Private sector lending witnessed a marked uptick by April 2026, as falling interest rates shifted the economics of credit deployment away from government paper and toward private borrowers, the latest Bank of Ghana (BoG) data has shown.
Real private sector credit grew 24.5 percent year-on-year in April 2026, reversing a contraction of 7.3 percent recorded in May 2025. Nominal credit growth stood at 28.7 percent, with total advances reaching GH¢115.2 billion, up 25 percent from a year earlier.
The acceleration follows a sustained easing cycle in which the BoG cut its monetary policy rate from 28 percent in mid-2025 to 14 percent by March 2026. The shortest term 91 day Treasury bill rates fell from above 15 percent a year ago to 4.9 percent in April 2026.
Yields on post-DDEP bonds in the secondary market, which traded above 20 percent in April 2025, compressed to a range of 9 to 13 percent across tenors by April 2026. With risk-free returns reducing, the opportunity cost of private lending has narrowed.
The sectoral distribution of credit shows services as the largest recipient at 36.7 percent of total loans, followed by commerce and finance at 23.0 percent and manufacturing at 11.0 percent, according to the BoG’s March 2026 Monetary Policy Report. The private sector’s share of total industry credit rose to 95.8 percent, as public sector credit contracted 27.8 percent to GH¢4.6 billion over the same period.
This coincides with corresponding growth across the banking sector’s aggregate balance sheet. The latest data shows total assets rose 26.6 percent year-on-year to GH¢493.9 billion, whilst total deposits grew 26.2 percent to GH¢365.5 billion.
Asset quality continued to improve as the non-performing loan (NPL) ratio fell to 18.0 percent in April 2026 from 23.6 percent in April 2025. Excluding the loss category, the NPL ratio stood at 5.6 percent. The capital adequacy ratio (CAR) rose to 22.3 percent from 17.5 percent over the same period, and now holds at that level without regulatory reliefs, compared with a 15.8 percent reading on that basis a year earlier.
The improvement in capital ratios and asset quality drew comment from the BoG Governor, Dr. Johnson Pandit Asiama, at the commencement of the 130th Monetary Policy Committee meetings this week, where he said the economy had improved “meaningfully” since the previous MPC meeting, supported by reforms, stronger external buffers and renewed investor confidence.
He, nonetheless, reflected on the effectiveness of monetary policy transmission, asking whether current conditions were “sufficiently effective in influencing lending conditions going forward.”
The improvement in capital positions and asset quality comes against a backdrop of declining profitability metrics. Net interest margins fell from 14.0 percent in April 2025 to 9.3 percent in April 2026. Return on equity (RoE) after tax declined from a range of 31 to 32 percent throughout 2025 to 22.4 percent in April 2026. Return on assets (RoA) before tax eased to 4.3 percent from 5.0 percent.
A concentration in shorter-duration assets points to continued caution among lenders. Treasury bills accounted for 65.0 percent of banks’ investment portfolios in February 2026, up from 44.5 percent a year earlier, while long-term securities fell to 34.5 percent from 55.1 percent over the same period, the March Monetary Policy Report showed.
The cost-to-income ratio remained broadly unchanged at 74.6 percent in April 2026, compared with 76.2 percent in April 2025, as operating costs have not fallen in line with revenue compression. Given total sector deposits of GH¢365.5 billion, banks currently have a substantial funding base to support continued credit expansion.
