in June 2024 (from 12.7% a year earlier).